WASHINGTON—President Barack Obama today proposed lowering corporate tax rates in exchange for eliminating loopholes in a renewed bid to strike a fiscal deal with rival Republicans.
The reheated tax reform plan, first proposed and then rejected by Republicans in 2011, is part of a renewed bid by the president to create a "better bargain" for the middle class in a second term thus far marked by few accomplishments.
Republicans, especially Tea Party conservatives, have rejected any proposals that would increase government revenue, insisting that only spending cuts can roll back the bloated deficit without further harming the sluggish economic recovery.
Seeking middle ground, the president gave a speech in Chattanooga, Tenn., calling for a simplification of the U.S. tax code that would lower the tax rate for businesses without worsening the deficit.
"Our current tax code is broken and too complex, with businesses that play by the rules paying a 35% tax rate while many corporations that can hire hundreds of lawyers pay virtually no taxes at all," the White House said in a statement. "That is why the president has called for a revenue-neutral simplification of our business tax code to eliminate loopholes that encourage companies to ship jobs overseas and establishes a top tax rate of 28%. Some businesses would pay less, some corporations would pay more, but everyone would pay their fair share."
In Chattanooga, Obama continued a ground campaign launched last week aimed at reviving interest in stalled economic initiatives, many of which date back to his first term.
Obama is seeking a "grand bargain" with rival Republicans that would simplify the tax code while boosting investment in education and infrastructure.
GOP Not Swayed
But with 2014 congressional elections on the horizon, the Republican-controlled House of Representatives has expressed little interest in working with the president.
The Republicans insist Obama's plans would only saddle corporations with more taxes while pouring more money into government programs they believe do not work.
An aide to Republican House Speaker John Boehner, speaking on condition of anonymity, roundly rejected the latest initiative.
The official insisted that any reforms apply to the corporate and individual tax codes, that all changes be revenue-neutral and that there be no additional "stimulus spending."
"The president is taking his idea of tax reform, making it worse, and then demanding ransom of more stimulus spending to get it," the official said. "Some bargain."
In the speech at an Amazon distribution center in Chattanooga, Obama was expected to hail signs of an improving economy, including the online retail giant's announcement Monday that it will hire another 7,000 U.S. workers.
Despite lingering high unemployment and low growth, Obama has insisted in a string of recent speeches that the economy is on the right track after his administration helped it to narrowly avoid another Great Depression in 2009.
Responding to Obama’s speech, Aric Newhouse, senior vice president of policy and government relations for the National Association of Manufacturers, called on the president and Congress to ensure that the plan addresses tax inequities faced by U.S. manufacturers.
"While it’s good news that President Obama is focusing on tax issues, solutions that pick winners and losers and increases the tax burden on businesses don’t benefit manufacturers," Newhouse said. "Tax reform must account for the nearly 70% of manufacturers that pay taxes at the individual rate. We look forward to working with the administration to achieve a positive tax climate that fosters global competitiveness for all manufacturers in the U.S."
Copyright Agence France-Presse, 2013