Obama Wants To Change How Businesses Are Taxed
RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News. Im Renee Montagne.
STEVE INSKEEP, host:
And Im Steve Inskeep. Good morning.
We're going to follow up this morning on President Obama's call to change the way American businesses are taxed.
MONTAGNE: In his State of the Union Speech, the president said lobbyists have rigged the corporate tax code.
President BARACK OBAMA: Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense and it has to change.
MONTAGNE: Administration officials have begun offering a little more of the details of what the president has in mind. David Wessel, economics editor of The Wall Street Journal, spoke yesterday with Treasury Secretary Tim Geithner. And he's with us, as he often is, this morning.
Mr. DAVID WESSEL (Economics Editor, The Wall Street Journal): Good morning, Renee.
MONTAGNE: From talking to the Treasury secretary, do you have a better idea this morning why the president would focus on this particular tax?
Mr. WESSEL: Yes, I think that the president has two objectives here. One is to make the economy grow a little bit faster, and he's looking for a set of things that can do that dont cost any money. This revenue-neutral corporate tax reform - every company that pays a little more, some other companies will pay a little less - he believes will help the economy grow a little faster.
The second thing is, as we saw throughout the State of the Union Speech, is he seems to be looking for ways to say to business: I love you, I love you, I love you, please hire some workers.
(Soundbite of laughter)
MONTAGNE: Well, he wants to lower the rate but also close loopholes, which would seem might raise the same amount of money. But it would seem like companies in the end pay the same amount of taxes.
Mr. WESSEL: Right. The president's plan is that companies should pay the same amount of taxes, just redistribute the amount of money. He says that that would be make make it - the Treasury secretary told me yesterday, that it would make it possible for businesses to invest where they think they get the highest return, rather than gaming the system - trying to take advantage of this tax break or that tax break, this credit or that deduction.
It's an idea that if you simplify the tax code, you make the economy more efficient. And thats where you get the growth dividend.
MONTAGNE: So is that why one might go through all of this if it wouldnt actually lower overall taxes, and it wouldnt raise more revenue?
WELNA: Right. I think the president starts with the premise that we can't widen the deficit. So if you start with that, there's a lot of things you'd like to do that you can't. He thinks that this thing will make the economy function better and he's also knows that some of the companies will actually have big benefits. And he hopes that in changing the process maybe we can have some of them move some of their money from overseas to the U.S., or other things that would accomplish other objectives.
MONTAGNE: Well, how is this being received by businesses; either those that in fact will pay more, and also those who have learned to deal within the tax code as it is now, including loopholes?
Mr. WESSEL: Well, businesses love to hate the corporate tax code. So they all love the idea of tax reform. The people who are going to get hit are obviously less happy about it. And when the Treasury secretary met with some corporate executives, as we reported in The Wall Street Journal recently, executives from Proctor & Gamble, from GE and from Pepsi said to him: This is a great idea but why does it have to be revenue-neutral? Can't you, in the process, lower the burden on us?
And that will be the struggle if this moves forward in Congress. Business will be trying to get the overall business tax burden lowered, as a result of this.
MONTAGNE: What about, David, taxes for the rest of us?
Mr. WESSEL: Well, in his State of the Union, the president talked about simplifying the individual tax code. Notice he didnt talk about lowering taxes on anybody. He did talk about raising taxes on upper-income people, as he's said all along.
My sense is that this is not a high priority, that this is kind of a talking point. He knows that the chairman of the Ways and Means Committee, Dave Camp, is interested in simplification of the individual tax code. But he talked so much more about corporate tax reform, it appears to me that is much higher on his priority list.
MONTAGNE: Well, going back to that, I mean are businesses sufficiently behind us that it has a good chance of happening?
Mr. WESSEL: Too soon to tell. We're in the first innings here. And I think what the president is saying to the businesses: If you want a simpler tax code, if you want lower rates, you guys are going to have to volunteer some credits or deductions or incentives that you want to get rid of. So this is the beginning of a negotiation, and I'd say it's less it's 50/50 whether we actually get anywhere.
MONTAGNE: David, thanks very much.
Mr. WESSEL: You're welcome.
MONTAGNE: David Wessel is economics editor of The Wall Street Journal.
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