The White House today announced a new tax reform plan for corporations. The plan would lower rates from 35% to 28%. However the deduction would be paid for by eliminating deductions, loopholes, and subsidies. Manufacturing would not have to pay a higher tax rate than 25%. The United States has one of the highest federal income tax rates for an industrialized country. The plan also says there should be a minimum rate for foreign income. This rate would be x-the foreign nation’s tax rate. The x is because the plan doesn’t give a specific number. The Administration says that the plan will not add a dime to the deficit.
This plan could be politically risky for Republicans because if they do not pass it, the President can say their anti-tax reform. Tax reform as been a cornerstone of the Republicans’ platform. The Republicans have been trying to paint President Obama as a tax-raising liberal. The move comes in a series where President Obama gives Republicans politically tricky plans. One other includes the President’s plan to restructure the Commerce Department, which has not been implemented.