The president offered an olive branch to Republicans: reducing the corporate tax rate from 35 percent to 28 percent. It would be even lower for manufacturing companies.
“I don’t want to go through the same old arguments where I propose an idea, and the Republicans just say no because it’s my idea,” he told a crowd at an Amazon facility in Chattanooga.
President Obama aims to collect money from companies to bring foreign earnings back to the country. That one-time fee would pay for increased spending on infrastructure and high-tech job training.
Get used to the term “grand bargain.” When Congress returns to Washington in September, it will need to vote to keep the government afloat.
And there will be tons of talk of a grand bargain; an agreement to corral the deficit and control the debt. The president is framing his new idea as a grand bargain for the middle class.
But to many legislators, tax rates are just one piece of a grand bargain.
“We need to look at tax reform from a more holistic perspective,” Senator Lisa Murkowski said Tuesday.
She said any grand bargain must include personal tax reforms as well. And, she added, any grand bargain needs to tackle government spending. Sequestration and higher tax rates on upper-income earners have reduced the growth of the deficit.
But Murkowski said Medicare, Medicaid and Social Security remain untouched.
“It’s been kind of radio silence when it comes to the mandatory spending,” she said. “That’s part of the equation as well.”
Senator Mark Begich said he introduced a revenue neutral tax reform bill – meaning it won’t add to the deficit. That bill is cosponsored by Democrat Ron Wyden – who could be the next chairman of the Senate Finance Committee, and Indiana Republican Dan Coats.
Begich said he’s lukewarm on the president’s plan.
“If it’s just c-corporations, then you’re really not helping the drivers in the economy right, which is small business,” he said at the Capitol Tuesday afternoon. “I prefer to label it business tax relief, not corporate relief.”
He’d like to see a restructuring of the tax code for limited liability corporations and s corporations.
It’s unclear how much the new proposals would cost the federal government. The price tag will surely be a sticking point in negotiations.
And many in Congress say even though a grand bargain with entitlement spending reforms paired with personal and corporate tax rewrites is tantalizing, it will take time.
Perhaps more time than Congress has. It will be in session for only nine legislative days until the end of the fiscal year.