Subsequent to the release of the Greenbook, the White House and Treasury Department released "The President's Framework for Business Tax Reform" (Feb 2012). In this report, President Obama lays out his five principles of business tax reform:
- "Eliminate dozens of tax loopholes and subsidies, broaden the base and cut the corporate tax rate to spur growth in America: The Framework would eliminate dozens of different tax expenditures and fundamentally reform the business tax base to reduce distortions that hurt productivity and growth. It would reinvest these savings to lower the corporate tax rate to 28 percent, putting the United States in line with major competitor countries and encouraging greater investment in America.
- Strengthen American manufacturing and innovation: The Framework would refocus the manufacturing deduction and use the savings to reduce the effective rate on manufacturing to no more than 25 percent, while encouraging greater research and development and the production of clean energy.
- Strengthen the international tax system, including establishing a new minimum tax on foreign earnings, to encourage domestic investment: Our tax system should not give companies an incentive to locate production overseas or engage in accounting games to shift profits abroad, eroding the U.S. tax base. Introducing a minimum tax on foreign earnings would help address these problems and discourage a global race to the bottom in tax rates
- Simplify and cut taxes for America’s small businesses: Tax reform should make tax filing simpler for small businesses and entrepreneurs so that they can focus on growing their businesses rather than filling out tax returns.
- Restore fiscal responsibility and not add a dime to the deficit: Business tax reform should be fully paid for and lead to greater fiscal responsibility than our current business tax system by either eliminating or making permanent and fully paying for temporary tax provisions now in the tax code."
- Why isn't this incorporated into the FY2013 revenue proposals ("Greenbook")?
- What loopholes? If the Administration is referring to rules being used as intended, but that we just don't like anymore, they should just say they don't like them or be more specific as to why they are no longer needed.
- How will the business reforms tie to overall reforms of President Obama's September 2011 report, Living Within Our Means and Investing in the Future?
- Are the touted simplifications true simplifications? Too often that word gets used while the tax law gets more complicated with special rules, new definitions to add to the list of old definitions, new limitations, exceptions, etc. I see that on page 12 of the report, President Obama proposes different tax rates for manufacturing, advanced manufacturing and non-manufacturing. Most states (other than California) have a sales tax exemption for manufacturing equipment and there are often court cases addressing the meaning of "manufacturing."