The Treasury Department on Wednesday will roll out a corporate tax reform plan from President Barack Obama, administration officials said on Tuesday, with expectations low for any major tax code overhaul in an election year.
The Obama plan will follow such principles as “fairness” that the president laid out in his State of the Union address to Congress last month, the officials said.
A cut in the corporate tax rate, which presently tops out at 35 percent, may be included, as well as a proposal for a minimum tax on overseas profits, analysts said.
Most analysts doubt that the convoluted tax system could be revamped by a deeply divided Congress in an election year.
After the presidential and congressional contests are decided in November, however, a number of major tax and budget issues will converge on Washington and new momentum for comprehensive tax reform may follow.
Treasury Secretary Timothy Geithner told a Senate committee last week that “dozens and dozens” of tax loopholes were being targeted for closure, but that some tax incentives would be kept for “creating and building stuff in the United States.”
Potomac Research analyst Greg Valliere said: “Even if Geithner floats something and members of both parties say they’re interested, I simply cannot see a reform bill passing before the election, close to a zero percent chance.”
He added: “I suppose anything would be possible in a lameduck session in December, but something this huge and complex will require a thorough vetting, and that could take a year or much longer.”
The last major rewrite of the tax code came in 1986 under Republican President Ronald Reagan, who raised corporate taxes.
Republican presidential candidate Mitt Romney on Tuesday called for a flatter, fairer and simpler tax code.
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