(Original post)
May 18, 2011
By Sam Goldfarb, CQ Staff
A coalition of 250 organizations, mostly consisting of labor unions and nonprofit groups, is urging Congress to reject any tax overhaul proposal that would lower the corporate tax rate or fail to reduce the deficit.
“Some lawmakers have proposed to eliminate corporate tax subsidies and use all of the resulting revenue savings to pay for a reduction in the corporate income tax rate,” the groups wrote in a May 18 letter that was sent to every House member and senator.
“In contrast, we strongly believe most, if not all, of the revenue saved from eliminating corporate tax subsidies should go toward deficit reduction and toward creating the healthy, educated workforce and sound infrastructure that will make our nation more competitive.”
Steve Wamhoff, legislative director at Citizens for Tax Justice, said that his group had drafted the letter and recruited labor unions, including the Service Employees International Union, to sign onto it.
Wamhoff said that his organization and others were trying to grab the attention of lawmakers, particularly Democrats, who have contemplated reducing the corporate tax rate, which currently stands at 35 percent.
“Not many people in Washington are trying to get more revenue from corporations,” Wamhoff said in an interview, adding that the letter was drafted partly in response to suggestions that President Obama’s administration could release a corporate tax overhaul proposal soon.
Obama endorsed broadly lowering the corporate tax rate in his State of the Union address in January and also proposed eliminating specific corporate tax breaks in order to create a more streamlined tax system that could boost economic growth.
Many Republican lawmakers, including House Ways and Means Chairman Dave Camp, R-Mich., are also eager to drop the tax rate for corporations, although they oppose treating the corporate side of the tax code separately from the individual side.
While the U.S. has an unusually high corporate tax rate among advanced countries, liberals note that the effective tax rate for many businesses is much lower than 35 percent, in part because businesses are able to take advantage of tax breaks such as the research and development credit.
Advocates for reducing the corporate tax rate argue that it would prevent businesses from trying to lower their tax liability by setting up operations in less-heavily taxed countries.