President Obama and one of the leading Republicans trying to replace him today unveiled proposals to overhaul the country's corporate tax code. And while each might be loath to admit they have much in common, there are some similarities between the two plans.
Both President Obama and former Massachusetts Gov. Mitt Romney agree that the nation's current corporate tax rate of 35 percent is too high. Under Mr. Obama's proposal, the rate would drop to 28 percent. The decrease would be paid for by closing loopholes and ending certain deductions. Under , the rate would drop three points further, to 25 percent. The Romney campaign says the cut would be paid for by broadening the corporate tax base and growing the economy to increase revenue.
The other Republican presidential candidates have also proposed steep cuts in the rate. Former Pennsylvania Sen. Rick Santorum would halve the rate to 17.5 percent, while Congressman Ron Paul and former House Speaker Newt Gingrich would drop it to 15 percent and 12.5 percent respectively.
Yet while both the Romney and Obama campaigns agree with the principle that the corporate rate is too high, they each attacked the other's plan for lowering it.
"He's proposing today a corporate tax plan, which I understand sounds like he's lowering taxes, but he's raising taxes - raises taxes on businesses by hundreds of billions of dollars," Romney said today at a rally in Chandler, Arizona. "Raising taxes will kill jobs. My plan will create jobs. That's the difference between the two of us."
The Obama campaign fired back.
Romney is "giving more tax breaks to millionaires and billionaires, raising defense spending to an arbitrarily high level, and lowering corporate taxes without explaining how he would pay for them," campaign spokesman Ben LaBolt said in a statement. "For all that business experience Mitt Romney touts, it's odd that he didn't learn how to balance his own books."
There are other similarities between the president's plan and those of the Republican candidates. All call for making permanent the decades-old research and development tax credit that is meant to spur innovation and investments in new technology. And Mr. Obama and Santorum each target the manufacturing industry for further tax breaks in an effort to lure manufacturing jobs back to America. The White House would cut taxes on manufacturers to 25 percent, while Santorum would zero-out the rate entirely.
A major difference, however, is how each plan would deal with taxing the overseas profits of U.S. multinational corporations. Mr. Obama's plan calls for a minimum tax on these earnings in an attempt to discourage companies from sheltering profits offshore. Romney would shift to a "territorial" system, which would only tax companies' profits made within U.S. borders and leave overseas profits untaxed. The Romney campaign says a territorial system will encourage businesses to reinvest foreign profits in the United States and will make U.S. companies more competitive worldwide.
Take a look at the chart above for a summary of each of the candidates' corporate tax plans.