February 22, 2012 in Nation/World

Obama details new corporate tax plan

Proposal cuts rates, but eliminates many loopholes

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WASHINGTON – Laying down an election-year marker in the debate over taxes, the Obama administration is proposing to cut the corporate tax rate from 35 percent to 28 percent, and to seek an even lower effective rate for manufacturers, a senior administration official says.

In turn, corporations would have to give up dozens of loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face a minimum tax on their foreign earnings.

Treasury Secretary Timothy Geithner today was to detail aspects of President Barack Obama’s proposed overhaul of the corporate tax system, a plan Obama broadly outlined in his State of the Union speech last month.

Chances of accomplishing such change in the tax system are slim in a year dominated mostly with presidential and congressional elections. But for Obama, the proposal is part of a larger tax plan that is central to his re-election strategy.

The corporate tax plan dovetails with Obama’s call for raising taxes on millionaires and maintaining current rates on individuals making $200,000 or less.

The 35 percent nominal corporate tax rate is the highest in the world after Japan. But deductions, credits and exemptions allow many corporations to pay taxes at a much lower rate.

Under the administration’s proposal, the rate cuts, closed loopholes and minimum tax on overseas earning would result in no increase to the deficit.

That means that many businesses that slip through loopholes or enjoy subsidies and pay an effective tax rate that is substantially less than the 35 percent corporate tax could end up paying more under Obama’s plan. Others, however, would pay less while some would simply benefit from a more simplified system.

The official said the Obama plan aims to help U.S. businesses, especially manufacturers. Obama’s plan would lower the effective rate for manufacturers to 25 percent while emphasizing development of clean energy systems.

© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Eight comments on this story so far. Add yours!

• 

  greenlibertarian on February 22 at 2:15 a.m.

  Following the Reagan model I see. Brill. Very good from a PR perspective.

  We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share.

  In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying ten percent of his salary, and that’s crazy. […]

  Do you think the millionaire ought to pay more in taxes than the bus driver or less?

  [Crowd:] NO!!!

  -President Ronald R. Reagan

• 

  Diana on February 22 at 5:39 a.m.

  I’ll be anxious to hear Romney explain how his extra 7 percent cut is the difference between capitalism and socialism.

• 

  Orphan on February 22 at 7:57 a.m.

  Great idea lets raise the taxes on the overseas companies so they can not compete in the world market.

  How about we reduce all subsidies, I mean all of them by 10% per year for 10 years that would do more than any tax changes they could possibly make.

  The biggest benefit to ending subsidies would our congress critters would then be looking for votes not money from the folks that benefit from the subsidies. We might even end up with some honest politicians.

• 

  DickAdams on February 22 at 8:10 a.m.

  When I read the story, maybe I missed the $2. trillion Obama wants as more of the same, i. e. taxpayer stimulus money. Surely the MSM would inform the public? And the beat goes on. Its no wonder newspapers in this country are closing there doors. These newspaper companies brought the huge readership decline on themselves by merely copying distorted facts. Good investigative reporting disappeared years ago.

• 

  Benaround on February 22 at 9:07 a.m.

  Dick Adams:
  The messengers of Valerie Jarrett’s press releases are not
  allowed to free-lance in any way and must stick to the Script
  they are given. It takes a while for details to appear like the
  proposed 43% tax on dividends that have already been taxed
  at corporate level before being taxed again. (Obama Budget)
  This phenomenon is occasionally called “Media Turbo-Lag”.

  Some stories are not even allowed reporting detail…like
  Corzine misplacing 2.5 Billion of Customer money or Eric
  Holder’s “Nicer Guns for Drug Cartels.”

• 

  misjustice on February 22 at 12:30 p.m.

  Someone droned on something about…” Valerie Jarrett’s press releases “… guess that someone didn’t get the memo; Ms. Jarrett is no longer working at the Whitehouse.

• 

  Benaround on February 22 at 3:34 p.m.

  misjustice:
  She was there at !0:00 a.m. this morning and is shown in
  photo today with Jack Lew and the President at White House.
  Somebody better tell the Secret Service to quit guarding her
  if she lost her adviser role this afternoon.

• 

  Diana on February 22 at 4:20 p.m.

  Re the budget: B-b-but, Valerie Jarrett!