White House Proposes Major Changes To Corporate Tax Code
AUDIE CORNISH, HOST:
President Obama's economic road trip took him to Chattanooga, Tennessee, today. He visited an Amazon warehouse just after the Internet retailing giant announced that it's adding more than 5,000 jobs. The president spoke of employment as a source of pride and dignity.
PRESIDENT BARACK OBAMA: It's proof that you're doing the right things and meeting your responsibilities and contributing to the fabric of your community and helping to build the country. That's what a job is all about.
CORNISH: The White House also used today's event to roll out a proposal to change the corporate tax code. President Obama said it will help create middle-class jobs. NPR's Ari Shapiro was traveling with the president and joins us now. And, Ari, what exactly is the president proposing here? And is there anything in it to attract Republicans?
ARI SHAPIRO, BYLINE: Yeah, right now, the base corporate tax rate is 35 percent and President Obama wants to lower it to 28 percent with a special 25 percent tax rate for manufacturers. Right now some companies use loopholes to pay almost no taxes, and so the president wants to eliminate some of those loopholes which would create more tax revenue even with the lower rates. The lower tax rates appeals to Republicans. They're not crazy about the revenue and they also don't want family-owned businesses, which are, in some cases, taxed as individuals, to pay a higher tax rate.
CORNISH: And so in his own party, what's in the plan for Democrats?
SHAPIRO: Well, he wants to impose fees on overseas profits which he says will encourage U.S. companies to create jobs here at home. And then the president wants to use the new revenue from those fees and from closing loopholes to build roads and bridges, improve community colleges and fund the other kinds of spending that Obama says will help build a strong economic foundation for the country. Here's how he put it this afternoon.
OBAMA: I'm willing to work with Republicans on reforming our corporate tax code as long as we use the money from transitioning to a simpler tax system for a significant investment in creating middle-class jobs. That's the deal.
CORNISH: That's the deal, the president says.
CORNISH: So, Ari, what's the reaction so far from the Republican side?
SHAPIRO: The reaction from Republicans is no deal. A spokesman for House Speaker John Boehner said if this is a grand bargain it doesn't look very grand and it's certainly not a bargain. Republicans say it's a mistake to change the corporate tax code without simultaneously changing the individual code because that, they say, will hurt small, family-run businesses. Also, Republicans oppose government spending, or stimulus, to boost the economy. They want a tax code overhaul to be revenue neutral without any new money coming into the government.
And then finally, this morning, House Speaker John Boehner's office said the fact that President Obama began by leaking the details of this plan to the media shows that he's not serious about negotiating. Then today on Air Force One, White House spokesman Jay Carney told us actually the White House called Boehner's office yesterday and nobody called them back.
CORNISH: OK. So this is President Obama's fourth economic speech in less than a week. You've heard them all. I mean, what's your assessment so far of how it's going?
SHAPIRO: Look, we've asked the White House how they're going to judge success and they say it's about re-centering the debate in Washington on helping the middle class and boosting the economy.
Strictly speaking, it's true that every time President Obama gives one of these speeches, Republicans engage in the debate. But so far, that debate doesn't seem to be very productive. Democrats say go this way, Republicans say no, go that way. The president makes suggestions, Republicans dismiss them as old news or unhelpful. That said, this is just the first week of this approach and the White House plans to extend this series of speeches for weeks to come, leading into some financial showdowns in the fall over the debt ceiling and government funding. So the real test of whether these speeches are working could be whether those showdowns go the way the White House wants or whether Republicans are able to extract significant concessions from the White House on things like spending and deficits.
CORNISH: That's NPR's Ari Shapiro. Ari, thank you.
SHAPIRO: You're welcome.
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