Sen. Rob Portman said today that he hopes to introduce a bipartisan bill to cut the corporate tax rate “early in this year.”
The Ohio Republican acknowledged that it will be a tough sell amid the partisan environment of a presidential election year, but he said it’s necessary to help spark economic growth and job creation.
“We’ve made our companies less competitive globally,” he told a group of Congressional staffers, lobbyists and reporters at a forum sponsored by the business coalition Reforming America’s Taxes Equitably.
Lowering the corporate tax rate is the mission of RATE, whose more than 25 member companies include FedEx, Macy’s, Walt Disney Co., Boeing, Ford and Raytheon. Portman, who served on the Joint Committee on Deficit Reduction, as a former U.S. trade representative and as one-time director of the Office of Management and Budget, said the current tax system has three main flaws: extremely high rates of about 35 percent, confusing tax preferences and an outdated approach to international profits. His proposal would lower the rate to 25 percent.
Portman said that repatriation — the taxes on overseas profits brought back to the United States — should be part of a broader corporate tax reform.
Sen. Bill Nelson (D-Fla.), the other lawmaker to address RATE today, said news reports of wealthy individuals and mega-corporations paying little or no taxes has given the public no confidence in the country’s tax system. Reforming the corporate tax structure is a good place to start, he said, to fix a system that dates back to the 1920s and has been kept alive with the help of “Band-Aids, splints and occasional surgery.”
Nelson added that the current system of tax preferences and loopholes makes for an incoherent regime in which some firms pay no taxes.
“Every little itch has been scratched, and it’s gotten out of control,” he said.
Like Portman, Nelson said it would be difficult to move a bill reducing the corporate tax rate before the November elections, but he said a lame-duck session and next year offer opportunities.
But it’s not just partisan politics that will stifle corporate tax reform, which could lower the overall rate.
RATE members who also spoke at the event offered a glimpse at the fractures within the business community, even within the coalition itself, which does not take a position on such details as whether a new corporate tax system should be a territorial one, as Portman said he favors.
When it comes to the kind of tax system, the “thoughts differ among the companies” in the coalition, explained Anne Buettner, Disney’s senior vice president for corporate taxes. And some of the companies, such as General Electric, that have made headlines recently for owing little or nothing in taxes in recent years are not among RATE’s members.
Economists participating in the RATE panel indicated that many corporate lobbyists, who earn their keep pushing for tax loopholes, and accountants who help firms exploit those loopholes would be reluctant to support an overhaul that obliterates their go-to policies.
“I’m not trying to put accountants or lobbyists out of business,” said Jason Fichtner, senior research fellow at George Mason University’s Mercatus Center and a former acting deputy commissioner of the Social Security Administration. But, he noted, the country needs a reformed corporate tax structure.
And at least in the near term, with tax reform on the agenda, tax lobbyists need not worry about going out of business, especially as companies and industries battle among themselves.