Obama brings firms’ tax simplification to campaign
PRESIDENT Barack Obama launched a dialogue with US companies yesterday over business tax reform, offering his first clear plan to cut the corporate tax rate, though with little prospect of it becoming law in an election year.
The President proposed cutting the top corporate tax rate to 28 per cent from 35 per cent. This would address US corporations’ long-standing gripe about the rate being too high – currently they pay the world’s second-highest corporation tax rate after Japan’s.
In return for lowering the tax rate on businesses, the plan calls for broadening the corporate tax base by ending a number of tax breaks, some spelled out previously in Obama’s budgets, and sure to be resisted by powerful corporate interests.
In a move partly to counter the unveiling of an economic plan by Republican presidential contender Mitt Romney, Obama’s proposal was rolled out at a briefing by Treasury secretary Timothy Geithner, likely marking the start of lengthy negotiations.
“The current tax code was written for a different economy, a different era,” Geithner said. He plans to meet next week with members of Congress to try to win support for the plan.
“This process will take some time. It will be politically contentious, some will say these proposals are too tough on business, others will say they are not tough enough,” he said.
The plan will try to reverse tax incentives for corporations to relocate jobs and research overseas, while giving domestic manufacturing operations a special tax break.
In a new twist, the president proposed imposing a minimum tax on corporate profits earned in low tax countries.