In a speech on Tuesday, President Obama unveiled an economic plan that he said would reform the corporate tax system and create jobs, but so far the response from businesses has been ambivalent.
Speaking at an Amazon fulfillment center in Chattanooga, Tenn., President Obama announced that his plan would lower the federal corporate tax rate from 35 percent to 28 percent for most corporations and to 25 percent for manufacturers. He also announced the plan would be revenue neutral, making up for the lower rate by closing loopholes. Obama also proposed a "minimum tax on foreign earnings," according to information released by the White house, aimed at discouraging companies from holding their money overseas.
Some business leaders offered praise for the proposal to lower corporate tax rates.
"We're very encouraged. We really appreciate the fact that the president is highlighting the high rate," says Elaine Kamarck, co-chair of the RATE Coalition, a group of big businesses who advocate for tax reform.
Likewise, Business Roundtable, a Washington-based association of U.S. CEOs, applauded the president's move to lower the top corporate tax rate. But aside from the rate reductions, business advocacy groups had plenty of complaints.
"The president used all the right buzz words but said nothing of substance," says Martin Regalia, chief economist at the U.S. Chamber of Commerce, in an emailed statement. He blasted the president's plan as incomplete, since it doesn't also reform the individual income tax code, whose rates some small businesses pay instead of the corporate rates.
The Business Roundtable agreed. While the group says it welcomes lower rates, it also believes the president's plan doesn't go far enough.
"[C]orporate tax reform should be part of a comprehensive fix for the individual and business tax codes," the group's president, John Engler, said in a statement.
Both groups also voiced concerns over the use of revenues from reform for spending in other areas like infrastructure.
"Taxing more to spend more is not a recipe for job growth and does nothing to help American companies compete," said Regalia.
Engler agreed, saying he believes "all revenues from corporate base-broadening measures should be applied to corporate rate reduction and to modernizing our international tax system, not for unrelated spending."
While disagreements abound, there is a consensus both among politicians and many businesses that the corporate tax code is ripe for improvement. And while the president's 28 percent rate may make businesses happy, it may have been too soon for the president to name his number, says one expert.
"It is a mistake to lock oneself into a specific rate," says Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities. "It's very hard to get there."
While Marr believes the president's plan to lower tax rates and boost infrastructure has many positive aspects, he also believes that the fight over loopholes will be contentious. That means that, even if the president and lawmakers agree on some changes that create room for a lower rate, it could make it difficult for the president to meet his 28-percent promise.
Likewise, Kamarck foresees potential trouble on loopholes. The president didn't discuss specific tax exemptions in his speech, which Kamarck said is to be expected, as those loopholes are worked out in Congress. She also believes that getting too far into the specifics of which loopholes to close too soon would be disastrous to the plan. Getting all parties to the table and committed to reform, she believes, is the first priority.
"If you start discussing too much the exemptions too early, you will lose the whole kit and caboodle," she says.
Then again, without bipartisan and business community support, that whole kit and caboodle may be lost already.