WASHINGTON (CNN) - The Treasury Department will unveil President Barack Obama's corporate tax reform plan Wednesday - a framework that would reduce the overall rate paid by corporations, a senior administration official told CNN.
The president's tax plan is intended to "enhance American competitiveness by simplifying the tax code and eliminating dozens of tax loopholes and subsidies, incentivizing job creation and investment here at home and lowering the business rate while broadening the tax base," the official said.
The proposal calls for lowering the overall corporate tax rate from 35% to 28%, and the effective rate for manufacturing to 25%.
The official, who laid out the plan's broad framework for CNN, said the proposal is essential to fixing a system that is "uncompetitive, unfair, and inefficient."
The official told CNN the lower rate would be largely funded by eliminating dozens of tax loopholes and subsidies, and broadening the business tax base.
The package would also encourage more research and development, and the production of clean energy. It would establish a new minimum tax on foreign earnings to discourage companies from shifting production or profits overseas.
The tax plan would also cut taxes and simplify the tax code for small businesses and entrepreneurs, the official said, while not adding to the U.S. deficit.
The Obama administration has been talking about unveiling a plan to fix the corporate tax system for well over a year.
In the State of the Union address and in subsequent speeches, Obama has called for ending tax breaks for companies that outsource jobs overseas and lowering rates for U.S. businesses that create jobs at home.
"Right now, companies get tax breaks for moving jobs and profits overseas," Obama said in his address to Congress in January. "Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it. So let's change it. "
Obama also said that it was time to end subsidies and tax breaks for the oil industry, which "rarely has been more profitable," while increasing tax credits for developing alternative energy sources.
Last year, the pressure for a corporate tax system fix heated up with news of General Electric's zero tax rate in 2010 due to profits overseas and losses at its financial unit. General Electric CEO Jeffrey Immelt is the chief of Obama's Council for Jobs and Competitiveness.
The current top corporate tax rate, among the highest in the world, has long been bemoaned by business leaders and tax experts. They say it discourages foreign investment in the United States and hinders the ability of U.S. companies to compete internationally. The bottom rate is 15%.
The Obama administration is expected to talk about lowering the top rate while axing some of the more than 130 business corporate tax breaks currently on the books and limiting companies' ability to shift profits to nations where tax rates are lower.
Treasury Secretary Tim Geithner told a Senate panel last week the plan will be an effort to find "common ground" on broad principles between Republicans and Democrats on Capitol Hill.
"We want to maximize the chance we can take advantage of that (common ground) to build consensus on
"In short, it will help level the playing field for businesses and allow the government to collect needed revenue while promoting economic growth," Geithner said in his written statement to the Senate panel.
CNNMoney's Jennifer Liberto, Jeanne Sahadi and CNN's Ed Payne contributed to this report.
I wonder if this eliminates the 10 year tax exemption for GM?
Makes sense and this is what the repos have been comlpaining about. Let's see how they react. What do you want to bet they find all kinds of fault with it. They really don't want to help American business. Obama 2012
Right. He was against it before he was for it. It will raise taxes so the libs will love it... His proposal to triple the tax rate on dividends for these same companies will do wonder for the economy – 44.8% next year under BO's plan vs. the 15% now. SHould do wonder for the so called "turn-around".
Oh, BTW Judy, the 10 year tax exemption will remain in place under this plan. SO the libs kill Mitt because he is rich and should pay more taxes. But, not a word from them (or their media shills) about this? Estimates come in at about $45 billion in tax breaks. Somehow this never gets mentioned, hmmm.
there is fault in it or not...if there is even you judy, can't hide from it. We know obama is going to shove it to the oil industry here... and guess what they will do...bingo...they will raise their prices and fools like you (judy) will pay for it.
Do you suppose Obama is catching on at last. Business will come back to the U.S. when they aren't taxed to death, of which computes to NO JOBS ! You wanta get rich? You're gonna have to do it yourself. One brick at a time.
Read the plan, don't listen to the shills. The media calls it a "massave tax cut" – LOL.
Here is an article that outlines how several major American corporations managed to pay no taxes on profits of $171 billion:
In fact, not only did these corporations pay no taxes, they actually received tax credits from Washington resulting in an overall taxation rate of negative 1.5 percent.
Something has to change.
Isn't this just ironic! Anytime a conservative offers a plan to lower tax rates, simplify the tax code and broaden the base, its just stupid Supply Side Economics that only benefits the "Rich" at the expense of the "middle class."
Oh but if liberal does then it makes total sense to them! It's nice to get the wrong people to do the right thing. To bad you'll never convince them the same economic principle does apply to income taxes as well. If you liberals would put your pitchforks down and stop defacating in parks you might take a minute to learn something from this.
Why what's so surprising about this? Obama is better at getting the Republican/big business concerns passed into law, than the actual Republicans are. – he did get the Republican version of healthcare reform passed into law. It is funny that they now call it Obamacare.
Tax reform from the corporate side as well as the individual taxpayer side is going to be terribly difficult. Romneys idea of tax reform is more wealth distribution to the rich via tax cuts. No jobs output, just tax breaks for the rich. Based in the economic environment we're in, that just can't happen. Anything more reasonable than than tax cuts for the rich is a winner with me.