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President Barack Obama’s plan to overhaul the corporate tax code was met with near universal derision from Republicans, who dismissed the framework as nothing more than an election-year ploy.
The outline, unveiled this morning by Treasury Secretary Timothy Geithner, would eliminate dozens of politically unpopular tax loopholes while lowering some corporate rates in what the Obama administration says is an effort to make American companies more competitive.
“The rising fortunes of emerging economies offer tremendous economic opportunities for the United States. But if we are going to be able to take advantage of those opportunities, we have to encourage companies — both American companies and foreign companies — to design and create and build things here,” Geithner told reporters.
But Republicans panned the plan —which was released as former Massachusetts Gov. Mitt Romney (R) began rolling out his own presidential campaign platform on taxes — as little more than a political document.
Senate Finance ranking member Orrin Hatch (Utah) — who may be content for tax reform to wither on the vine this year in the hope that he becomes Finance chairman in 2013 — slammed the proposal as “a set of bullet points designed more for the campaign trail than an actual blueprint for fixing our tax code.”
Hatch went on to argue the proposal is “profoundly disappointing in its lack of detail” and that, “this so-called framework is murky, ill-defined and contradictory to the goal of reducing complexity and making our tax code more efficient.”
Romney also criticized Obama’s tax plan.
“He is proposing today a corporate tax plan which I understand sounds like he’s lowering taxes but in fact he’s raising taxes — raising taxes on businesses by hundreds of millions of dollars,” Romney said today during a campaign stop in Chandler, Ariz., USA Today reported.
The administration insists the proposal is a serious effort to begin working on corporate tax reform, but there were some signs of politics. For instance, although the plan offers few specifics, it pointedly calls for the elimination of the “carried interest” loophole, which allows extremely wealthy Americans to pay a low, 15 percent tax rate.
Romney has acknowledged paying that rate — which is significantly lower than most American workers pay — and Democrats have hammered him over the issue for weeks.
Additionally, the administration did not inform Speaker John Boehner (Ohio) of the plan until this morning, well after details began to leak to the press. And, in a rare moment of bluntness, a senior administration official acknowledged, “Sometimes we tell them an hour before we tell [the media], sometimes we tell [the media] an hour before them.”
GOP leaders also reacted critically.
Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (Ky.), argued the plan is part of what the GOP contends is a failed record on the economy.
“First it was a stimulus bill that led to fewer jobs. Then it was a health care bill that led to higher costs. Now it’s a ‘framework’ for corporate tax ‘reform’ that isn’t focused on protecting jobs, small businesses and families. This isn’t a record of success,” Stewart said.
Boehner spokesman Brendan Buck struck a similar cord, raising concerns that the plan will hurt small businesses.
“Tax reform should encourage entrepreneurs, not punish the millions of small businesses that pay taxes at individual income rates. This outline continues to pick winners and losers at the expense of a more competitive tax code and lower rates,” Buck said.
K Street also reacted coolly to the plan, raising its own concerns about the political nature of the outline.
“I suspect it will encourage Congressional Republicans to be even more aggressive on tax reform,” said Bruce Thompson, a tax expert with Van Scoyoc Associates. “I don’t think they want to sit idly by and let the president steal the tax reform banner.”
Others questioned why the administration would pursue corporate tax reform as a political issue at all.
“I have never thought corporate tax reform was an issue with a lot of political zip to it,” said Kenneth Kies, the managing director of the Federal Policy Group. “The average voter doesn’t care about the corporate tax reform.”
When asked how important the proposals could be in the lame duck session this year, Kies said that will “depend on whether or not Obama gets a second term. If he doesn’t, this will be just another footnote in history, just like all the other tax proposals.” He added, “If he does get elected, this could be the first step.”
In an measured statement, Camp said that while he is “pleased to see the administration’s proposal adopts many of the same principles of reform that House Republicans have championed,” there remain significant differences to work out.
“While this is a good step by the administration, I will borrow from the president’s own words to Congress from just yesterday: ‘Don’t stop here. Keep going,’” he added.
Democrats largely praised the proposal.
“The president’s proposal would lower the business tax rate by broadening the base through elimination of those loopholes that distort business decision making,” House Minority Whip Steny Hoyer said.
“It also goes hand-in-hand with House Democrats’ Make It In America comprehensive jobs plan by providing incentives for manufacturing and research that will help us retain our role as the world’s innovation leader,” the Maryland Democrat added.
Ways and Means ranking member Sander Levin (D-Mich.) was equally supportive, arguing the outline “put[s] the focus of corporate tax reform where it needs to be: on promoting investment, job creation and especially manufacturing in the United States, not overseas.”
Janie Lorber contributed to this report