President Obama released a tax proposal Wednesday that would lower corporate taxes from 35 percent to 28 percent while ending some tax loopholes and subsidies. His plan lowers tax rates for manufacturers to 25 percent but also closes a loophole that allows hedge fund managers, private equity partners, and others in financial services to pay 15 percent on capital gains—a provision that has kept the tax rates of some of the very wealthy like former Gov. Mitt Romney and "Buffett rule" inspiration Warren Buffett in the teens, far below the standard 35 percent rate of the top-income earners. "This tax loophole is inappropriate and allows these financial managers to pay a lower tax rate on their income than other workers," said the proposal.
Obama said in a statement his plan "provides tax breaks for moving jobs and profits overseas and hits companies that choose to stay in America with one of the highest tax rates in the world," and that it comes as part of his State of the Union promise "to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America."
However, its passage by Congress is already looking unlikely, as many political observers predict that lawmakers will not push through much legislation in the lead-up to November's election. Nevertheless, administration officials plan to meet with members of Congress for negotiations. Former Gov. Mitt Romney has already criticized the plan, saying, "He's proposing today a tax plan which I understand sounds like he's lowering taxes but in fact he's raising taxes, raising taxes on businesses by hundreds of millions of dollars."
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