Saturday, March 30, 2013
Wall Street Journal : Big Business Spars Over Rewriting Tax Code, by John D. McKinnon:
One sign of that is the splintering of big companies into different groups promoting different strains of tax reform. High-tech, pharmaceutical and consumer-products companies, for instance, are eager to change the way overseas profits are taxed. Big domestic retailers, banks and telecommunications firms, in contrast, are more eager to see the corporate-tax rate come down.
The fundamental tension reflects an arithmetic reality: Corporate-tax reform—even if it doesn't mean a net increase in taxes on business—means doing away with someone's tax break to pay for lowering the overall tax rate, now at 35%, though many companies pay less. There are winners, but there are also losers. ...
The corporate tax is a big deal to the companies that pay it, but it represents a small slice of federal revenue, an estimated $251 billion for the current fiscal year ending Sept. 30, or 9.3% of federal revenue.
The prospects for a major corporate-tax rewrite are clouded by partisan differences—and by the divisions in the business community. Washington has a plethora of business-lobby organizations already, but some of them represent such divergent business interests that they can't go much beyond endorsing the principle of tax reform. So new, tax-focused coalitions are emerging with logos, squads of lobbyists and PR people but, for the most part, without actual offices.
At root, the different coalitions reflect the differences among big companies and across industries. Companies with huge capital investments, such as manufacturers, care a lot about the terms of writing them off; companies in labor-intensive business don't. Companies with big overseas profits focus heavily on how those earnings are taxed; primarily domestic companies don't. Companies who get little advantage from all the existing credits, deductions and loopholes are ready to sacrifice them to bring down the corporate-tax rate; those who benefit, not surprisingly, aren't.
A dozen big high-tech, pharmaceutical and other companies that do business overseas recently formed a coalition called LIFT (for Let's Invest for Tomorrow) America to press the U.S. to get rid its system of taxing companies' overseas profits while also lowering the corporate tax rate. ...
Another group called RATE (for Reforming America's Taxes Equitably) Coalition, organized more than a year ago, represents U.S.-focused companies pushing primarily for lower corporate-tax rates. ...
Yet another evolving coalition—as yet unnamed—includes tax officials from a mix of high-profile firms and has been working with the accounting firm PricewaterhouseCoopers as its technical consultant.