Barack Obama signalled he was open to lowering the US corporate tax rate from its level of 35 per cent, amid speculation that the administration could seek broad-based reform of the tax code as early as next year.
At a meeting of his economic recovery advisory board on Monday, the president said: “We would be very interested in finding ways to lower the corporate tax rate so that companies that are operating overseas can operate effectively and aren’t put at a competitive disadvantage.”
But Mr Obama told the group, which is chaired by Paul Volcker, former Federal Reserve chairman, and includes Jeffrey Immelt, chief executive of General Electric, and Jim Owens, chief executive of Caterpillar, that any solution would have to be “revenue neutral”.
“If there are ideas whereby we can lower corporate tax rates in a way that does not massively add to our deficit, but instead revolves around tax loopholes...that is something that we would be very interested in and we think could eliminate uncertainty,” Mr Obama said.
The president’s remarks come as tax policy, including extension of the income tax cuts of the George W.?Bush era, has risen to the top of the agenda in Washington and could remain there for some time.
Some insiders believe there is scope for significant reform of the tax code, potentially echoing landmark legislation enacted in 1986.
On Monday, Mr Obama said he was interested in a tax overhaul that would reduce business taxes. “That is an area where we’d like to collaborate,” he said.
Max Baucus, the Democratic chairman of the Senate finance committee, held a hearing on the 1986 tax reform bill last month, demonstrating that Congress is also gearing up for potential negotiations on the fiscal structure of the US.
Any tax reform proposals would probably take their lead from the bipartisan commission on fiscal responsibility, which will release its conclusions on ways to cut the deficit on December 1.