AP source: Obama seeks 28 percent corp. tax rateAssociated PressBy JIM KUHNHENN | Associated Press – 2 hrs 35 mins agoWASHINGTON (AP) — President Barack Obama is proposing to cut the corporate tax rate from 35 percent to 28 percent and wants an even lower effective rate for manufacturers, a senior administration official says, as the White House lays down an election-year marker in the debate over tax policy.In turn, corporations would have to give up dozens of loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face a minimum tax on their foreign earnings.Treasury Secretary Timothy Geithner on Wednesday was to detail aspects of Obama's proposed overhaul of the corporate tax system, a plan the president outlined in general terms in his State of the Union speech last month.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.The corporate tax plan dovetails with Obama's call for raising taxes on millionaires and maintaining current rates on individuals making $200,000 or less.The 35 percent nominal corporate tax rate is the highest in the world after Japan. But deductions, credits and exemptions allow many corporations to pay taxes at a much lower rate.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.That means that many businesses that slip through loopholes or enjoy subsidies and pay an effective tax rate that is substantially less than the 35 percent corporate tax could end up paying more under Obama's plan. Others, however, would pay less while some would simply benefit from a more simplified system.The official said the Obama plan aims to help U.S. businesses, especially manufacturers who face strong international competition. Obama's plan would lower the effective rate for manufacturers to 25 percent while emphasizing development of clean energy systems. The administration official spoke on condition of anonymity to describe what the administration will do.The New York Times first reported details of the plan in its online edition early Wednesday.Many members of both parties have said they favor overhauling the nation's individual and corporate tax systems, which they complain have rates that are too high and are riddled with too many deductions.The corporate tax debate has made its way into the presidential contest. Former Massachusetts Gov. Mitt Romney has called for a 25 percent rate, former House Speaker Newt Gingrich, R-Ga., would cut the corporate tax rate to 12.5 percent, and former Sen. Rick Santorum, R-Pa., would exempt domestic manufacturers from the corporate tax and halve the top rate for other businesses.While Obama has been promoting various aspects of his economic agenda in personal appearances and speeches, the decision to leave the corporate tax plan to the Treasury Department to unveil signaled its lower priority.What's more, the administration's framework leaves much for Congress to decide — a deliberate move by the administration to encourage negotiations but which also doesn't subject the plan to detailed scrutiny.Obama's plan is not as ambitious as a House Republican proposal that would lower the corporate rate to 25 percent.Still, Obama has said corporate tax rates are too high and has proposed eliminating tax breaks for American companies that move jobs and profits overseas. He also has proposed giving tax breaks to U.S. manufacturers, to firms that return jobs to this country and to companies that relocate to some communities that have lost big employers.Geithner told a House committee last week that the administration wants to create more incentives for corporations to invest in the United States."We want to bring down the rate, and we think we can, to a level that's closer to the average of that of our major competitors," Geithner told the House Ways and Means Committee.White House economic adviser Gene Sperling has advocated a minimum tax on global profits. Currently many corporations do not invest overseas profits in the United States to avoid the 35 percent tax rate.http://news.yahoo.com/ap-source-obama-seeks-28-percent-corp-tax-053911565.html
The process flow for this one:Obama knows Dems won't go for a Corp. tax cutObama throws it out there anyway for PRObama proposes budget with said tax cutDemocrats in House vote Corp Tax Cut downObama publically states to the American Electorate that "he at least tried to cut taxes"Obama touts himself as a tax cutter to the middle class and small business between now and November
Obama's Dividend AssaultA plan to triple the tax rate would hurt all shareholders.President Obama's 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%...
Chart of the Week: Nearly Half of All Americans Don’t Pay Income TaxesRob Bluey February 19, 2012 at 9:32 amThis year’s Index of Dependence on Government presented startling findings about the sharp increase of Americans who rely on the federal government for housing, food, income, student aid or other assistance. (See last week’s chart.)Another eye-popping number was the percentage of Americans who don’t pay income taxes, which now accounts for nearly half of the U.S. population. Meanwhile, most of that population receives generous federal benefits.“One of the most worrying trends in the Index is the coinciding growth in the non-taxpaying public,” wrote Heritage authors Bill Beach and Patrick Tyrrell. “The percentage of people who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, jumped from 14.8 percent in 1984 to 49.5 percent in 2009.”That means 151.7 million Americans paid nothing in 2009. By comparison, 34.8 million tax filers paid no taxes in 1984.The rapid growth of Americans who don’t pay income taxes is particularly alarming for the fate of the American form of government, Beach and Tyrrell warned. Coupled with higher spending on government programs, it is already proving to be a major fiscal challenge.“This trend should concern everyone who supports America’s republican form of government,” Beach and Tyrrell wrote. “If the citizens’ representatives are elected by an increasing percentage of voters who pay no income tax, how long will it be before these representatives respond more to demands for yet more entitlements and subsidies from non-payers than to the pleas of taxpayers to exercise greater spending prudence?
It's actually more nefarious than that, GH, The Pharaoh will probably get bi-partisan support for the proposal in the House were it could pass; it's the Senate that will shut it down. But with that bi-partisan support in the House he'll have very tangible political creds that he can exploit by embarrassing the Republicans among other things; in addition to him touting himself of course. I think there are a few RINOs in the House who will cross the aisle. It's really going to put the House Republican majority in a bad political situation.
6 Replies
1241 Views