Obama to propose cut to corporate tax rate
The White House on Wednesday will announce plans for a corporate tax overhaul that would reduce the overall rate while increasing revenues by eliminating loopholes and subsidies, US media reported.
The New York Times and the Wall Street Journal said the plan would reduce the overall rate from 35 percent to 28 percent while eliminating dozens of deductions and subsidies that allow many firms to pay far less.
White House officials could not immediately be reached for comment.
The plan, to be unveiled later on Wednesday, could help US President Barack Obamablunt election-year attacks by his Republican rivals, who advocate cutting taxes as well as federal spending to trim the country’s bloated debt.
The Journal quoted a senior administration official as saying the plan would lower the effective tax rate on manufacturers to “no more than 25 percent” from an average rate of about 32 percent.
At the same time, it would effectively raise the taxes paid by oil and gas companies, which benefit from deductions and subsidies.
The plan would also require US companies operating overseas to pay a minimum tax rate on foreign earnings for the first time while rewarding on-shore companies, the Journal said.
Obama said earlier this year that he wanted to restructure the tax code to penalize companies for sending jobs overseas and encourage those that brought them back to the United States.
The Journal quoted a senior official as saying the plan would raise an additional $250 billion in taxes over 10 years.
The plan would have to be approved by a divided Congress, which could prove a daunting task in an election year.
Republicans have called for a similar overhaul of the tax code, but could object to the removal of the loopholes, arguing that doing so would amount to a tax hike that could endanger the economic recovery.
The Republican candidates hoping to challenge Obama in the November election have argued for across-the-board tax cuts as well as the slashing of federal spending, particularly on health and pension programs.