Obama’s Tax Break for Corporation

Posted on February 26, 2012

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In the latest events in business and politics, President Obama has offered to cut the corporate tax rate for domestic businesses from 35 percent to 28 percent; however, the President’s tax cut for corporations requires that tax loopholes and subsides are given up by both domestic and foreign businesses (Newyorktimes.com).

Meanwhile, political analysis suggests that the offer to lower tax cuts for corporations is an attempt by the President to win over votes during this election period. On the other hand, if President Obama’s tax cuts for corporations are approved by congress, the President’s strategy may provide additional profit for corporations, which can potentially encourages businesses to use the savings, from President Obama’s tax break for corporations, to buy assets and hire new employees.

Additionally, President Obama’s administration believe that “the proposed [tax] overhaul ‘will help level the playing field for businesses and allow the government to collect needed revenue while promoting economic growth,’ Mr. Geithner told a Congressional committee last week, without details. [On the other hand] Republicans and business groups complain that the 35 percent corporate tax rate is among the highest in the world, leaving American companies at a competitive disadvantage. They typically seek a 25 percent rate, with many of them saying that the current tax breaks should be kept in place as well. Nonpartisan tax analysts consistently find that corporations here on average pay just slightly more than their competitors in other developed countries after exploiting the many tax breaks and loopholes. Recent news accounts have highlighted the low effective rates paid by companies like Google, Boeing and General Electric.” (Newyorktimes.com).

Clearly than, both major parties, in the United States, agree that lower tax rates will improve businesses’ financial position, but both parties do not agree on the details concerning political and economic policies. If and when tax breaks are implemented in America’s weak economy, millions in America, and around the world, can potentially benefit  from a revamp domestic and global economy; for this reason, policies that will revamp America’s economy should be encouraged to move forward in the political process, so that America can move towards progress and away from “class warfare” rhetoric.

Adelain Francois contributed to this article

Adelain Francois can be reached at francoisa@wnmu.edu

 

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