On July 30, President Obama gave a speech in Chattanooga, Tenn., where he laid out more of his “middle-out” economic plan to create jobs as a “grand bargain for the middle class.” The speech focused on his tax reform plan – an exact likeness of the framework for corporate tax reform released in February 2012 – with the caveat that new revenues from the elimination of tax “loopholes” would be spent on infrastructure, job training programs, and manufacturing innovation institutes.
The president’s plan was met with a strong rebuke from Republicans in Congress as they expressed frustration that it did not address tax changes for individuals, which must be paired with a corporate tax overhaul. Finance Committee Ranking Member Orrin Hatch (R-Utah) said the White House was “undermining” tax reform efforts on Capitol Hill. Meanwhile, Finance Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) issued a measured response in a joint statement, stating that they would like to address individual and corporate taxes together.
Chairman Baucus predicted two weeks ago that an effort by President Obama to start “beating the drums for tax reform” might backfire with Republicans, but said the addition of infrastructure was favorable because the issue was less partisan.
Specific to infrastructure investments, the president’s plan would allocate funds to the following:
- Immediate Investments With a “Fix It First” Focus: The plan would invest immediately in our nation’s infrastructure, with an emphasis on reducing the backlog of deferred maintenance on highways, bridges, transit systems, and airports nationwide.
- A “Rebuild America Partnership” to Leverage Private Sector Investment: Combined with his plan for immediate investments, President Obama has called for new efforts to leverage private funds to rebuild our infrastructure. The president has proposed a National Infrastructure Bank, expanding the successful TIFIA program and changes to tax rules to encourage greater private investment.
- Encouraging Private Investment Through “America Fast Forward” Bonds – Including for Modernized Schools: The president’s new America Fast Forward (AFF) bonds program would build upon and expand a successful program created in the Recovery Act to attract private capital for infrastructure investments – including additional support for bonds that finance school construction and modernization.
- Cut the C-corporation top tax rate to 28 percent;
- Reduce the top rate on C corporation manufacturers to 25 percent;
- Eliminate tax deductions, preferences and credits used by C-corporations and pass-through businesses alike to offset the lower C corporation rates; and
- Increase expensing limits to $1 million.