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Responses to Obama Corporate Tax Proposal Reflect Difficulty of Tax Reform By Tory O’Connor President Obama jumped into the tax reform debate, proposing to reduce corporate tax rates from 35% to 28% while at the same time reducing or eliminating certain
July 31, 2013
Responses to Obama Corporate Tax Proposal Reflect Difficulty of Tax Reform
By Tory O’Connor
President Obama jumped into the tax reform debate, proposing to reduce corporate tax rates from 35% to 28% while at the same time reducing or eliminating certain (as-of-yet-unnamed) business deductions. According to the President, the corporate tax reform plan will simplify corporate taxes and raise revenue, which will then be used to fund (also unnamed) job growth proposals. Senate Finance Committee Chairman Max Baucus (D-Mont.) applauded the development, saying "It's a major development. The president is for tax reform. That's the major takeaway."
Sen. Baucus's support notwithstanding, in what is starting to feel like déjà vu for any tax reform plan, the plan was then criticized from all sides:
- For using corporate tax reform as a vehicle for raising revenue - Sen. Rob Portman (R-Ohio): “I like the idea that he’s promoting business tax reform. But if it’s taking money out of that system to give it to government to spend, it’s a mistake.”
- For planning to use the revenue for other government spending - Sen. Mark Pryor (D-Ark.) expressed concerns, believing any revenue raised from corporate tax reform should be used to pay down the debt.
- For undermining current tax reform efforts - Sen. Orrin Hatch (R-Utah) stated that calls from Democrats to raise hundreds of billions of dollars through rewriting the corporate tax code are "undermining the chairman of the Finance Committee, and I really don't think they're very serious about tax reform."
- For not proposing a broader deal - Sen. Mark Warner (D-Va.) expressed concerns about separating corporate and individual tax reform in the discussion.
- For not proposing a broader deal - Sen. Lindsey Graham (R-S.C.) suggested that Republicans would agree to raise revenue in a broader deal that includes entitlement reform: “Really, the only way you’re going to get this is doing entitlement reform and simplifying the tax code.”
- Howard Gleckman of the Tax Policy Center summed up the status of reform: "Thus, we remain stuck in the same Ground Hog Day rut that has bedeviled tax reform—individual or corporate—throughout the Obama Administration. Obama and the Democrats won't support reform unless it produces revenue to fund new spending and/or deficit reduction. Republicans won't support it if it does increase revenue."
Read the full reaction by Tax Policy Center’s Howard Gleckman.
For more news analysis, see Forbes, Washington Post, Ezra Klein Blog, Bloomberg, WSJ, The Hill.