P&G, big U.S. firms push for lower corporate rate
* House Ways and Means panel meets on tax code overhaul
* Hearing on heels of Obama effort to court business
By Kim Dixon
WASHINGTON, Jan 20 (Reuters) - The top executive of Procter & Gamble (PG.N) will take corporate America's case for a lower tax rate to U.S. lawmakers on Thursday, and also call for an end to taxation of foreign-earned profits.
Multinational companies say the top 35 percent corporate tax rate hamstrings them competitively against foreign-based rivals, most of whom are subject to far lower rates.
The House of Representatives Ways and Means Committee hearing, the first in a series expected in Congress this year on simplifying the U.S. tax code, gives them a chance to press their case.
"If we are handicapped by an uncompetitive corporate tax system, we will slow the growth of the U.S. economy to the benefit of our competitors," Procter & Gamble Chief Executive Robert McDonald will tell the tax-writing lawmakers, according to prepared remarks for the panel.
McDonald is speaking on behalf of the Business Roundtable, a lobbying group composed of big corporations. The Chamber of Commerce has also submitted testimony calling for similar tax changes.
Also appearing is U.S. Taxpayer Advocate Nina Olson, a watchdog within the Internal Revenue Service. Olson earlier this month said the single biggest challenge facing taxpayers is the code's complexity.
In prepared testimony, Olson said a "dirty little secret" is that the tax breaks that must be trimmed to simplify the code "generally benefit the masses," not just special interests.
Representative Dave Camp, the Republican who chairs the Ways and Means Committee, told Reuters earlier this week the hearing is the first step in a debate about the tax code. "There is quite a bit of groundwork that needs to be done."
Camp said a reworking of the code must address the individual and corporate tax rates together because so many businesses are organized as "pass through" entities that allow them to pay the individual tax rate, which also tops out at 35 percent but gives them other tax advantages.
It took several years to cement a deal that led to the last major tax reform act, brokered in 1986 between then-President Ronald Reagan, a Republican, and a Democratic-led House.
President Barack Obama, a Democrat whose first two budgets proposed raising tens of billions of dollars by closing what he called tax loopholes abused by big companies, has made efforts to recently to court U.S. business.
Obama in recent weeks has said he wants a rewrite of the tax code, and started a debate on the corporate tax rate.
That discussion began in earnest when Secretary of the Treasury Timothy Geithner met with chief financial officers from big corporations like General Electric Co (GE.N) and Microsoft Corp (MSFT.O) last week.
Republicans and Democrats agree the top corporate rate may hurt U.S. competitiveness but Democrats want the myriad of deductions and credits in the code -- many of which they dub as "loopholes" -- trimmed to fund any overall corporate tax cut. (Reporting by Kim Dixon; Editing by Tim Dobbyn)
- French warplanes search Mali desert for crashed Air Algerie plane |
- At least 15 killed by Israeli shelling of Gaza school; toll exceeds 760 |
- Exclusive: Ukraine rebel commander acknowledges fighters had BUK missile
- U.S. House panel votes to authorize lawsuit against Obama
- Sierra Leone's chief Ebola doctor contracts the virus