Arrow-right Camera
The Spokesman-Review Newspaper

The Spokesman-Review Newspaper The Spokesman-Review

Spokane, Washington  Est. May 19, 1883
Partly Cloudy Day 49° Partly Cloudy
News >  Business

Tax overhaul hits obstacles

Bipartisan reform deal seems unlikely this year

Jim Puzzanghera Los Angeles Times

WASHINGTON – Despite optimistic talk from Democrats and Republicans about overhauling the tax code, General Electric Co. recently showed that corporate executives aren’t holding their breath for a bipartisan deal.

GE said April 10 that as part of a major restructuring, it would bring back $36 billion in overseas cash and pay $6 billion in taxes to do it – even though changes long under discussion in Washington could have significantly reduced that tax bill.

“It’s a clear indication that corporate America isn’t waiting for D.C. to make the tax code any simpler,” said Chris Krueger, a policy analyst at financial services firm Guggenheim Partners in Washington.

There’s broad agreement the U.S. corporate tax rate, which at 35 percent is the highest among industrialized nations, needs to be lowered to make American companies more competitive with foreign firms and that loopholes need to be eliminated to make the code simpler and more fair. Yet for multinational companies, loopholes and the ability to stash profits overseas help lower their overall tax rate to well below 35 percent. A study by the Government Accountability Office found that the average effective tax rate for profitable U.S. corporations was 16.6 percent in 2010.

Given that President Barack Obama and congressional Republican leaders want to show that they could work together in the aftermath of last fall’s elections, both sides have made a tax overhaul a top priority.

The desire to find a way to lower the corporate tax rate also was fueled by a rash of so-called inversion maneuvers last year by U.S. companies to reincorporate abroad to lower their tax bills.

But the devil is in the details, and major differences remain in how to reform the code, particularly whether individual tax rates should be revised along with those paid by corporations.

There isn’t much time left to gain momentum.

With elections in 2016, it’s unlikely Congress could pass something as controversial as tax reform next year. And obstacles are mounting to getting anything passed this year.

The Spokesman-Review Newspaper

Local journalism is essential.

Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.

Active Person

Subscribe now to get breaking news alerts in your email inbox

Get breaking news delivered to your inbox as it happens.