The White House sweetened its latest offer to House Republicans by including in the details an overhaul of the corporate tax code, according to sources familiar with the fiscal cliff talks.
While a spokesman for House Speaker John Boehner quickly downplayed the revised offer, saying what’s needed is comprehensive tax reform that includes the individual side of the code, the Obama administration’s inclusion of corporate tax reform could win allies in the business community that the GOP might find hard to ignore.
The sources would not share details of the corporate reform plan Obama sent Boehner.
This latest offer arrived during a week when business had already ramped up its calls for a big tax and budget deal. The influential lobbying group, Business Roundtable, urged Republicans in a letter to agree to an increase in tax rates if that’s what it took to reach a compromise while also calling on President Obama and Democrats to commit to entitlement and spending cuts.
Other prominent business leaders and groups from Goldman Sachs CEO Lloyd Blankfein to “Fix the Debt” have supported revenue increases alongside spending cuts as part of a grand compromise—public proclamations that only add to the pressure on the House Republicans.
Any overhaul of the corporate tax code is bound to appeal to the corporate community, which Obama has assiduously courted in the past few weeks. It’s part of his strategy to boost support outside the beltway and put pressure on Congress.
Still, Boehner’s spokesman, Michael Steel, called the White House’s inclusion of the corporate tax code piece “a red herring.”
“We've always said you need to do both, given the way they interact,” he wrote in an email. “The issue is the individual rates because of the small business jobs impact.”
This isn’t the first time the president has proposed an overhaul of the corporate tax system. In February 2011, he released a framework that proposed lowering the corporate tax rate to 28 percent. It also gave manufacturers an even lower tax rate of 25 percent and gave breaks to companies that brought jobs back to the United States.
At the time, it received a lukewarm reception because, by adding new tax breaks to the code, experts worried that the president’s plan only complicated an already onerous tax system. The president’s plan also did not include a territorial tax system, which the Republican chairman of the House Ways & Means Committee had proposed and which was a big hit with multinational corporations that would prefer to only be taxed on the profits they earn domestically.