Obama Administration Proposes to Slash Corporate Tax Rate

On February 22, 2012, Trasury Secretary Timothy Geithner proposed Obama administration's far-reaching corporate marginal tax rate reduction plan that would lower the top marginal rate from 35 percent to 28-percent. Although the corporate tax rate for the US companies is 35% as opposed to 23% marginal rate for their counterparts in other OECD nations, the average effective rate for US companies is much lower: 18.5%. In exchange of lowering the marginal rate from 35% to 28%, the Obama administration proposed to eliminate tax breaks for oil and gas companies, thus expecting to raise an estimated $250 billion over 10 years. According to a preliminary report published in Fall 2011 by the Joint Committee on Taxation, reduction in marginal rate from 35% to 28% would cost $700 billion over 10 years. Also as part of funding the marginal rate reduction, Obama administration proposed to tax, not known yet the rate of taxation, on the overseas earning of US companies.