Obama challenges GOP to accept corporate tax deal

President Barack Obama on Tuesday offered congressional Republicans a new corporate tax cut and jobs spending package he said might “help break through some of the political logjam in Washington,” only to have GOP lawmakers immediately throw cold water on the idea.

The announcement and quick rejection underscored how elusive common ground is between the Democratic White House and Republicans in Congress on fiscal issues. The divide was particularly stark on the corporate tax proposal given that both parties generally have supported overhauling the code for businesses, though the White House and Republicans have differed on specifics. …

The U.S. has one of the highest corporate tax rates in the world, but many businesses avoid the full cost by taking advantage of deductions, credits and exemptions that Obama wants to eliminate. …

Obama isn't serious about reducing corporate tax rates. He is just trying to be the big man on campus and challenge the House Republicans.

The Republicans should counter with a lowered top rate for both the individual and corporate income taxes, but make it revenue neutral by eliminating deductions.

Historically, any time there has been a significant difference between the individual and corporate rates, businesses have responded by shifting their income taxation to the lowest one.

Obama also wants lawmakers to pour one-time revenue generated from the tax overhaul into jobs programs, including infrastructure, manufacturing and community colleges.

Here is the problem. The AP and the President and his minions would like the public to believe that this "corporate tax reduction" would help businesses. But Obama wants lawmakers to pour one-time revenue generated from the "tax overhaul" into jobs programs (additional subsidies... redistribute the wealth).

In reality, businesses "Effective Tax" rate would go up. Their taxes actually paid to the government would be more than they are now. How? Obama would eliminate all the deductions that so drastically cause the actual tax rate to be so different from the effective tax rate (Actual Paid).

Tax Lesson for FReepers that don't understand the difference: The AGI (Adjusted Gross Income) is what a company pays a tax rate on. This is after deductions. Corporate deductions are now specific to industries and even companies after years of meddling with laws. While the corporate tax rate may be 35%+, few companies actually pay this against the profits that they really make. They move the profits through accounting strategies off shore. They invest or spend specifically to lower their AGI. Then they apply tax credits through loopholes and additional accounting tactics to where they get their real tax burdens as low as they can. (BTW - This effort is all pretty costly in itself. It takes an army of lawyers and accountants depending on the size and scope of the business.) Some companies may only pay about 10% while others end up paying 29% after the dust settles and depending on which numbers you use as the basis of measuring. SIMPLY PUT: It's all smoke and mirrors. Companies get away with whatever the IRS let's them get away with. GE, Microsoft, Google, Amazon, Etc. The little guys don't have the resources to game the system as much but still enough to get below what Obama is proposing.

Bottom Line, the president wants to lower the tax rate and take away the deductions. This would force most, if not all to pay more. With deductions what they are, most mom and pop organizations get to show very little profit after they pay their staff, buy equipment, pay rent, insurance, office supplies, cleaning.... business expenses. If the fed is collecting more revenue, then they are taking more private money out of the economy! IT'S BAD!

The republicans should counter. "Make the tax rate 15% and you, Mr. President have a deal." He wouldn't take it because that rate might actually reduce revenue to the government, free up private capital and allow businesses to grow.

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