Official: Administration to unveil corporate tax framework on Wednesday

The Obama administration will unveil its long-awaited framework on corporate tax reform on Wednesday, according to a senior administration official.

President Obama has worked to make economic fairness and income inequality the central topic of the presidential campaign in recent months, and administration officials have said of late that their corporate tax proposals would be tougher on businesses than Republican plans.

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The administration was mum on the details of the proposal on Tuesday evening, but the president previewed his corporate tax approach in last month’s State of the Union address.

“Right now, companies get tax breaks for moving jobs and profits overseas,” Obama said. “Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it.”

The president specifically proposed scrapping tax breaks for companies that send jobs overseas, and implementing a minimum tax for U.S. companies that have offshore operations.

Those companies, known as multinationals, can take advantage of what are often much lower corporate tax rates offered in other countries.

Obama has also called in recent weeks for bolstering tax preferences for American manufacturers, including extending a provision that allows companies to expense the full costs of certain purchases and doubling a deduction received by high-tech manufacturers.

Even with the president’s preview, key lawmakers in both parties — including Rep. Dave Camp (R-Mich.) and Sen. Max BaucusMax Sieben BaucusOvernight Defense: McCain honored in Capitol ceremony | Mattis extends border deployment | Trump to embark on four-country trip after midterms Congress gives McCain the highest honor Judge boots Green Party from Montana ballot in boost to Tester MORE (D-Mont.), the top two tax-writers in Congress — are doubtless more than ready to see the fully fleshed-out framework, which has been discussed and awaited for months.

But even with the release of the administration framework, most Washington observers are deeply skeptical that tax reform can be completed in this election year.

Treasury Secretary Timothy Geithner suggested, in several rounds of testimony on Capitol Hill last week, that the corporate tax reform structure would propose ending dozens of tax preferences, and stop short of being a full-blown legislative proposal.

“We're going to take that approach because we actually think — this may not be true, but we actually think that there's a lot of common ground in the broad elements of what we heard from the Hill on the corporate side, and so we want to maximize the chance we can take advantage of that to build consensus on something that's going to work,” Geithner told the Senate Finance Committee.

Geithner has also discussed lowering the top corporate rate — which, at 35 percent, is among the highest in the industrialized world – to become more in line with America’s trading partners. In the past, the Treasury secretary has said he hopes to bring the rate down to the high 20s.

Meanwhile, Republicans like Camp and Rep. Paul RyanPaul Davis RyanAmash storm hits Capitol Hill Debate with Donald Trump? Just say no Ex-Trump adviser says GOP needs a better health-care message for 2020 MORE (R-Wis.), the House GOP budget guru, have called for lowering both the top corporate and individual rate to 25 percent, while scrapping an array of tax preferences.

Lawmakers from both parties have also called for tackling both codes together, given that many small businesses pay taxes through the individual code.

Camp has also proposed switching the United States to a so-called territorial system for taxing corporate profits, which would essentially shield much of the profits a company makes outside the U.S. from American taxation.

But that proposal is widely seen as being at odds with Obama’s plan for a minimum tax for multinationals.

The push for tax reform could face other roadblocks as well: the Joint Committee on Taxation reported last year that getting rid of a wide range of tax incentives would only pay to lower the corporate rate to 28 percent.

Republicans have dismissed that estimate, requested by Rep. Sandy Levin (D-Mich.), as incomplete.

The administration proposal also comes the same week that Mitt Romney, who is seeking the GOP presidential nomination, is set to unveil a beefed-up set of tax proposals.

The former Massachusetts governor had, much like House Republicans, already called for a 25 percent corporate rate and a territorial system.

Obama, in his campaign, is also expected to highlight a slew of tax proposals on the individual side as he works to paint the GOP as defenders of tax breaks for the rich, even at the expense of the middle class and poor.

Those proposals include the so-called Buffett Rule, named after the billionaire investor Warren Buffett, which states that those making north of $1 million a year should pay a higher tax rate than middle-class families.