Obama Plans to Propose Corporate Tax System Overhaul Next Month
January 27, 2012
President Barack Obama will propose an overhaul of the U.S. corporate tax system in February, his economic advisers said.
The proposal will be released at about the same time as the administration’s fiscal 2013 budget plan, which is scheduled to be sent to Congress on Feb. 13. The administration isn’t releasing details of the comprehensive proposal, such as whether it will include a target for the top corporate tax rate.
“The president is looking to push forward a discussion on a broader corporate tax reform,” Jason Furman, the deputy director of the National Economic Council, told reporters on a conference call yesterday. “We’re going to have more discussion of that broader framework around the time of the budget.”
Obama has said the corporate rate should be lowered from the current maximum of 35 percent in a way that doesn’t add to the federal budget deficit. An overhaul plan probably will encounter opposition in Congress, where Republicans have said a rewrite of corporate tax rules should be paired with changes in the tax system for individuals.
“I don’t think anything is going to happen this session,” said Neal Weber, a tax partner in the Washington office of Cherry Bekaert & Holland LLP. “People are going to posture during the next 10 months through the election.”
Paying for Overhaul
One of the biggest obstacles to a corporate tax overhaul is how to pay for it. Obama might seek to raise revenue for lowering the corporate rate by reviving calls to end tax breaks for oil and gas companies or corporate jets. Republicans have blocked such moves in Congress.
Any effort to revise corporate tax laws stands to divide the business community as well. Retail companies, whose assets are mostly inside the U.S., are more focused on lowering the corporate rate. Multinational companies with headquarters in the U.S. are interested in shifting to a territorial tax system, in which only domestically generated income would be taxed.