Mendoza School of Business

Experts react to Obama’s corporate tax proposal

Published: February 22, 2012 / Author: Suzy Plumer

Earlier Wednesday, the White House released its proposed principles for overhauling the corporate tax code — bringing the rate down to 28 percent, establishing a minimum tax, and expanding credits for R&D and manufacturing. It’s not a plan so much as a framework. But we asked a variety of experts what they think of the idea. Here are their e-mailed responses:

Brad Badertscher, CFA and assistant professor of accountancy in the University of Notre Dame’s Mendoza College of Business:

The Obama administration proposed lowering the top income-tax rate for corporations to 28% from 35%, which despite the decrease would actually raise overall tax revenue by eliminating dozens of deductions in an effort to restructure the corporate tax code. The new proposal would offer new tax benefits for U.S. manufacturers while raising taxes on U.S. companies with large operations in other countries. Despite the proposed decrease to 28%, the U.S. would still be above the average world corporate tax rate which is closer to 25%. Therefore it is unclear how this new proposal would allow U.S firms to be more competitive in the world if on average the amount of taxes paid by U.S firms is actually going to increase and the tax rate is still higher than most other countries. Overall, lowering the tax rate for U.S. corporations seems like step in the right direction but with the elimination of popular deductions the proposal actually increases the average amount of taxes paid by corporations.

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Topics: Mendoza