Impact of Obama Jobs Panel’s Tax Advice Likely Limited
President Barack Obamaâ€™s corporate â€śJobs Council,â€ť a whoâ€™s who of corporate titans including General Electric chairman Jeff Immelt and luminaries from American Express and Facebook said in a report on Tuesday they recommendedÂ . . .Â cutting corporate tax rates.
Perhaps unsurprising, given the vast majority of the panel are corporate officers — also on the committee are union umbrella AFL-CIO president Richard Trumka, and Roger Ferguson, chief executive of TIAA-CREF, one of the biggest providers of U.S. pension funds — but also unlikely toÂ have much impact, despite the big names behind it.
The council called on lawmakers and the president to begin work â€śimmediatelyâ€ť on corporate tax reform.
Obama could mention it in his State of the Union address and in his forthcoming budget, but reformers know they are several years out from a revamp of the tax code.
Arguing that the corporate tax rates in the United States —topping out at 35 percent â€“ are way too steep, the group said trimming them would boost investments within U.S. borders. That idea has bipartisan support â€“ including from Obama, a Democrat,Â and congressional Republicans.
The tricky part is the second of the council’s tax recommendations, â€śbroadening the baseâ€ťÂ or trimming what some might call loopholes to make sure most businesses are subject to roughly equal rates of taxation.
Most agree the U.S. tax code is sprawling and counterproductive, loaded with special breaks for select individuals and industries leading to high administrative costs and low revenue collection.
Tax-writers in the U.S. Congress have been holding hearings for about a year mulling the intricacies of the U.S. tax code, but no one expects an overhaul any time soon â€“ especially in an election year. The last rewrite in 1986 took several years of groundwork.
Obamaâ€™s own Treasury Department has shelved a plan to overhaul the corporate side of the code, after criticism that tackling only business taxes would leave business owners subject to individual taxes paying higher taxes but losing special breaks.
The council itself highlights the challenges reform will face. While calling for an end to special corporate tax exemptions, the group also put in a plugÂ for its ownÂ favorite tax incentive, the research and experimentation tax credit. The report calls for expanding that break, which primarily benefits the biggest U.S. companies and has bipartisan support, and making it permanent.
The jobs panel took no stance on one of the toughest corporate tax questions, whether to not to move to a so-called territorial system, where foreign profits earned by U.S. multinationals would not be taxed.
Many businesses and Republicans favor this view. Others say it will just lead to more offshoring of U.S. jobs. The group said it is working on moving toward a consensus.