US Considers Business Tax Reforms
February 23, 2012 Taxation in USA
WASHINGTON D.C. – The Obama administration has proposed a major update of the corporate tax rules in the USA, which would broaden the base for corporate taxes, simplify compliance, reduce the corporate tax rate, and encourage a greater level growth in the country’s manufacturing sector.
The five key points describing President Barack Obama’s proposed tax reform were detailed in The President’s Framework for Business Tax Reform, a joint report by the Department of the Treasury and the White House, published on Febraury 22nd.
The key concept behind the planned changes is to remove the multitude of tax loopholes, to revise the system of corporate subsidies currently used by American enterprises, and, at the same time, reduce the corporate tax rate from the current level of 35 percent to 28 percent.
The White House has also suggested that manufacturing enterprises in the USA should receive preferential tax treatment, and be granted tax deductions which will lower their effective tax rate to 25 percent. Some of the tax breaks will be aimed specifically at American manufacturers utilizing technologies for the production of clean energy.
In order to encourage US companies to keep their production in the country, the government has proposed introducing a new minimum tax on foreign earnings. It is thought that the measure will reduce the tax appeal for multinational companies to structure their business using offshore registered companies and other entities.
Amongst other measures, the report also proposed that the process of tax reform should include actions which will lower the costs of tax compliance and simplify filing rules for small and medium sized enterprises in the USA.
Photo by Barack Obama