Businesses Say Corporate Tax Proposals Raise “Red Flags”
“We certainly are not happy.”
That was the response by Dorothy Coleman, chief tax lobbyist for the National Association of Manufacturers, after the Senate’s chief tax writer unveiled a series of proposals aimed at lowering the 35 percent tax on corporate profits by removing special-interest tax breaks. While American businesses have asked Congress for those changes for years, the potential trade-offs embedded in the proposals have created a ripple effect of alarm thorough businesses large and small, the Washington Post reports.
“There are certainly a lot of red flags in there that are really very concerning to us,” Coleman said. The “red flags” Coleman was referring to have more to do with what is missing from the proposals rather than what is included. While the proposals appear to have substantial downsides for businesses, the positive attributes are mostly unclear.
According to The Post, proposal drafts from Senate Finance Committee Chairman Max Baucus (D-Mont.) would end the practice of indefinitely deferring U.S. taxes on foreign earnings, impose an immediate 20 percent tax on about $2 trillion in overseas profits, and diminish a business’ ability to quickly deduct certain expenses, such as advertising. These changes would help lower the 35 percent corporate tax rate without the U.S. Treasury being impacted, Baucus says.
While Baucus has not stated a concrete number for the lower tax rate, The Post reports that he is aiming for a number below 30 percent.