White House wants election year fight over taxes

The Obama administration is set to propose an overhaul of the federal tax code for corporations, cutting both their tax rates and the loopholes available to them.

Under the current tax system, the U.S. is soon going to have one of the highest corporate tax rates in the world. And that puts U.S. businesses and manufacturers at a disadvantage.

So, the White House is going to announce the overhaul proposal today.

Obama administration to propose corporate tax rate cut

This plan for reforming the corporate tax code would bring down the rate, currently at 35 percent, to 28 percent, with a better rate for manufacturers.

The reason this comes today is because, just two days from now, (Republican presidential hopeful) Mitt Romney is going to be unveiling his own economic (plan in a) speech in Detroit.

So make no mistake -- the president's political advisers want an election year debate -- not just about the corporate tax code system, but also the whole tax system, in general. And so that's why they're setting up that debate this week for the president to make that, but there is little chance this year that this tax reform proposal will make it through Congress, because there's too much politics going on.

When deductions and exemptions are factored in, corporations would probably see a slight increase in the amount of money they pay in taxes, because the Treasury Department is also proposing a minimum tax on U.S. corporations, so they have to pay something.

In the end, though, the goal from the Treasury Department -- and they've been working on this proposal for a long time, in coordination with a lot of corporations who have long said that this corporate tax rate is outdated, it should be changed, it should be scrapped, it makes us uncompetitive. It should make the system simpler and fairer.

To see Norah O'Donnell discussing the tax reform proposal, click on the video in the player above.

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