* Camp wants top individual, corporate rates cut
* Backs 'territorial system' for foreign profits
* Proposes 5.25 pct repatriation tax holiday
By Kevin Drawbaugh and Patrick Temple-West
WASHINGTON, Oct 26 Tax rates would be slashed
and U.S. corporations would get big tax breaks on their
offshore profits under a plan offered on Wednesday by a senior
In a move that shifts the tax reform and deficit debate,
Dave Camp, chairman of the tax-writing House Ways and Means
Committee, called for cutting the top tax rates for individuals
and corporations to 25 percent from 35 percent.
He proposed adopting a "territorial system" that would
exempt 95 percent of corporations' overseas profits from the
U.S. corporate income tax. In addition, he urged a transitional
tax on corporate profits currently stashed offshore of 5.25
percent, "whether or not such earnings are repatriated."
Camp's plan taps into proposals that likely could pass the
Republican-controlled House of Representatives. Democrats would
put up a fight over them in the House and Senate, but some of
the proposals already have bipartisan support.
A summary on the committee's website said the plan "would
lower top tax rates for both individuals and employers to 25
percent" and "transition the United States ... to a territorial
Camp said he wants to offset the tax cuts that he proposes
with unspecified "base-broadening provisions." That would
likely mean closing tax loopholes and ending certain deductions
and credits. Camp provided no details on how to do that.
"For individuals, this plan would almost certainly result
in another massive tax cut for many of the very wealthy," said
Representative Sander Levin, the top Ways & Means Democrat.
Levin said the Camp plan would likely shift more of the tax
burden onto working families by ending middle class tax
benefits such as the mortgage interest deduction.
Camp's proposals come as the pace of negotiations within
Congress' "super committee" on deficit reduction accelerates
toward a Nov. 23 deadline. By that date, the panel must find at
least $1.2 trillion in budget savings over 10 years.
CAMP ISSUES CHALLENGE
Camp is a member of the panel, but he made his tax reform
proposals on his own, in his role as chairman, throwing down a
challenge to Democrats hours after their super committee
members released a deficit-cutting plan.
Democrats on Tuesday unveiled a plan proposing up to $3
trillion in measures to slash the budget deficit, including
revenue increases and cuts to the Medicare health program.
With budget deficits topping $1 trillion annually, ratings
agencies are watching closely for signs that Congress and the
Obama administration can put the U.S. fiscal house in order.
Corporations issued a barrage of statements praising the
Camp plan only minutes after it was released.
"We are pleased that Chairman Camp included foreign
earnings repatriation in his tax reform proposal," said Karen
Olick, campaign manager for WIN America, a lobbying group
backed by large multinationals including Apple Inc ,
Cisco Systems Inc , Google Inc , Microsoft Corp , Oracle Corp and Pfizer Inc .
The Business Roundtable, a lobbying group for chief
executives of major corporations, also praised Camp's plan.
Taking a critical view, Democratic Representative Lloyd
Doggett said, "While Halloween approaches, no matter how you
dress up this proposal, a territorial tax system is about
shipping more jobs and profits to another country's territory.
"It encourages U.S. multinational corporations to expand
abroad rather than at home."
FOREIGN PROFITS IN FOCUS
Under current law, U.S. corporations must pay tax -- most
at the top rate of 35 percent -- on profits earned at home or
abroad, minus credits for taxes paid to foreign governments.
For overseas profits, the U.S. corporate income tax need not be
paid, however, until earnings come into the United States.
While some companies regularly bring home, or repatriate,
their foreign income, many do not. Instead, they park these
profits overseas to avoid taxes. An estimated $1.2 trillion to
$1.5 trillion is stashed abroad for this reason.
Corporations have been waging a multimillion-dollar
lobbying campaign for months seeking an offshore profits tax
repatriation holiday and a territorial system.
Public interest groups immediately attacked the Camp plan,
with the left-leaning Tax Justice Network saying the plan's
foreign profits provisions would worsen the deficit and
encourage companies to shift profits and jobs overseas.