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Corporate Tax Cuts May Bring Political Foes Together

Tuesday, 20 Nov 2007 | 3:58 PM ET

Journalists in Washington spend most of their time focusing on warfare between Democrats and Republicans. There's a good reason for that: in the dysfunctional capital city of 2007, warfare is what they do best.

But in the unlikely arena of tax policy, there's an emerging point of consensus that may prove consequential in the 2008 campaign as well as in the next administration. It is the desirability of cutting corporate tax rates.

The Bush administration has been emphasizing this theme for weeks, hoping to reclaim control of the tax-and-spending issues from Democrats in Congress and the 2008 presidential campaign.

Cutting Corporate Taxes
Discussing the Treasury's tax proposal, with CNBC's Steve Liesman & John Harwood

But Democrats haven't played along. Rep. Charlie Rangel of New York, chairman of the Ways and Means Committee, has himself proposed a cut in the top corporate rate to 30.5 percent from 35 percent as part of a broader package for replacing the alternative minimum tax.

Does this mean a deal is in the works? not anytime soon; Bush lacks the votes in Congress to push through any administration-friendly tax overhaul plan, and Democrats lack the votes to override his veto.

But expect to hear lots of talk about this over the next 12 months because it suits the interests of both sides. Republican want an old wedge issue back, and Democrats want to show they are business-friendly and attuned to America's competitiveness in the global economy. And by the time we have a new president--of either party--it might actually be time for some action.

Questions? Comments? Write to politicalcapital@cnbc.com.