Corporate Tax Rate Cut Urged For Bush Plan

ByJohn S. McClenahen Although President Bush did not mention it when he announced his $1.6 trillion tax-cut plan Feb. 5, the White House is being urged to add to it a 10 percentage point reduction in the nominal 35% U.S. corporate tax rate. The reduction, to 25%, would be the first since 1986, and, according to the Washington-based American Council for Capital Formation (ACCF), would benefit non-capital intensive companies. Under the plan being advanced by a coalition headed by the ACCF, high-tech and other capital-intensive firms for whom faster business depreciation would mean more could forego the rate reduction and take the equivalent in accelerated capital cost recovery. The Bush plan is slated to be sent to the House and Senate Feb 8. Because of credits and other allowable adjustments to their tax bills, corporations in the U.S. currently have an effective tax rate of 30.7%, more than four percentage points below the nominal rate, figures Merrill Lynch & Co., New York.