Obama proposes to slash corporate tax rate, pare back tax breaks

Feb 22, 2012, 21:56 GMT

Washington - President Barack Obama's administration called Wednesday for a cut in the top US corporate income tax rate to 28 per cent from the current 35 per cent, one of the world's highest.

'Our corporate tax rate is now on pace to become the highest among all developed economies,' Treasury Secretary Timothy Geithner said in Washington.

The proposed cut would put the corporate tax rate 'close to the average of the rates that prevail across the other major developed economies,' he said.

Geithner said current rates stem from what he called a 'tax code full of special benefits for certain industries and certain business activities.' Without offering specifics, he suggested oil and gas companies were not paying their fair shares.

The plan, which leaves many details up to Congress, would retain tax breaks for renewable energy, manufacturing and corporate research. It would impose a new minimum tax on the overseas profits of US-based companies.

White House spokesman Jay Carney stressed that Congress should be able to take action on reforming corporate tax rates despite election-year politics.

'After all, there's a fair amount of consensus that simplifying the corporate tax code is a good idea - that broadening the base and lowering the rate is a good idea,' he said.

Carney pointed to proposals that would eliminate subsidies for certain industries, bolster US manufacturing, eliminate tax incentives for businesses to relocate overseas and encourage them to bring jobs back to the US.

The proposal comes as Republican candidates continue to battle for the conservative party's nomination against Obama, whom they blame for the sluggish recovery from the worst recession in decades.

The Republican presidential candidates are all proposing to lower corporate taxes without eliminating many tax breaks. Former Massachusetts governor Mitt Romney has proposed a 25-per-cent rate. Rick Santorum, the former Pennsylvania senator, has called for a 17.5-per-cent rate for most companies and no income tax on manufacturing.

Former House speaker Newt Gingrich wants a 12.5-per-cent rate. Representative Ron Paul of Texas wants to set the corporate rate at 15 per cent.