(Reuters) - The Treasury Department will roll out President Barack Obama’s corporate tax reform plan on Wednesday, administration officials said on Tuesday.
The plan will follow such principles as “fairness” that Obama laid out in his State of the Union address to Congress last month, the officials said.
A package had been expected by the end of February, though most analysts highly doubt that substantive legislation to overhaul the convoluted U.S. tax code could win approval in a deeply divided Congress in an election year.
After the presidential and congressional contests are decided in November, a number of major tax and budget issues will converge on Washington and new momentum for comprehensive tax reform may follow, according to some analysts.
Treasury Secretary Timothy Geithner told a Senate committee last week that “dozens and dozens” of tax loopholes were being targeted for closure, but that some tax incentives would be kept for “creating and building stuff in the United States.”
Potomac Research analyst Greg Valliere said: “Even if Geithner floats something and members of both parties say they’re interested, I simply cannot see a reform bill passing before the election, close to a zero percent chance.”
He added: “I suppose anything would be possible in a lame-duck session in December, but something this huge and complex will require a thorough vetting, and that could take a year - or much longer.”
The last major rewrite of the tax code came in 1986 under Republican President Ronald Reagan, who raised corporate taxes.
Republican presidential candidate Mitt Romney on Tuesday called for a flatter, fairer and simpler tax code. He is scheduled to make a major economic speech on Friday in Detroit.
Corporations are clamoring for a cut in corporate taxes from the top rate of 35 percent. That level is one of the world’s highest, though few U.S. corporations actually pay it due to assorted loopholes that make their effective tax rates lower.
Obama last week unveiled a $3.8 billion budget-and-tax proposal that called for aggressive government spending to boost the economy and higher taxes on the rich.
Republican Representative Dave Camp, chairman of the U.S. House of Representatives tax-law writing Ways and Means Committee, wants to slash the top corporate rate to 25 percent.
On Friday, Congress approved extending a payroll tax cut through the end of 2012. Its expiration will coincide with several other fiscal earthquakes: the expirations of individual tax cuts enacted under President George W. Bush, and $1.2 trillion in automatic budget cuts across all government programs imposed as part of last year’s deal to raise the debt ceiling.
Reporting by Jeff Mason, Kim Dixon, Kevin Drawbaugh, Patrick Temple-West; Editing by Eric Beech, Howard Goller