By Vicki Needham - 02/23/12 12:28 AM EST
RILA supports a territorial tax system, which is part of a Republican proposal, that would tax the domestic earnings of U.S. businesses and prevent the double taxation of their foreign operations abroad, which RILA argues puts them at a competitive disadvantage to foreign competitors.
"The president’s proposal is a significant step forward, and we hope the administration will work closely with those in Congress who have proposed going even further,” said Matthew Shay, NRF president and chief executive.
“Tax reform is a once-in-a-generation opportunity and we need to get it right," Shay said.
"Reform needs to address small businesses as well as corporations, and needs to be fair to all industries rather than favoring one over another.”
NRF has supported corporate tax reform that would eliminate most if not all credits and deductions rather than creating new ones, favoring a plan by House Ways and Means Committee Chairman Dave Camp (R-Mich.) that would lower the top rate to 25 percent for corporations and individuals.
Camp also has proposed switching the United States to a territorial system for taxing corporate profits, essentially shielding much of the profits a company makes outside the United States from U.S. taxes.
That proposal runs at odds with Obama’s plan for a minimum tax on foreign earnings, and providing incentives for bringing jobs back to U.S. shores.
Camp welcomed the White House plan but, as he did last week, chastised the administration for failing to propose a comprehensive reform of the tax code, individual and corporate.
Some tax experts are cautioning lawmakers that it will be difficult to make changes to the corporate code on its own without placing a greater burden on individual taxpayers, meaning they tax code should be tackled as a whole.
In addition, the chances of moving any type of overhaul in an election year seems unlikely, at best.
Retailers argue that they are few benefits for their industry in the tax code and they pay some the highest effective rates of any U.S. sector, often at or close to the full 35 percent statutory rate.
NRF points out that many retailers are small businesses that pay their taxes utilizing individual tax rates.
Obama administration officials, including Treasury Secretary Timothy Geithner, have said they want the tax-reform framework to jump-start negotiations with Congress.
Geithner is expected to meet with congressional leaders next week on the issue — one where Republicans and Democrats could reach a consensus, if not this year, possibly by the end of 2013.