Obama Proposes Corporate Tax Overhaul
In the lead up to the upcoming U.S. federal election, the president has proposed a sensible reform for the corporate tax code.
After living in the U.S. most of my life, I can appreciate how little the average American (and many American corporations) pay in taxes compared to Canadians.
The corporate tax code is a hot topic, and has been for years. Some businesses claim the current rate of 35 per cent suffocates growth. Then we hear anecdotes of huge corporations taking advantage of loopholes so they don’t pay a cent (see last year’s tax return from General Electric).
The discrepancies make the problem that much more obvious – the U.S. tax code desperately needs an overhaul.
On Wednesday, President Barack Obama announced just such a proposal that would cut the corporate tax rate to 28 per cent. In exchange for a significantly lower rate, the proposal cleans up the current code to remove existing loopholes and unnecessary breaks.
The new code would also establish a minimum tax for U.S.-based companies with overseas operations.
Despite the lower rate, Obama’s administration estimates the cleaned-up code would pull in $250 billion more in revenues over the next 10 years. Those kind of additional revenues be a huge economic boon for our neighbours to the south.
But anyone who follows U.S. politics knows how this story will likely end. Congress’ usual shenanigans will probably prevent the bill from passing – either the bill will be watered down or filibustered. Here’s hoping the president has a political ace up his sleeve.
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