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Obama’s State of the Union address, his proposed 30 percent effective tax rate for people earning $1 million or more a year, and his Wednesday “framework” for business tax changes sketched out his political themes on at least four fronts: economic renewal; middle-class fairness; incentives for business activity to spur growth and hiring in the U.S.; and a healthier long-term balance sheet.
“It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America,” the president said in a written statement.
The administration decided to separate into two baskets its individual tax proposals and its corporate tax changes, which helps keep distinct Obama’s advocacy for working Americans over millionaires, and his backing for manufacturing jobs and innovative new employers in the United States, versus corporate profiteers (as embodied by large, multinational petroleum companies).
With gasoline and petroleum prices rising, and oil and gas company profits soaring, the administration reprised its proposal to raise revenues by repealing “tax preferences available for fossil fuels.” It also seeks to end an insurance-based tax shelter used by major corporations.
The administration offered no detailed estimates of either job creation or economic growth if Obama’s tax plan for businesses were to become law.
Administration officials said the president and his economic team consulted business community representatives before unveiling the latest collection of tax proposals, but chose not to adopt many recommendations backed by corporate advocates. The detractors in the business world were not hard to find.
In a written statement, the U.S. Chamber of Commerce said it wants to see Congress take up tax reform for individuals and businesses together to broaden the tax base and lower rates. The business lobby said it opposes the administration’s interest in raising revenues by eliminating benefits for certain companies in order to benefit others. The Chamber also complained Wednesday that the administration should end “double taxation” of profits earned by U.S. companies doing business outside the country, by adopting what’s known as a “territorial” tax system.
The National Federation of Independent Business, which represents small employers, assailed the administration for focusing on corporate tax provisions and not individual reforms, which would help small companies that file under those provisions. Obama’s framework, the NFIB said, “creates even more uncertainty by taking away the deductions that many small-business owners count on each year.”
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