New plan to be outlined for U.S. corporate tax code
Each year, citizens and companies alike must file taxes with the federal government. Many big corporations have reduced their payments by finding loopholes in the tax code, but that could soon change.
Adriene Hill: The Obama administration today will outline a broad overhaul of the nation's corporate tax code. The plan isn't expected to be approved during this election year, but it's got businesses taking note -- here and abroad.
Marketplace's Eve Troeh reports.
Eve Troeh: Today's announcement isn't unexpected. In the State of the Union address last month President Obama said he planned a corporate tax makeover. It wasn't just American companies who took note -- foreign leaders perked up.
Richard Murphy: Because the U.S. has really one of the strangest sets of corporate tax laws in the world.
Richard Murphy directs Tax Research U.K. He says the U.S. charges some of the highest corporate taxes in the world -- about 35 percent. Compare that to Ireland: it charges companies taxes nearer 10 percent.
But the American system lets companies avoid paying by taking advantage of tax shelters. Many U.S. companies park their profits overseas to avoid taxes. And it's not just U.S. taxes they're avoiding.
Murphy: Frankly we're seeing these companies not paying taxes in the countries around the world where they're generating their profits, because they can shift all their profits back to a tax haven like Bermuda, and the rest of the world is pretty fed up about that.
Fed up with the loopholes, and President Obama's plan is expected to close some of those. At the same time, he'd lower the corporate tax rate by a few percentage points. The combination of the two should bring in more money. Companies will pay a lower tax rate, but pay it on a bigger chunk of their profits.
I'm Eve Troeh for Marketplace.