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Obama urges corporate tax cut, closing loopholes

Updated: 2012-02-23 06:55
( Agencies)

WASHINGTON - US President Barack Obama made an opening offer in what could be a long negotiation with corporate America on Wednesday, putting forward his first clear plan to cut the corporate tax rate.

Though it has little chance of becoming law in an election year with Congress deeply divided on fiscal issues, Obama's plan aligns him roughly with the Republican presidential challengers and could minimize the corporate tax rate as a political issue.

The president proposed cutting the top corporate rate to 28 percent from 35 percent, addressing a long-standing gripe by US corporations that the rate is too high.

Republican hopeful Mitt Romney on Wednesday unveiled proposals of his own calling for capping the individual income tax rate at 28 percent, down from 35 percent, and slashing the corporate rate to 25 percent, among other steps.

Though thanks to tax breaks many companies pay nowhere near the top US corporate rate of 35 percent, the statutory top US rate makes it the world's second-highest after Japan's.

In return for lowering the tax rate on businesses, Obama's plan calls for broadening the corporate tax base by ending a number of tax breaks, some spelled out earlier in his budgets.

The plan tries to reverse tax incentives for corporations to relocate jobs and research overseas, while giving domestic manufacturing operations bigger tax breaks.

In a new twist targeting companies that stash profits abroad to avoid paying US taxes, the president proposes slapping a minimum tax on corporate profits earned in low-tax countries, though his plan did not spell out a rate.