Three years into his term, President Obama has woken up and figured out that he should do something for small business. Of course the proposal to lower the corporate tax rate to 28% from 35% (Canada’s is 16%), is another trap to set up a fight with Congress. It is just amazing how the President finds all these little perks in an election year. In the new proposal Barak Obama also proposes to temporarily raise taxes on oil companies by closing loopholes by eliminating tax breaks and subsidies, amidst a period of high pump prices.
While the proposal makes sense and is finally an admission by Democrats that the corporate tax rate is much too high compared to other countries. With the removal of subsidies and some loopholes offshore companies, including the oil companies will actually be paying higher nominal tax rate.
Obama’s proposal is nothing but another election gimmick in which the Obama campaign is looking for a fight with Republicans in Congress. As yourself why it took more than three years into his term that Obama now wants to lower the corporate tax rate?
GOP Presidential candidates have also rolled out tax reform plans, including a lowering of the corporate tax. While oil companies may be seen as a demon by many Americans, discontinuing subsidies at this stage could have an adverse affect on the economy, with higher prices at the pumps.
Yesterday prices at the pumps reach a nine month high and exports predict that they could reach $5 a gallon by this summer. Tomorrow the President is expected to give a speech in Florida, which will outline his energy strategy. Be prepared to hear more rhetoric of how the President is staying ahead of the issue.
For the time being it will be interesting to see the Republican reaction to the President’s proposal.
Doubling down on his pledge to build an economy based on “fairness,” Obama’s lieutenants rolled out a plan that would lower the nominal business tax rate from 35 percent, but rake in more revenue by ending dozens of tax breaks and subsidies.
The plan would lower taxes on manufacturing firms — which would see a nominal 25 percent rate — while introducing a minimum levy on foreign earnings which go largely untaxed today.
The plan, which is in embryonic form, stands little chance of passing a divided Congress this year, but does present a political challenge to Republicans running for the White House. Tip News
House Republican Chairman Response to Obama’s Tax Cut Proposal
WASHINGTON – House Republican Conference Chairman Jeb Hensarling (R-Texas) today issued the following statement regarding President Obama’s corporate tax reform “blueprint.”
“Again I find myself agreeing with 80 percent of what the president says but disagreeing with 80 percent of what he does. This blueprint appears to include many of the reforms that House Republicans have already passed – like closing tax loopholes – but it fails to address the need for comprehensive reform of our fundamentally unfair tax code.
“What’s being sold as corporate tax reform is a recipe for a small business tax hike. Combine that with the $1.9 trillion tax increase the president calls for in his
budget and it appears these policies are designed to help the government pay for more spending, not to help small businesses pay more employees.
“House Republicans fought for fundamental pro-growth tax reform in our budget and through the work of the Joint Select Committee, but the Democrats rejected it both times. In the meantime, the constant threat of out-of-control spending, higher taxes, and excessive regulation from Washington has resulted in uncertainty for job creators and the worst unemployment since the Great Depression.
“The president’s major policies have already failed and are making things worse, in large part because he spent three years looking for ways to spend more taxpayer money when he should have addressed our fundamentally unfair tax code. Fairness is not found in taxing people and companies more, but in subsidizing them less. Americans deserve a tax code that is fairer, flatter, and simpler and will enable our businesses to compete with the rest of the world. What the president is offering isn’t it, but we stand ready and willing to work with him on comprehensive tax reform that will get the job done.” www.gop.gov/press-release/12/02/22/hensarling-statement-on-presidents-tax