Obama Opens Door to Lower Corporate Tax Rates – WSJ.com

By MARTIN VAUGHAN

WASHINGTON—President Barack Obama opened the door Tuesday to lowering U.S. corporate tax rates, launching a politically fraught and complex effort that holds promise for some U.S. firms and pain for others.

President Obama was applauded by Vice President Joe Biden and House Speaker John Boehner prior to delivering his State of the Union address.

In his State of the Union address, Mr. Obama said he wanted to lower the corporate tax rate, now at 35%, “without adding to our deficit.” That means offsetting any cut in the overall rate by ending scores of broad tax deductions, the impact of which would be distributed unevenly across corporate America. The president didn’t offer specifics.

In November, a White House-appointed commission on reducing the deficit recommended lowering the corporate tax rate by seven percentage points to 28%. To achieve that, it recommended repealing research tax credits, tax breaks for domestic manufacturers and a tax provision that allows faster write-offs for equipment purchases.

Companies that don’t make big use of the deductions on offer and pay a high effective tax rate, such as Wal-Mart Stores Inc. and CVS Caremark Corp., would welcome such a move. Rachelle Bernstein, tax counsel for the National Retail Federation, a trade group, called the president’s outline “very positive. Rather than having a tax incentive here and a tax incentive there, it makes better sense for the economy to allow businesses to make decisions on what will create the most growth.”

By contrast, the firms that have been most vocal in pressing for a straight rate cut are multinationals that pay a relatively low effective tax rate and would have much to lose in a package that repealed the current tax benefits.

via Obama Opens Door to Lower Corporate Tax Rates – WSJ.com.

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