Today, in prepared remarks delivered at the Brookings Institution, Treasury Secretary Jacob Lew described “five pillars” of President Obama’s plan for business tax reform. First, the plan would lower the corporate income tax rate from 35 percent to 28 percent. Second, the plan would further reduce the income tax rate for domestic manufacturing activity to 25 percent and would make manufacturing tax incentives, such as the research and experimentation tax credit, permanent. Third, the plan would create a minimum tax on foreign earnings while reducing barriers to repatriating income and would tighten rules intended to prevent profit shifting by multinational enterprises. Fourth, the plan would provide various benefits to small businesses, including simplified reporting requirements, increased availability of cash method accounting, and annual expensing of up to $1 million in investments. Finally, the plan is intended to be revenue neutral, both over a ten-year budget window and over the long-term, and is paid for by permanently eliminating or reducing various business tax incentives, such as those provided to oil and gas companies.
These pillars described in Secretary Lew’s remarks closely track the major elements of the President’s framework for business tax reform, released in February 2012. The remarks also touch on the House’s adoption of dynamic scoring for major legislation, stating that the administration “think[s] this is unwise given the uncertainty involved in dynamic scoring, the assumptions that have to be made, and the unequal treatment of tax cuts versus pro-growth investments funded through appropriations.”