Tag Archive | "corporate tax reform"

More Business Might Be Forced to Pay U.S. Corporate Tax

The administration of President Obama is taking into consideration a plan that would oblige more businesses to pay the corporate income tax in a reform that might be released earlier this month, an industry group said on Monday.

The tax reform proposal entitles businesses with gross receipts more than $50 million to pay the corporate income tax in lieu of the individual income tax. In this case, business partnerships such as hedge firms and law firms are likely to be most affected.

According to a letter from Mary Lyman, the executive director of National Association of Publicly Traded Partnerships, the proposal includes corporate taxation for $50 million or more pass-through entity gross receipts.

Pass-through entities mean both income and tax liability are being carried on by the individual, instead of the company. Although the highest corporate tax rate is currently equal to the highest individual tax rate, several firms still have income tax at lower rates for capital gains.

The reform is being worked by the Treasury Department staff. While cutting on credits and deductions, the U.S. administration is creating a plan to cut down the 35 percent corporate tax rate. It is currently the highest rate for corporate tax in the entire world.

According to a source, details about the reform could materialize as early as this month. Several lawmakers are against the corporate tax reform alone. However, Lyman believes several businesses would object to the plans that would force them to pay corporate taxes as well.

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Geithner Evaluating Support for Broader Tax Reform

Obama’s administration is investigating methods to improve tax incentives for corporate investments in the United States, Treasury Secretary Timothy Geithner informed on Wednesday before his meeting with chief financial officers from some of the biggest companies in America.

Geithner said in comments after his speech at John Hopkins University’s School of Advanced International Studies that they are examining whether they can get political support for a big tax change. This change is revenue neutral but would improve incentives for investing in the United States.

He is expected to gather with CFOs of major companies in the U.S that includes Microsoft Corp and Cisco Systems on Friday to discuss ideas for simplifying, as well as trimming the corporate tax that is almost the highest tax in the world of industry.

Corporate tax reform, according to administration officials, is the foundation for a discussion about comprehensive tax. But, it would be difficult to pass any meaningful reform for the next two years if the Congress is divided.

Several White House officials have said that they concur with the companies’ main complaint that the federal corporate tax rate at 35 percent is way too high. Both parties have also agreed that the tax code is too heavy and troublesome.

However, administration officials and other people noted that deductions, as well as loopholes make it uncommon for companies to pay the 35 percent rate.

Dorothy Coleman, the vice-president of tax and economic policy at the National Association of Manufacturers, told that cutting the corporate tax rate is a big issue for the group’s members, many of whom will attend the Friday meeting.

Coleman said that they are looking at the issue as a start of a debate and a sign that the administration is serious.

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