2 parties agree on corporate tax cut

WASHINGTON -- As President Barack Obama and congressional Republicans wrangle over tax increases and spending cuts, they can agree on something: They want to lower the corporate tax rate.

The U.S. has the highest overall rate of any of the world's developed economies. It took the top spot in March after Japan reduced its rate, mimicking other countries that have lowered taxes to lure new businesses and keep existing companies from leaving.

Negotiations to avert automatic income tax increases and federal spending cuts scheduled to kick in Jan. 1 could provide the impetus for U.S. policymakers to tackle an overhaul of the corporate tax code next year.

The White House wants to put a corporate tax overhaul, along with changes to the individual income tax system, on a fast track as part of any deal with Republicans.

The centerpiece of an overhaul would be slashing the 35 percent corporate tax rate.

In the name of global competitiveness, I think that has largely been agreed to, Jim McNerney, chief executive of Boeing Co., said about how both parties view the need for changes.

In February, Obama proposed lowering the federal rate to 25 percent for manufacturing companies and to 28 percent for other firms. Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, has been pushing a plan to lower the rate to 25 percent for all corporations.

In both cases, the rate cuts would be accompanied by the elimination of some tax breaks.

But, some Democrats want to use an overhaul to increase tax revenue from corporations, while Republicans want to keep the amount the same. The White House and congressional Republicans also differ on how the U.S. should treat money earned abroad.

And businesses are divided. Many small companies file taxes as individuals. They're opposed to any deal that would raise their rates while giving corporations a rate reduction.