* GAO says corporate tax break costs jumps
* April 15 deadline for lobbyists to submit comments on revamp
* Corporate interests back lower rate but want to keep perks
By Kim Dixon
WASHINGTON, April 15 (Reuters) - The annual cost of corporate tax breaks, including one that eases shifting profits offshore and out of the U.S. taxman’s reach, has more than doubled to $180 billion since 1987, according to a report released on Monday.
Corporate tax deferral, the potential indefinite postponement of U.S. taxes on profits held offshore, makes up nearly a quarter of that sum, according to a Government Accountability Office report released on April 15, which is the deadline for individuals to file their tax returns.
The study comes as lawmakers work to revamp the U.S. tax code, a task expected to involve scrubbing the code of breaks to fund a cut in the top corporate income tax rate, now at 35 percent. Legislation is expected this year in the U.S. House of Representatives and possibly the Senate.
Comments from special interests streamed in late on Monday to the House committee that is leading the drive to overhaul the code. Midnight was the deadline for taxpayers to comment.
Prospects for an overhaul are unclear, with Republicans and Democrats squabbling over whether new revenue is needed, and corporate lobbyists gearing up to protect their tax perks.
The last major rewrite of the U.S. tax code occurred in 1986, as a divided Congress agreed to lower rates and cut deductions under Republican President Ronald Reagan. Since then the code has been larded up with special provisions.
Republican Representative Dave Camp, chairman of the House Ways & Means Committee, said that all tax perks potentially were on the chopping block, with the goal of simplifying the code and cutting individual and corporate tax rates.
Revenue lost by the government from corporate tax provisions rose to $180 billion in 2011 from $84 billion in 1987, according to the GAO. That figure was $116 billion in 2010, after which Congress further extended corporate tax write-offs.
Some Democrats in Congress want to restrict the methods companies use to avoid U.S. taxes.
“Today, many Americans are paying their federal income taxes to contribute their fair share to the cost of our national security and of vital public services, but much of corporate America is still not doing the same,” said Representative Lloyd Doggett, a Democrat from Texas who requested the GAO report and introduced legislation to tighten tax rules on Monday.
His bill will be almost certainly be dead on arrival in the Republican-controlled House, though parts of it may reemerge during tax talks.
Special interests and corporations, meanwhile, told the Ways and Means Committee in the comments due Monday that they backed the easy part of tax reform - lower rates. They were not shy, however, about defending their favored tax expenditure.
For example, the biggest corporate tax break in 2011 was accelerated depreciation of machinery and equipment, accounting for $76 billion of the revenue loss, according to GAO.
The comments from the U.S. Chamber of Commerce, a powerful business lobbying group, asked that breaks like accelerated depreciation be preserved, even with a lower tax rate.
Corporate America complains that the United States has the highest corporate income tax rate in the industrialized world, although the “effective” tax rate paid after deductions, credits, exemptions and other breaks is much lower.
Doggett plans to introduce several bills on Monday, including provisions to stiffen penalties for failing to disclose foreign profits and to require more disclosure.
Doggett’s legislation takes aim at tax deferral, which allows corporations not to pay tax on foreign profits as long as they never come into the United States. As a result, many U.S. companies stash foreign profits offshore. The bill would subject such income to U.S. tax.
U.S.-based multinational corporations are estimated to hold about $1.7 trillion offshore, in large part to avoid taxes.
Tax deferral by foreign units of U.S. companies accounted for $41 billion in 2011, GAO said. That has grown from about $11 billion in 2005, according to the Pew Charitable Trusts.
President Barack Obama has called for tightening deferral rules, but Republicans, and the business community, object.
Much of corporate America fervently opposes any limits to deferral, and many of the comments submitted called for moving to a territorial tax system, where most offshore profits would be largely exempt from U.S. taxes.