Obama Seeks Corporate Tax-Break Cuts for Revenue

Monday, 14 Feb 2011 02:33 PM

 

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U.S. President Barack Obama revived earlier proposals to raise tens of billions by cutting tax breaks enjoyed by America's biggest companies, ideas that have floundered in Congress for several years.

Obama's 2012 budget request released Monday proposes to raise $129 billion over 10 years by limiting deferral of taxes on income earned abroad and curtailing what the White House calls abuse of foreign tax credits, among other provisions.

Last year's budget proposal was similar, seeking to raise about $122 billion by trimming loopholes.

Most of these ideas have stalled in Congress in the past two years, even when Democrats controlled both chambers. With Republicans now in power in the U.S. House, they are even less likely to move.

"Pretty clearly the business revenue raisers are retreads of last years," said Clint Stretch, a principal at Deloitte and a former congressional tax staffer. "They could not pass the 111th Congress; Hard to see how they could pass in the 112th."

Other White House proposals include a switch to "last-in, first out" accounting, which hurts some industries and an effort to limit "excess returns" on transfers of intellectual property offshore.

The White House also boosted the amount it wants to raise by trimming tax preferences for oil, gas and coal companies, to $46 billion over a decade from $38 billion, a year earlier.

Many lawmakers from both parties say they back a major tax code overhaul instead of tackling those tax provisions individually.

The president's budget did not contain a concrete proposal to revamp the tax code, but called on lawmakers to begin "the process of corporate tax reform," without adding to the deficit, expected to top $1.5 trillion this fiscal year.

Obama and Republicans both want to trim the top marginal 35 percent corporate tax rate, but differ on the need to fund a tax cut, which will likely delay an overhaul for a few years. Obama ties rate cuts to paring tax breaks, which will lead to a major lobbying blitz among industries vying to preserve their breaks.

"We cannot afford a tax code burdened with special interest tax breaks," the budget summary reads.

On the individual tax side, Obama renewed calls to let lower tax rates on high-income earners rise when they expire at the end of 2012 and repeated a bid to raise dividend taxes on high earners to 20 percent, from the current 15 percent.

Obama also re-introduced his bid to limit itemized deductions for high earners to 28 percent of income, a proposal that has met fierce resistance from lawmakers in recent years.

© 2014 Thomson/Reuters. All rights reserved.

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