Tuesday, July 30, 2013

Corporate Tax Rates May Go Down

President Obama, seeking to break a stalemate with Republicans, announced Tuesday that he would cut corporate tax rates in return for a pledge from Republicans to invest in more programs to generate middle-class jobs.

Using a sea of cardboard boxes in a cavernous Amazon distribution center as a backdrop, Mr. Obama described a grand bargain' for the middle class that he said would stimulate the economy while giving businesses the lower tax rates they have long sought. The terms of Mr. Obama’s tax plan were outlined in early 2012 by Timothy F. Geithner, his former Treasury secretary, who said the corporate tax rate would be reduced to 28 percent, from 35 percent, with a lower rate of 25 percent for manufacturing firms.

The choice of Amazon was meant to illustrate Mr. Obama’s theme of a job revival in America. The company recently announced plans to hire 5,000 more workers at 17 fulfillment centers, where it packs and ships customer orders. But the White House came under fire because many Amazon jobs pay only $11 an hour, and the pace of the work in these warehouses has been described as exhausting. 

Mr. Obama’s appearance here also raised the hackles of independent booksellers, who blame Amazon, with its deep discounting and massive selection, for putting bookstores out of business.

“We are disheartened to see Amazon touted as a ‘jobs creator’ and its warehouse facility used as a backdrop for an important jobs speech, when, frankly, the exact opposite is true,” the American Booksellers Association said in a letter to Mr. Obama.

One House GOP leadership aide, speaking on background, summed up Obama's plan as a series of proposals that are just the opposite of concessions for Republicans: corporate tax reform without individual tax reform, corporate tax reform that isn't revenue neutral, and additional stimulus spending."

In Chattanooga, Tenn. Obama outlined his so-called "grand bargain for middle-class jobs," which the White House is framing as something that Congress can pass amid stalled efforts at broader deficit reduction. His proposal would pair a cut in corporate tax rates with new investments in manufacturing, infrastructure and community colleges. White House officials say the money for the new investments would come from a one-time revenue boost generated by changing depreciation rules or a fee on earnings held overseas.

Boehner spokesman Michael Steel reiterated that Republicans won't support a corporate tax reform plan unless it's paired with individual tax reform." This proposal allows President Obama to support President Obama's position on taxes and President Obama's position on spending, while leaving small businesses and American families behind."

Meanwhile the Wall Street Journal reports," Republicans [currently engaged in informal talks with White House officials] have suggested changes to Medicare, including switching to a slower-growing gauge of inflation that would reduce benefits, and "means-testing" the program by charging well-to-do senior citizens higher premiums. In the past, Mr. Obama has said he could consider both ideas as part of a larger deal. Republicans also proposed raising the eligibility age for Medicare, a concept the White House dislikes. Mr. Lew said on Sunday the White House wants to replace the sequester with a combination of changes to entitlement programs and adjustments to the tax code—often code for raising revenue by eliminating tax breaks."

There's a petition that was put up online to eliminate the cap on Social Security taxes. Billionaires like the Koch brothers pay the same amount in Social Security tax as someone who makes $113,700 a year (or less, or none at all if all their income is earned from capital gains on stocks). But if we're going to lower the "statutory" 35% corporate tax rate (even though these businesses pay a much lesser "effective" tax rate), we should at least lift the cap on Social Security taxes. I would also suggest taxing capital gains as regular wages. But the billionaires have been lobbying to kill a new minimum wage bill. That's another reason why "white" is now the predominate face of the poor.

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