WASHINGTON — President Barack Obama on Wednesday proposed a lower corporate tax rate and an end to dozens of loopholes he said helps companies move jobs and profits overseas. “It’s not right and it needs to change,” he said.
The president wants to lower the corporate tax rate from the current 35 per cent, the highest in the world after Japan. Under his plan, manufacturers would receive incentives so that their effective tax rate could be even lower.
Obama’s election-year plan would set a new 28 per cent corporate tax rate, still higher than the 25 per cent rate sought by congressional Republicans.
“It’s a framework that lowers the corporate tax rate and broadens the tax base in order to increase competitiveness for companies across the nation,” Obama said in a statement.
Corporations would have to give up dozens of cherished loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face an unspecified minimum tax on their foreign earnings.
The proposal outlined by Geithner would also eliminate tax loopholes and subsidies that Geithner called “fundamentally unfair.”
Obama also would set a minimum tax on the foreign earning of U.S. companies.
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.
Treasury Secretary Timothy Geithner, who rolled out the plan Wednesday morning, acknowledged that the debate “will be politically contentious.”
“Some will say these proposals are too tough on business, and others will say that they’re not tough enough,” he said.