Corporate Taxes Enter Debt Debate

By JOHN HARWOOD
NYT

The Obama administration is preparing to inject an unpredictable new variable into its economic policy clash with Republicans: a plan to overhaul corporate taxes.

Economic advisers have nearly completed the process initiated in January by the Treasury secretary, Timothy F. Geithner, at President Obama’s behest. That process, intended to make the United States more competitive internationally, has explored the willingness of business leaders to sacrifice loopholes in return for lowering the top corporate tax rate, currently 35 percent.

The approach officials are now discussing would drop the top rate as low as 26 percent, largely by curbing or eliminating tax breaks for depreciation and for domestic manufacturing. Final options have not been presented to Mr. Obama, but officials aim to unveil a single proposal or a set of alternative plans as early as May.

So far, administration officials have been encouraged by support among business leaders for the tradeoffs needed for rate reduction. Whether that survives the legislative process in Congress is another matter.

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