By Kim Dixon
WASHINGTON, Oct 13 (Reuters) - President Barack Obama remains committed to ending 'unfair loopholes' and tax breaks for international corporations, but congressional tax writers and others doubt that will happen without broader reforms, such as cutting the top corporate tax rate.
Obama ignited fear in corporate America earlier this year when he proposed about $200 billion in tax increases over a decade through tightening corporate tax rules for multinational companies, mostly related to offshore profits.
A White House spokeswoman on Tuesday said the president is committed to those proposals, commenting on a front-page article in The Wall Street Journal that said the Obama administration had shelved the plan.
'While we have an open door to the ideas and concerns of business leaders, we remain as committed to reforming international corporate taxation to end unfair loopholes as we were the day the president announced the plan,' said White House spokeswoman Jen Psaki.
U.S. lawmakers and tax experts say the plan to crack down on corporate taxes never had a chance on its own, given opposition from chairmen of several key congressional committees.
Marc Gerson, a former House Ways and Means Committee staffer, said lawmakers, guided by the efforts of the business community, recognized these as fundamental changes.
'To the extent that they are considered at all, it will be considered as part of a larger consideration of reforming the international tax rules,' said Gerson, who now councils corporate clients at Miller & Chevalier in Washington.
Obama's crowded legislative agenda -- which includes reforming U.S. healthcare, obtaining stricter financial services regulation and capping greenhouse gas emissions -- means any tax proposals are unlikely to move forward until 2010.
The House Ways and Means Committee is working on a broader plan to overhaul the tax code, which would include many of Obama's ideas and cut the top corporate rate.
The U.S. has among the highest corporate tax rates in the world at 35 percent. Ways and Means Committee Chairman Charles Rangel, a Democrat, is looking at lowering the rate to 28 percent, or even lower.
'He is willing to go even lower if others come forward with loopholes to close,' Rangel spokesman Matt Beck said.
A Republican tax aide said the administration has realized that raising business taxes is easier said than done.
'It looks like good business tax reform policy might be trumping the easy politics of raising taxes on business to pay for enlarging already unsustainable social programs,' he said.
BIGGER IDEAS NEEDED?
Some mainstream economists had said that Obama's proposals on their own were unlikely to create U.S. jobs. Some even suggested they could cause companies to be acquired by foreign rivals, an argument of the business community.
Many argue there is not enough money in the corporate and individual income taxes to control widening budget deficits projected for the foreseeable future.
A growing number of economists and others are speaking in favor of value-added, or national sales tax, which is employed in many industrialized countries.
Paul Volcker, the former Federal Reserve Chairman who is heading an economic advisory panel charged with giving tax reform advice to Obama, has suggested a VAT be considered.
'The inescapable truth is that deficits will grow unless taxes increase,' wrote Brookings Institution economists Henry Aaron and Isabel Sawhill, in a Washington Post editorial on Tuesday.
The two economists from the center-left leaning think tank suggest a VAT be enacted only after unemployment falls, or after a certain period of time. They propose that the funds raised be used to get a handle on healthcare spending, which has risen at double the rate of inflation in recent years.
The conservative Heritage Foundation, which opposes a VAT, estimates that just a one percent VAT on all goods and services could raise $63 billion a year.
RELATED NEWS:
* Obama faces clamor for action on economy
* Tax chiefs target loans by offshore funds
* U.S. homebuyer credit used by 1.4 mln
* W.House cuts int'l tax revenue estimate
(Additional reporting by Steve Holland; Editing by Gerald E. McCormick and Tim Dobbyn)
((kim.dixon@reuters.com; +1 202 354-5864; Reuters Messaging: kim.dixon.reuters.com@reuters.net)) Keywords: OBAMA CORPORATE/TAXATION (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, Oct 13 (Reuters) - President Barack Obama remains committed to ending 'unfair loopholes' and tax breaks for international corporations, but congressional tax writers and others doubt that will happen without broader reforms, such as cutting the top corporate tax rate.
Obama ignited fear in corporate America earlier this year when he proposed about $200 billion in tax increases over a decade through tightening corporate tax rules for multinational companies, mostly related to offshore profits.
A White House spokeswoman on Tuesday said the president is committed to those proposals, commenting on a front-page article in The Wall Street Journal that said the Obama administration had shelved the plan.
'While we have an open door to the ideas and concerns of business leaders, we remain as committed to reforming international corporate taxation to end unfair loopholes as we were the day the president announced the plan,' said White House spokeswoman Jen Psaki.
U.S. lawmakers and tax experts say the plan to crack down on corporate taxes never had a chance on its own, given opposition from chairmen of several key congressional committees.
Marc Gerson, a former House Ways and Means Committee staffer, said lawmakers, guided by the efforts of the business community, recognized these as fundamental changes.
'To the extent that they are considered at all, it will be considered as part of a larger consideration of reforming the international tax rules,' said Gerson, who now councils corporate clients at Miller & Chevalier in Washington.
Obama's crowded legislative agenda -- which includes reforming U.S. healthcare, obtaining stricter financial services regulation and capping greenhouse gas emissions -- means any tax proposals are unlikely to move forward until 2010.
The House Ways and Means Committee is working on a broader plan to overhaul the tax code, which would include many of Obama's ideas and cut the top corporate rate.
The U.S. has among the highest corporate tax rates in the world at 35 percent. Ways and Means Committee Chairman Charles Rangel, a Democrat, is looking at lowering the rate to 28 percent, or even lower.
'He is willing to go even lower if others come forward with loopholes to close,' Rangel spokesman Matt Beck said.
A Republican tax aide said the administration has realized that raising business taxes is easier said than done.
'It looks like good business tax reform policy might be trumping the easy politics of raising taxes on business to pay for enlarging already unsustainable social programs,' he said.
BIGGER IDEAS NEEDED?
Some mainstream economists had said that Obama's proposals on their own were unlikely to create U.S. jobs. Some even suggested they could cause companies to be acquired by foreign rivals, an argument of the business community.
Many argue there is not enough money in the corporate and individual income taxes to control widening budget deficits projected for the foreseeable future.
A growing number of economists and others are speaking in favor of value-added, or national sales tax, which is employed in many industrialized countries.
Paul Volcker, the former Federal Reserve Chairman who is heading an economic advisory panel charged with giving tax reform advice to Obama, has suggested a VAT be considered.
'The inescapable truth is that deficits will grow unless taxes increase,' wrote Brookings Institution economists Henry Aaron and Isabel Sawhill, in a Washington Post editorial on Tuesday.
The two economists from the center-left leaning think tank suggest a VAT be enacted only after unemployment falls, or after a certain period of time. They propose that the funds raised be used to get a handle on healthcare spending, which has risen at double the rate of inflation in recent years.
The conservative Heritage Foundation, which opposes a VAT, estimates that just a one percent VAT on all goods and services could raise $63 billion a year.
RELATED NEWS:
* Obama faces clamor for action on economy
* Tax chiefs target loans by offshore funds
* U.S. homebuyer credit used by 1.4 mln
* W.House cuts int'l tax revenue estimate
(Additional reporting by Steve Holland; Editing by Gerald E. McCormick and Tim Dobbyn)
((kim.dixon@reuters.com; +1 202 354-5864; Reuters Messaging: kim.dixon.reuters.com@reuters.net)) Keywords: OBAMA CORPORATE/TAXATION (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.