Corporate tax plan would cut top rate to 28 percent

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Corporate tax plan would cut top rate to 28 percent
 
The Obama administration today will propose cutting the top tax rate for corporations to 28 percent, to be paid for by eliminating dozens of tax loopholes companies now use to lower their rates, Reuters reported.
 
Chances of a deeply divided Congress revamping the tax system seem remote in an election year, but the announcement is certain to fuel debate in the run-up to November’s elections.
 
The plan, more than a year in the making, is President Barack Obama’s first official foray into overhauling the tax code, which most experts believe badly needs a revamp after years of being loaded up with special provisions.
 
The centerpiece is a cut in the top corporate rate – now at 35 percent, among the highest in the industrialized world. That will appeal to businesses, which gripe that the current U.S. rate puts them at a competitive disadvantage.
 
The proposal makes a special carve-out for manufacturing – cutting that tax rate to 25 percent – and proposes a minimum tax on profits earned in low tax countries.
With deficits running about $1 trillion, the administration official said the plan will not “add a dime to the deficit.” 
 
That means any tax revamp will create winners, companies whose tax rates go down, and losers who now benefit from the very loopholes Obama wants to trim. This will set up a fierce fight among lobbyists defending their tax breaks, when a proposal finally makes it to Congress for debate, which seems unlikely before November at the earliest.
 
The Obama administration today will propose cutting the top tax rate for corporations to 28 percent, to be paid for by eliminating dozens of tax loopholes companies now use to lower their rates, Reuters reported.
 
Chances of a deeply divided Congress revamping the tax system seem remote in an election year, but the announcement is certain to fuel debate in the run-up to November’s elections.
 
The plan, more than a year in the making, is President Barack Obama’s first official foray into overhauling the tax code, which most experts believe badly needs a revamp after years of being loaded up with special provisions.
 
The centerpiece is a cut in the top corporate rate – now at 35 percent, among the highest in the industrialized world. That will appeal to businesses, which gripe that the current U.S. rate puts them at a competitive disadvantage.
 
The proposal makes a special carve-out for manufacturing – cutting that tax rate to 25 percent – and proposes a minimum tax on profits earned in low tax countries.
With deficits running about $1 trillion, the administration official said the plan will not “add a dime to the deficit.” 
 
That means any tax revamp will create winners, companies whose tax rates go down, and losers who now benefit from the very loopholes Obama wants to trim. This will set up a fierce fight among lobbyists defending their tax breaks, when a proposal finally makes it to Congress for debate, which seems unlikely before November at the earliest.