| WASHINGTON, July 30
WASHINGTON, July 30 President Barack Obama's bid
to slash corporate taxes on its face might seem to be a
concession to win Republican and business support, but it landed
with a thud among those groups and has little chance of becoming
Some in Washington said the plan was most likely White House
positioning designed to contrast the president's compromising
spirit with Republican stubbornness ahead of partisan fiscal
fights expected after Labor Day.
One battle will revolve around a Sept. 30 deadline to fund
the government and the other around raising the government's
borrowing authority, known as the debt ceiling, sometime after
"We have some really big moments coming up and the question
is, who is going to blink on the (budget) and who is going to
blink on the debt limit?" said Patrick Griffin, assistant
director for the Center for Congressional and Presidential
studies at American University, who worked as a legislative aide
for Democratic President Bill Clinton and for Senate Democrats
in years past.
Obama outlined a familiar set of ideas in his latest
economic speech in Tennessee on Tuesday, repeating his backing
for cutting the corporate tax rate to 28 percent from 35
percent, and giving manufacturers a preferred 25 percent rate.
White House economic adviser Gene Sperling told reporters it
combines measures Republicans have clamored for - namely lower
corporate rates - with new spending on politically popular items
backed by Democrats, such as infrastructure and education.
Obama's new spending would be funded by one-time revenue
boosts from business reforms included in Obama's plan, such as
curbing accelerated write-offs of investments, Sperling said.
But Republicans, particularly in the U.S. House of
Representatives, are unlikely to back new spending. Indeed, they
are preparing for the fall showdowns with demands for more
PLAN LEAVES OUT PASS-THROUGHS
In the business community, there were complaints that
Obama's corporate ideas ignore a key issue of how to handle
taxation of so-called pass-through businesses. Because of the
way they are organized, profits earned by pass-through entities
flow through straight to owners, avoiding the corporate tax.
These businesses - ranging from mom-and-pop stores to law
firms and hedge funds - would not be affected by Obama's plan
because they are subject to individual tax rates, which now top
out at 39.6 percent.
Reactions from business people were mixed.
Ian Read, the chief executive of Pfizer, the world's biggest
drug company, welcomed a corporate rate cut in an interview with
Reuters: "The devil is always in the details on these type of
things, but I would welcome a change that allows us to have an
effective tax rate that is competitive with most of our
competitors outside," he said.
But Chris Whitcomb, tax counsel for the National Federation
of Independent Business, a powerful lobbying group in
Washington, said the proposal leaves his members out in the
"If you don't address provisions on both sides of the code,
you'll create complications," Whitcomb said. "The bottom line is
we don't think this is doable."
Tax-writers in the House and Senate are working on
comprehensive tax reform that would scrub the code clean of
special interest breaks in order to fund lower rates. None back
White House adviser Sperling was asked but did not respond
to a question on his call with reporters about how pass-through
businesses would be treated.
Sperling also said the plan did not include a one-time
"repatriation" or tax holiday on foreign earnings, a proposal
many Republicans do back.
"It's clever politics. Obama can say he favors tax reform
and creating infrastructure jobs, all in one package," said Greg
Valliere, who advises investors at Potomac Research in
Washington. "This is all about putting Republicans on the
defensive, making them look obstructionist."