The Obama administration has proposed overhauling the corporate tax system, including a cut in the top rate and eliminating many subsidies and other breaks. But the framework, which the Treasury Dept. released on Feb. 22, does not affect many small businesses, which are prevalent in the design and construction industry.
The proposal calls for trimming the top corporate tax rate to 28% from 35%, and making permanent tax credits for renewable energy and research.
In a call with reporters, Treasury Secretary Timothy Geithner said that President Obama's plan would simplify the tax code and end dozens of tax incentives and subsidies, including breaks for oil and gas production.
At present, the U.S. has one of the highest corporate tax rates among developed countries. That puts American businesses at a competitive disadvantage, Geithner said.
Some critics said that the administration's proposal offers little for small businesses, which often are structured as sole-proprietorships, partnerships or "S-corporations" and are taxed as individuals, rather than corporations. Such non-corporate entities are common in architecture, engineering and construction.
Dan Danner, National Federation of Independent Business CEO, said in a statement, “At what point does big business stop dictating the policies of Washington, D.C.? The focus should be on individual rate reform, keeping the tax rates for small business low and allowing small businesses to actually grow and create jobs.”
Geithner acknowledged that the debate over how to reform nation’s the tax system could be “politically contentious.” He added that the president’s proposal was a “starting point” and that “a long-term growth strategy for the U.S. requires tax reform.”
House Ways and Means Committee Chairman Dave Camp (R-Mich.), said, “I am pleased to see the administration’s proposal adopts many of the same principles of reform that House Republicans have championed, such as lowering rates by broadening the tax base and closing loopholes." However, he said there “are some policy differences that I look forward to discussing with the administration and my House and Senate counterparts."