WASHINGTON — President Barack Obama rolled out a corporate tax overhaul plan Wednesday that lowers rates but also eliminates loopholes and subsidies cherished by the business world. A long shot for action in an election year, the plan nevertheless stamps Obama's imprint on one of the most high-profile issues of the presidential campaign.
The president's plan to lower the corporate tax rate to 28 percent came on the same day Republican presidential contender Mitt Romney called for a 20 percent across-the-board cut in personal income tax rates, underscoring the potency of taxes as a political issue, especially during a modest economic recovery.
Obama has not laid out a plan for overhauling personal income taxes but has called for Bush era cuts to end on individuals making more than $200,000, and for a 30 percent minimum tax on taxpayers who make $1 million or more. He decried the current corporate tax system as outdated, unfair and inefficient. "It's not right and it needs to change," he said.
The president would reduce the current 35 percent corporate tax, which is the highest in the world after Japan but which many corporations avoid by taking advantage of deductions, credits and exemptions. Under his plan, manufacturers would receive incentives so that they would pay an even lower effective tax rate of 25 percent.
His plan would eliminate corporate tax benefits like oil and gas industry subsidies and special breaks for the purchase of private jets and do away with certain corporate tax shelters. In addition, Obama also would impose a minimum tax on foreign earnings, a move opposed by multinational corporations and perhaps the most contentious in the plan.
Romney has also called for a 25 percent corporate tax rate, in line with what some congressional Republicans want.
Under the framework proposed by the administration, the rate cuts, closed loopholes and the minimum tax on overseas earning would result in no increase to the deficit.
Payroll tax cut extension becomes law: President Barack Obama signed the payroll tax cut extension into law Wednesday, notching an election-year victory and rare bipartisan agreement in the battle over jobs, taxes and debt.
The $143 billion measure that Congress passed overwhelmingly on Friday continues the 2 percentage-point reduction in the tax that funds Social Security, a cut begun last year to aid the nation's struggling economic recovery. It also extends jobless benefits for between 63 weeks and 73 weeks, and averts a Medicare reimbursement cut for doctors.