NYT: Corporate Taxes Enter Debt Debate

From the NYT Caucus blog:

The Obama administration is preparing to inject an unpredictable new variable into its economic policy clash with Republicans: a plan to overhaul corporate taxes.

Economic advisers have nearly completed the process initiated in January by the Treasury secretary, Timothy F. Geithner, at President Obama’s behest. That process, intended to make the United States more competitive internationally, has explored the willingness of business leaders to sacrifice loopholes in return for lowering the top corporate tax rate, currently 35 percent.

The approach officials are now discussing would drop the top rate as low as 26 percent, largely by curbing or eliminating tax breaks for depreciation and for domestic manufacturing.

… Balancing deficit concerns with its desire to improve relations with businesses, the Obama administration wants any corporate tax overhaul to be “revenue neutral” — that is, a new system should bring in no more or less money from businesses than the old one did. Thus some sectors with comparatively few major deductions could win big, including Wall Street. Others paying lower “effective rates,” like domestic manufacturers, could lose.

… Proposing to cut the top rate for corporations poses the risk of aggravating unease among Democrats as they negotiate with Republicans over spending cuts in the monuments of modern liberalism: Medicare, Medicaid and Social Security. The recent revelation that the nation’s largest corporation, General Electric, paid no federal tax for 2010 despite $14.2 billion in worldwide profits makes a business tax-rate reduction an even tougher sell.

Comments

2 Comments so far. Leave a comment below.
  1. Danger,

    Politico: New W.H. battle: Corporate taxes (5/4/2011)

    … Aides say Geithner will personally dive into the negotiations. House Speaker John Boehner also sees this as a ripe area for bipartisan cooperation. And House Budget Committee Chairman Paul Ryan included corporate tax reform in his budget, which has been adopted as the GOP’s fiscal blueprint.

    … Geithner has already begun his campaign with a series of closed-door meetings with CEOs, academics, labor unions and liberal and conservative think tanks. Aides say he was encouraged by the response. At the White House, Jason Furman, principal deputy director of the National Economic Council, is working the issue.

    “This won’t be like health care, where you put out specific ideas people have to take or leave,” an administration official said. “We’ll be more than willing to make trade-offs — to look at alternatives that lower the rates and broaden the base,” a euphemism for cutting back on loopholes.

    One top business lobbyist, speaking on condition of anonymity, said corporate tax reform should be “the easiest piece” of a complex fiscal bargain “because you have people in both parties in the business community.”

  2. Danger,

    The Nation: Obama Administration Plans Corporate Tax Cut In Year Of Record Profits (5/5/2011)

    … Meanwhile, the number of people who filed new applications for jobless benefits leaped 43,000 last week to 474,000, the highest level in almost nine months.

    The surge in unemployment comes at a time when US corporations are more profitable than ever. The end of 2010 saw some of the biggest gains in the business world, according to data from the federal Bureau of Economic Analysis. Corporations reported an annualized profit of $1.68 trillion in the fourth quarter, up from the previous record of $1.65 trillion in the third quarter of 2006.

    In the first quarter of 2011, Exxon-Mobil, the world’s biggest and most profitable corporation, raked in $10.7 billion. That’s a 69 percent increase over the same quarter last year, and the highest quarterly profit since 2008. This is happening during a time when citizens are searching underneath the couch cushions to scrape together enough change in order to fill their gas tanks so they can go file for unemployment benefits.

Add Your Comments

Disclaimer
Your email is never published nor shared.
Required
Required
Tips

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <ol> <ul> <li> <strong>

Ready?