WASHINGTON (Reuters) - A select group of chief executives meets for the first time as advisers to President Barack Obama on Thursday, when they will confront the thorny issue of how to trim the U.S. corporate tax rate.
The starting point is one of consensus: nearly every business gripes that the 35-percent top marginal corporate rate blunts their competitiveness against foreign-based peers, which generally enjoy much lower rates.
Democrats and Republicans also mostly agree on that point, and Obama says he backs paring the corporate rate, among the highest in the industrialized world.
“If not corporate taxes, where are you going to find bipartisan agreement?” said Dan Maffei, a former Democratic congressman now working on corporate tax reform at the centrist think tank Third Way.
But agreement on how to cut the rate is harder to find.
Obama wants to fund a rate cut by closing tax loopholes and slashing deductions enjoyed by America’s biggest companies.
Resistance from corporate giants to losing cherished tax breaks along with the political risk of tackling tax issues in the run-up to the 2012 presidential election make the prospects for meaningful reform in the next two years unlikely.
Obama tapped General Electric CEO Jeff Immelt to lead the panel. Former AOL Inc CEO Steve Case and Intel Corp Chief Executive Paul Otellini are on the panel.
Some of the panel’s most notable members may have tax advantages to protect.
General Electric and AOL are among those that have employed deductions, credits and other breaks to cut their effective tax rates to below 20 percent, according to Thomson Reuters research, which calculated rates paid using cash taxes divided by pretax income over the last five years available.
The average tax rate paid over the last five years by GE was 13 percent, by AOL 14 percent, and by Intel 27 percent, according to Thomson data. (See Starmine Data chart: link.reuters.com/bew28r)
Big multinational technology companies generally pay lower effective tax rates because they are able to move intellectual property abroad.
Companies not enjoying as many tax preferences, including panel members American Express and Comcast Corp., both pay close to the actual 35 percent rate.
Editing by Eric Walsh