During President Obama’s State of the Union Address on January 25, he called for change in the Tax Code to make it simpler to the public, take out loopholes, and level the competitiveness; he also called for the savings generated from this action to lower the corporate tax rate.
“Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries,” President Obama said. “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.” Today, 39.2% is the combined federal and state corporate tax rate. According to the President’s Economic Recovery Advisory Board (PERAB), every percent reduction in the U.S. corporate tax rate would cost the U.S. $120 billion over ten years.
For the next several months, administration officials will be meeting with corporate executives and there will be a series of hearings on comprehensive tax reform. Ways to tackle the budget deficit according to President Obama is to cut “spending through tax breaks and loopholes.” In addition, “if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2 percent of Americans,” the President said. President Obama also addressed the controversial Form 1099 information reporting requirements; he stated that Democrats and Republicans are on common ground and that the start of correcting the flaw in this legislation to be less of a burden on small businesses.
