31 Jul Obama Tax Proposal Would Restructure Corporate Taxes
President Barack Obama’s new attempt to forge a compromise on tax and spending policies includes a change to a corporate tax overhaul proposal he first offered in 2011 that may make it less appealing to Republicans.
In a conference call with reporters, White House aides said Obama does not want to use any temporary windfall of revenue to pay for a lower corporate tax rate. Instead, up-front revenues gained by changing international tax rules or lengthening tax depreciation schedules would be used to pay for new infrastructure spending.
Obama, the aides said, still wants to lower the corporate rate from 35 percent to 28 percent — 25 percent for manufacturers — and pay for that change by closing tax breaks that would result in lasting revenue streams. Although that already difficult task would be made more challenging under Obama’s new specifications, White House aides insist it would be possible.
They also argued that they were making a concession to Republicans by not demanding that a corporate tax overhaul be immediately coupled with tax increases on upper-income individuals.
After years of futile attempts to reach a sweeping deficit-reduction agreement, legislation that combines infrastructure spending with a revamped corporate tax “could be the type of grand bargain for middle-class jobs that can get energy and momentum,” Gene Sperling, director of the National Economic Council, told reporters.
Republicans, however, quickly attacked the offer, with Senate Minority Leader Mitch McConnell, R-Ky., calling it “just a further-left version of a widely panned plan he already proposed two years ago — this time with extra goodies for tax-and-spend liberals.”
Republican leaders adamantly oppose to any policy that could be construed as a tax increase. In addition, most Republicans say they are against a tax overhaul focused on corporations, arguing that eliminating business tax breaks to pay for a lower corporate rate would hurt small businesses that don’t pay the corporate tax unless Congress also drops the top individual income tax rate.