Obama pledge to close corporate tax loopholes still core objective

PRESIDENT BARACK Obama remains committed to ending “unfair loopholes” and tax breaks for international corporations. However, congressional tax writers and others doubt that will happen without broader reforms, such as cutting the top corporate tax rate.

Mr Obama ignited fear in corporate America earlier this year when he proposed about $200 billion in tax increases. The increases would come over a decade through tightening corporate tax rules for multinational companies, mostly related to offshore profits.

A White House spokeswoman yesterday said the president is committed to those proposals, commenting on a front-page article in the Wall Street Journalthat said the Obama administration had shelved the plan.

“While we have an open door to the ideas and concerns of business leaders, we remain as committed to reforming international corporate taxation to end unfair loopholes as we were the day the president announced the plan,” said White House spokeswoman Jen Psaki.

US lawmakers and tax experts say the plan never had a chance on its own, given opposition from chairmen of several key congressional committees.

Former house ways and means committee staffer Marc Gerson said lawmakers, guided by the efforts of the business community, saw these as fundamental changes. “To the extent that they are considered at all, it will be considered as part of a larger consideration of reforming the international tax rules.”

Mr Obama’s crowded legislative agenda, which includes reforming US healthcare and obtaining stricter financial services regulation means any tax proposals are unlikely to advance until 2010.

The house ways and means committee is working on a broader plan to overhaul the tax code, which would include many of Mr Obama’s ideas and cut the top corporate rate.

The US has among the highest corporate tax rates in the world, at 35 per cent. Ways and means committee chairman Charles Rangel, a Democrat, is looking at lowering the rate to 28 per cent, or even lower. “He is willing to go even lower if others come forward with loopholes to close,” Mr Rangel’s spokesman said. – (Reuters)