Republicans Press Treasury To Support Tax Reform Allowing Corporations To Offshore More Profits
By Travis Waldron on Apr 12, 2013 at 9:35 am
Treasury Secretary Jack Lew appeared Thursday in front of the House Ways and Means Committee to testify about the Obama administration’s budget and corporate tax reform, and Republicans quickly peppered him with questions about the possibility of moving to a “territorial” tax system, favored by both the GOP and corporate lobbying groups, that would exempt most foreign profits from taxation.
Despite previous calls for generating revenue through corporate tax reform, the Obama budget calls for reform in a revenue-neutral manner. Obama has previously proposed a system that would institute a global minimum tax for corporations, which would exempt some profits but require that corporations pay a certain tax rate around the world. When Rep. Lynn Jenkins (R-KS) asked Lew if the administration was willing to move toward a territorial system, Lew said the administration still supported the global minimum reform but would “welcome a conversation” about how to reduce incentives for corporations to offshore profits and cost the United States needed revenue:
LEW: Congresswoman, I actually think the choice is not so stark as one or the other. Our system is a bit of hybrid already, and our proposal for the global minimum makes it more of a hybrid. We would welcome a conversation of how to set the dial in the right place so that it has the right incentives without losing revenue that we can’t afford to lose. I think there’s a solution in the middle here that if we work together in a bipartisan basis we can find.
Republicans and corporations often repeat the talking point that America has the highest corporate tax rate in the world, and while that is true for the nation’s 35 percent marginal rate, it doesn’t tell the entire story of American taxation. The U.S. collects less in corporate tax revenue as a percentage of GDP than all but one other industrialized country, and even as corporate profits hit a 60-year high in 2011, the effective corporate tax rate hit a 40-year low. Corporations haven’t paid an effective rate that equals the 35 percent top marginal rate in more than four decades.
more
http://thinkprogress.org/economy/2013/04/12/1857711/republicans-press-treasury-to-support-tax-reform-allowing-corporations-to-offshore-more-profits/