WASHINGTON — President Obama, in a bid to break a stalemate with the Republican-controlled House, will revive on Tuesday his proposal to cut corporate tax rates in return for a commitment from Republicans to invest more in programs spurring middle-class jobs. þþUsing a cavernous Amazon distribution center in Chattanooga, Tenn., as his backdrop, Mr. Obama will describe a “grand bargain” on jobs that White House officials say will stimulate the economy, as well as give businesses the lower tax rates they have long sought. It would be the first new proposal of his economic offensive, setting the stage for the fall budget fights with Congressional Republicans. But the packaging is what is new, not the ideas. þþThe terms of Mr. Obama’s tax plan are those that Timothy F. Geithner, his former Treasury secretary, first proposed in early 2012, as the presidential campaign was getting under way: the corporate tax rate would be reduced to 28 percent, from 35 percent, with a lower rate of 25 percent for manufacturers. þþAt the time, Mr. Obama’s ultimate Republican rival, Mitt Romney, was proposing a 25 percent corporate rate, the same level that Republicans in Congress espouse now. þþWhile the White House is advertising the move as a big concession, Republicans dismissed the proposal even before the president had spoken in Tennessee, based on advance news reports. þþ“It’s the opposite of a concession,” said Brendan Buck, a spokesman for House Speaker John A. Boehner, Republican of Ohio. þþFor two years, Republicans have rejected the bulk of Mr. Obama’s initiatives to create jobs by investing in public-works projects, higher education, advanced manufacturing and scientific research. A big reason was that he previously has paired those ideas — to offset the spending and avoid adding to annual budget deficits — with proposals to repeal or reduce tax breaks for wealthy individuals and corporations, especially oil companies, that Republicans reject. þþThe White House did not offer details on whether its corporate tax cut would have to go hand in hand with reductions on current tax breaks for businesses. A separate complication for the administration, in seeking a different, lower tax rate for manufacturing companies, would be in defining manufacturing for purposes of assessing which corporations would qualify. þþThe administration also was not specific about the jobs spending, though Mr. Obama’s priorities have been clear since he first outlined them in an address to a joint session of Congress in September 2011, and he has proposed details since then in his annual budgets. But the House has ignored the proposals. þþMany Republicans and Democrats argue that an overhaul of corporate taxes should be done along with a rewrite of the tax code for individuals. Republicans say that is necessary because many smaller businesses file their tax returns using the individual tax code. þþWhile in the past the administration pressed to cut corporate tax rates as a stand-alone proposal, on Tuesday it was describing the president’s initiative to do so as a concession. þþIn February 2012, Mr. Geithner said the corporate tax plan that Treasury had worked on for two years was designed so that you could do cut corporate taxes alone. But he said he understood the argument for doing an overhaul of corporate and individual taxes together, adding, “That may be the way this comes out.” þþCorporations and their Republican allies have long argued, correctly, that the 35 percent corporate tax rate is among the highest in the industrialized world, and undercuts the competitiveness of American businesses. However, numerous tax breaks unique to the United States allow many corporations to significantly reduce or even wipe out their tax liabilities. þþMr. Geithner and Republicans have said that overhauling the corporate code should be done in a way that neither adds to nor subtracts from the deficit. But many Democrats say that any revenue from closing tax breaks should be used only partly to reduce corporations’ tax rates and that some savings should be used to reduce deficits. þ
Source: NY Times
