A week after releasing a budget request that calls for significantly higher income taxes for wealthy individuals, President Obama today unveiled a proposal to revamp the corporate tax code, lowering the top rate but eliminating numerous credits and incentives.

Corporate Tax Overhaul

As with the proposed tax changes in the President’s budget, this proposal is unlikely to be passed by a divided Congress in an election year, but it sets the stage for what will be a key issue in the November election.

Republican presidential hopeful Mitt Romney is expected to release details of his own proposed tax overhaul in the near future. He recently said he would push for a “flatter, fairer and simpler” tax code while also addressing “our entitlements and obligations.” Bloomberg BNA published a comparison of the candidates’ tax plans, budget proposals and general policy views, which you can read here (requires registration).

Obama’s proposal calls for the top corporate tax rate to be reduced from 35 percent to 28 percent – and 25 percent for manufacturers – and will eliminate “dozens” of tax breaks. There are so many tax credits and incentives currently available that many corporate taxpayers pay significantly less than 35 percent. Obama’s proposal also includes a minimum tax on the foreign profits of U.S. multinational companies.

“We want to restore a system in which American businesses succeed or fail based on the products they make and the services they provide, not on the creativity of their tax engineers or the lobbyists they hire,” Treasury Secretary Tim Geithner said in unveiling the proposal. “Some will say these proposals are too tough on business, and others will say that they’re not tough enough.”

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