US Chamber: What’s Really Inside Obama's Framework for Business Tax Reform

[Patricia M. McBride]

This came to me by way of the US Chamber of Commerce newsletter I recieve, but it originated in a Fox news article if you want to link over to it.  In the mean time, I will post the Chamber link for you.   I don't think there was much doubt that this will be a income creator for the government instead of a boon to help businesses and cut their tax rates...........another smoke and mirrors move by the administration.

 

 

March 6, 2012
Fox Business
Gail Buckner

The White House has been touting its proposed “Framework for Business Tax Reform” as a way to cut the corporate tax rate and eliminate loopholes and subsidies and strengthen American manufacturing and spur innovation all. The administration also touts it will simplify and cut taxes for small businesses, and encourage domestic investment.

What’s not to love?

Plenty, perhaps.

Whether you end up on the winning or losing side of this reform depends upon politics. In other words, are you one of the industries favored by this president? Alternative energy, for instance? There’s a tax incentive for that. Manufacturer? Your top tax rate will be lower than a service provider’s.

I’m not naïve. I recognize that the tax code is full of incentives that encourage both individuals and businesses to act in ways deemed to be positive or socially enhancing. That’s why there’s a tax deduction for charitable donations. I also acknowledge that our current tax code is overly complex, and that many aspects are outdated. I just don’t see how replacing old “preferences” with new ones is an improvement.

And let’s be honest: Although the top corporate tax rate is currently 35%, many companies don’t pay anything close to that under the current system. According to the Treasury Department, after taking deductions, writeoffs and other tax breaks into account, the “effective” tax rate a company pays varies widely, depending upon the business it’s in:

Agriculture, Forestry, Fishing and Hunting22%

Mining18%

Utilities14%

Construction31%

Manufacturing26%

Wholesale and Retail Trade31%

Transportation and Warehousing19%

Information25%

Insurance25%

Finance and Holding Companies28%

Real Estate23%

Leasing18%

All Services29%

Average Effective Actual Tax Rate26

Source: U.S. Department of the Treasury, Office of Tax Analysis based upon 2007-2008 data

In addition to lowering the maximum corporate tax rate to 28%, the administration would eliminate most of the tax breaks businesses currently receive. So many, in fact, that they more than makes up for the reduction in the tax rate. “The president’s proposal is designed to be a net revenue raiser,” according to Mark Luscombe, principal federal tax analyst at CCH, a global provider of tax information and software. “When you start eliminating a whole range of tax breaks, it adds up… Overall, there will be more paid.”

READ MORE HERE:  http://www.friendsoftheuschamber.com/article/what-s-really-inside-o...