Obama Seeks 28 Percent Corporate Tax Rate

payroll tax cutBy Jim Kuhnhenn

WASHINGTON (AP) -- President Barack Obama is proposing to cut the corporate tax rate from 35 percent to 28 percent and wants an even lower effective rate for manufacturers, a senior administration official says, as the White House lays down an election-year marker in the debate over tax policy.

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 on Wednesday was to detail aspects of Obama's proposed overhaul of the corporate tax system, a plan the president outlined in general terms 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 framework proposed by the administration, the rate cuts, closed loopholes and the 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 who face strong international competition. Obama's plan would lower the effective rate for manufacturers to 25 percent while emphasizing development of clean energy systems. The administration official spoke on condition of anonymity to describe what the administration will do.

The New York Times first reported details of the plan in its online edition early Wednesday.

Many members of both parties have said they favor overhauling the nation's individual and corporate tax systems, which they complain have rates that are too high and are riddled with too many deductions.

The corporate tax debate has made its way into the presidential contest. Former Massachusetts Gov. Mitt Romney has called for a 25 percent rate, former House Speaker Newt Gingrich, R-Ga., would cut the corporate tax rate to 12.5 percent, and former Sen. Rick Santorum, R-Pa., would exempt domestic manufacturers from the corporate tax and halve the top rate for other businesses.

While Obama has been promoting various aspects of his economic agenda in personal appearances and speeches, the decision to leave the corporate tax plan to the Treasury Department to unveil signaled its lower priority.

What's more, the administration's framework leaves much for Congress to decide - a deliberate move by the administration to encourage negotiations but which also doesn't subject the plan to detailed scrutiny.

Obama's plan is not as ambitious as a House Republican proposal that would lower the corporate rate to 25 percent.

Still, Obama has said corporate tax rates are too high and has proposed eliminating tax breaks for American companies that move jobs and profits overseas. He also has proposed giving tax breaks to U.S. manufacturers, to firms that return jobs to this country and to companies that relocate to some communities that have lost big employers.

Geithner told a House committee last week that the administration wants to create more incentives for corporations to invest in the United States.

"We want to bring down the rate, and we think we can, to a level that's closer to the average of that of our major competitors," Geithner told the House Ways and Means Committee.

White House economic adviser Gene Sperling has advocated a minimum tax on global profits. Currently many corporations do not invest overseas profits in the United States to avoid the 35 percent tax rate.

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Doesnt matter who is in there its all about big business and screw the working guy. It will never change. You think your getting screwed now look at the clowns that are running against him. What a joke!!!!!!!!!

February 23 2012 at 5:57 AM Report abuse -1 rate up rate down Reply
1 reply to dchain4648's comment
Brian Williams

Most other Countries SUBSIDIZE corporations in order to get them to bring the jobs and manufacturing there. China either gives them money straight out or gives them low interest loans to build and get the companies going, why do you think most manufacturing goes on overseas now? It's cheaper to send the material there to be built and then ship it back then it is to build it here. Something has to be done.

February 23 2012 at 6:37 AM Report abuse rate up rate down Reply
welcome butch


February 23 2012 at 5:47 AM Report abuse rate up rate down Reply

Another Trojan horse from the most inept administration this nation has ever had the misfortune of witnessing. This seems to fall right into Obama's scheme to allow the mega-corp GE not to pay any taxes at all.

February 23 2012 at 5:26 AM Report abuse rate up rate down Reply

That dude neens to go !

February 23 2012 at 4:53 AM Report abuse +1 rate up rate down Reply

The more Obumma campeigns the rounder his mouth is getting. I guess from talking out of both sides. I thought biig business was our enemy and not paying their fair share already. No way he would be doing this just to get votes or could it be just some more of his double talk.

February 23 2012 at 3:33 AM Report abuse rate up rate down Reply

Forked tongue an indiscriminate attribute. Stay alert, educate yourself. Live and love within your means!...?

February 23 2012 at 3:07 AM Report abuse +1 rate up rate down Reply

how about anyone running for office at any level, be required to go spend a week homeless, go walk in the shoes before saying they really know how tough it is, i wanted to say a month,, but a week give em a small taste

February 23 2012 at 1:23 AM Report abuse +1 rate up rate down Reply

look at the picture caption, the vice president looks like he wants to bust out laughing

February 23 2012 at 1:18 AM Report abuse +1 rate up rate down Reply

its all hook or crook, congrats to all who voted for reps and dems,all are crooks, they go to washington to get access to positions after they leave office, to make even greater riches, its all about staging, i will lie to get in, i will pretend while im there, but by all means after i leave i will have made sure i am set for life, this is what we have in politicians today and for sometime, not just in the national, but every level of politics, its not serve the people ,its serve myself, get rid of this rigged system, until then, nothing changes, just erodes further, when the politicians are smiling, then you know they espousing lies, you didnt c the founding fathers smiling with suger dripping from their mouths, from really looking at politics over the years, everything that looks like gold isnt gold,

February 23 2012 at 1:16 AM Report abuse +2 rate up rate down Reply

And what are these big corporations going to do to compensate for these cuts? Lay off workers, cut pensions and benefits for employees, charge more for services and goods. Maybe even close down offices. How is that going to help the economy? All I can see is higher prices and more unemployments.

February 23 2012 at 12:51 AM Report abuse -1 rate up rate down Reply

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