By Erik Wasson - 01/25/12 06:20 PM EST
The second change would target an existing domestic production incentive on manufacturers who create jobs in the United States and double it for “advanced manufacturing.”
The third change would provide $6 billion in targeted assistance to communities affected by job loss. The tax credit would support qualified investments to escape a death “spiral,” Sperling said.
The fourth change would provide $5 billion in new clean energy manufacturing tax credits.
The fifth would allow 100 percent of investments in plants and equipment to be expensed. This costs $4 billion in revenue.
The other changes would be paid for by closing a loophole that exempts profits on “intangible property,” such as patent royalties, when those properties are transferred overseas.
NEC Deputy Director Jason Furman said that House Ways and Means Committee Chairman Dave Camp (R-Mich.) has floated the idea in draft form. The intagible property loophole closer was one of several options put out for comment in the context of transitioning to a territorial tax system.
Sperling said that the focus had moved to manufacturing because the United States has an opportunity to reverse 30 years of job losses in the sector as labor costs rise in China and productivity increases here.
He said the proposed changes could be enough to convince some manufacturers to “think twice” before taking jobs abroad, noting that manufacturing is key to the development of intellectual property and spawns 90 percent of patents.
“These proposals are united by their focus on ensuring our tax code is reformed to encourage and reward job creation and adding value for our economy and our workers,” Sperling said.
He said that the United States has no good policy tools to stop communities from falling into a "vicious downward spiral" when jobs are off-shored. Because of this, Obama is backing the communities tax credit.
The six proposals will be part of the 2013 budget, which is being released Feb. 13.
Sperling said that “around” that time a plan for corporate tax reform will be released, but he would not say how much detail that plan will contain.
The plan is to include a “minimum tax” on overseas profits, and it is not clear if the White House is prepared to specify the rate.
U.S. Chamber of Commerce chief tax counsel Caroline Harris said Wednesday the blueprint as detailed so far actually hurts U.S. competitiveness.
“I would say it is anti-business,” she said. Harris said that the change to domestic production credits is actually a punishment for oil-and-gas companies, which will make energy prices increase.
On top of that, the proposal so far does not convert the United States to a territorial tax system where corporations are only taxed on profits made inside the United States.
Better for business would be to lower corporate tax rates, convert to a territorial system and reduce complexity to lower compliance costs.
The six new changes proposed by the White House go in the opposite direction, she said.
“It actually proposed more provisions and that adds complexity,” Harris said.
Harris said that the Chamber is seeking more information before judging the idea of an international minimum tax.