Obama Plan Will End Dozens of Business Tax Breaks
The Obama administration’s corporate tax reform plan will end “dozens and dozens” of tax breaks, U.S. Treasury Secretary Timothy Geithner said on Tuesday as he defended the White House’s election-year call for higher taxes on the wealthy.
Within days, the administration is set to unveil a blueprint for revamping the corporate tax system aimed at leveling the playing field for all companies, which pay wildly differing levels of taxes, while lowering the top corporate tax rate.
Companies are clamoring for a cut in the top 35 percent corporate tax rate but disagree about how to how eliminate special tax preferences that benefit selected industries.
Geithner spoke before the Senate Finance Committee a day after President Barack Obama unveiled a $3.8 trillion budget-and-tax proposal that called for aggressive government spending to boost the economy and higher taxes on the rich.
“We think they can handle it. We think they can afford it,” Geithner said.
The budget proposal is seen as a campaign document, with few elements expected to win approval this year in a divided U.S. Congress as elections approach in November.
Republicans criticized Obama’s budget, saying it chooses winners and losers and moves away from tax reform.
For example, Obama wants to end a manufacturing tax break for oil and gas companies, but expand it for high-tech companies. “Obviously not everyone is going to be playing by the same set of rules,” Republican Senator Jon Kyl of Arizona said.
Geithner said it was a “fair question.”
He said the Obama plan would “wipe out a very substantial, dozens and dozens of special tax preferences,” in the corporate code, but keep a “very limited” number targeting incentives for “creating and building stuff in the United States.”
Senators from both parties said Obama needs to use the bully pulpit to push major changes to the tax code.
The last time major rewrite of the U.S. tax code came in 1986 under the leadership of Republican President Ronald Reagan.