Obama’s tax code bargain: Lower corporate tax rate but eliminate loopholes
US President Barack Obama on Tuesday will propose lowering corporate tax rates in exchange for eliminating loopholes in a renewed bid to strike a fiscal deal with rival Republicans.
The reheated tax reform plan, first proposed and then rejected by Republicans in 2011, is part of a renewed bid by the president to create a “better bargain” for the middle class in a second term thus far marked by few accomplishments.
Republicans, especially Tea Party conservatives, have rejected any proposals that would increase government revenue, insisting that only spending cuts can roll back the bloated deficit without further harming the sluggish economic recovery.
Seeking middle ground, the president was to give a speech in Chattanooga, Tennessee calling for a simplification of the US tax code that would lower the tax rate for businesses without worsening the deficit.
“Our current tax code is broken and too complex, with businesses that play by the rules paying a 35 percent tax rate while many corporations that can hire hundreds of lawyers pay virtually no taxes at all,” the White House said in a statement.
“That is why the president has called for a revenue-neutral simplification of our business tax code to eliminate loopholes that encourage companies to ship jobs overseas and establishes a top tax rate of 28 percent,” it said.
“Some businesses would pay less, some corporations would pay more, but everyone would pay their fair share.”
In Chattanooga, Obama was to continue a ground campaign launched last week aimed at reviving interest in stalled economic initiatives, many of which date back to his first term.
Obama is seeking a “grand bargain” with rival Republicans that would simplify the tax code while boosting investment in education and infrastructure.
But with 2014 congressional elections on the horizon, the Republican-controlled House of Representatives has expressed little interest in working with the president.
The Republicans insist Obama’s plans would only saddle corporations with more taxes while pouring more money into government programs they believe do not work.
An aide to Republican House Speaker John Boehner, speaking on condition of anonymity, roundly rejected the latest initiative.
The official insisted that any reforms apply to the corporate and individual tax codes, that all changes be revenue-neutral and that there be no additional “stimulus spending.”
“The president is taking his idea of tax reform, making it worse, and then demanding ransom of more stimulus spending to get it. Some bargain,” the official said.
In the speech at an Amazon distribution center in Chattanooga, Obama was expected to hail signs of an improving economy, including the online retail giant’s announcement Monday that it will hire another 7,000 US workers.
Despite lingering high unemployment and low growth, Obama has insisted in a string of recent speeches that the economy is on the right track after his administration helped it to narrowly avoid another Great Depression in 2009.