WASHINGTON (MNI) – Following is the text of a press release issued
Wednesday by the U.S. Treasury Department unveiling the Obama
Administration’s framework for corporate tax reform:

ADMINISTRATION RELEASES PRESIDENT’S FRAMEWORK FOR BUSINESS TAX
REFORM TO ENHANCE AMERICA’S COMPETITIVENESS

Framework Would Simplify the Tax Code, Eliminate Dozens of Tax
Loopholes and Subsidies, and Incentivize Job Creation, Investment at
Home

The U.S. Department of the Treasury today released the President’s
framework for reforming the U.S. business tax system, which would
enhance American competitiveness by simplifying the tax code and
eliminating dozens of tax loopholes and subsidies, incentivizing job
creation and investment here at home and lowering the business rate
while broadening the tax base.

“In order to make us more competitive and create jobs here at home,
we must reform our corporate tax code,” said Treasury Secretary Tim
Geithner. “The President’s framework would boost growth and provide
American companies with incentives to invest in the U.S. while
simplifying and cutting taxes for our small businesses.”

Under the current tax system, the United States will soon have the
highest statutory corporate tax rate among developed countries, within a
system that features a large number of tax expenditures for special
interests. This puts American businesses-especially those in areas like
manufacturing that are subject to more intense international
competition-at a disadvantage. And this system is also unnecessarily
complicated for America’s small businesses.

For these reasons, the current business tax system is
uncompetitive, unfair, and inefficient-distorting choices about where to
produce, what to invest in, how to finance a business, and how to
incorporate. As a result, the U.S. business tax system does too little
to encourage job creation and investment in the United States and
creates too many opportunities that encourage shifting production and
profits overseas.

The President’s framework for reform seeks to address those
deficiencies in a way that is fiscally responsible. The details put
forward today also make clear that the Administration is committed to
working with experts, stakeholders and lawmakers on a bipartisan basis
to enact tax reform, including business tax reform that improves the tax
treatment of a range of businesses from large corporations to small
businesses and does so with fewer tax expenditures, less complexity and
lower rates without adding to the deficit.

This report describes the current state of the U.S. business tax
system and lays out a framework for reform that includes five major
elements:

1. Eliminate dozens of tax loopholes and subsidies, broaden the
base and cut the corporate tax rate to spur growth in America: The
framework eliminates dozens of different tax expenditures and
fundamentally reforms the business tax base to reduce distortions that
hurt productivity and growth. It reinvests these savings to lower the
corporate tax rate to 28 percent, putting the United States in line with
major competitor countries and encouraging greater investment.

2. Strengthen American manufacturing and innovation: The framework
would refocus the manufacturing deduction and use the savings to reduce
the effective rate on manufacturing to no more than 25 percent, while
encouraging greater research and development and the production of clean
energy.

3. Strengthen the international tax system, including establishing
a new minimum tax on foreign earnings, to encourage domestic investment:
Our tax system should not give companies an incentive to locate
production overseas or engage in accounting games to shift profits
abroad, eroding the U.S. tax base. Introducing the principle of a
minimum tax on foreign earnings would help address these problems and
discourage a global race to the bottom in tax rates.

4. Simplify and cut taxes for America’s small businesses: Tax
reform should make tax filing simpler for small businesses and
entrepreneurs so that they can focus on growing their businesses rather
than filling out tax returns.

5. Restore fiscal responsibility and not add a dime to the deficit:
Business tax reform should be fully paid for and lead to greater fiscal
responsibility than our current business tax system by either
eliminating or making permanent and fully paying for temporary tax
provisions now in the tax code.

** Market News International Washington Bureau: (202) 371-2121 **

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