Camp entered the fiscal cliff negotiations with the president aiming to get his commitment to a tax package that goes beyond raising rates and revenue.
The idea that corporate taxes could be thrown into the mix in 2013 was not entirely unexpected, and it did not immediately win over House Republicans, who would be in charge of rewriting the tax code next year, largely because their broader objections to Obama’s negotiating posture still stand.
“Everything [Obama] wants, he wants now,” said Rep. Wally Herger, a California Republican on the tax writing House Ways and Means Committee. “Everything that would be some kind of negotiation or a compromise he wants to give us mańana.”
Another senior Ways and Means member, Rep. Pat Tiberi, R-Ohio, laughed when asked about the latest White House offer to include a corporate tax overhaul. “It’s just hard to know what the president really thinks,” he said.
Yet Republicans have reason to be heartened by the offer. A complete overhaul of the tax code has been a party priority since the start of the 112th Congress. Speaker John A. Boehner, R-Ohio, and Ways and Means Chairman Dave Camp, R-Mich., entered the fiscal cliff negotiations with the president aiming to get his commitment to a tax package that goes beyond raising rates and revenue, and they appear to be making progress on that front.
In an interview with CBS News on Wednesday morning, Camp echoed concerns expressed by other Republicans, but nonetheless said that the president’s movement on the corporate tax issue was “encouraging.”
In fact, Obama has been talking about corporate taxes for some time. He first pledged to reduce the corporate tax rate and eliminate special preferences in his 2011 State of the Union address. A promised blueprint to achieve his goals was finally offered about a year later.
Until now, however, Obama had not said when he planned to tackle a corporate tax overhaul, suggesting only that it was something that he would like to accomplish in his second term.
For many lawmakers, the underlying reason for changing corporate taxes is the globalization that has so fundamentally altered the business landscape, creating competition between companies around the globe.
Like many political figures on both sides of the aisle, Obama has expressed concern that the U.S. corporate tax rate, at 35 percent, is a drag on the economy because it is the highest in the industrialized world. His blueprint would lower the rate to 28 percent but would pay for the rate reduction by eliminating tax breaks many businesses use to reduce an effective tax burden that brings down the final tax liabilities for companies.
The plan the administration unveiled in February would raise an additional $250 billion over 10 years, and it carries other goals the White House would like to achieve.
“Our tax system should not give companies an incentive to locate production overseas or engage in accounting games to shift profits abroad, eroding the U.S. tax base,” the White House said in a statement on its plan.
According to the administration, the options for raising revenue include limiting the deductibility of interest tied to the debt held by businesses and requiring companies to write off the cost of their depreciable assets over a longer period than is now required.