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Obama Administration Calling For Closing “Loopholes” and Making R&D Tax Credit Permanent

While President Obama did not specifically address tax policy in his State of the Union address on Tuesday night, on Wednesday morning, Treasury Secretary Jack Lew presented the administration’s outlook at the Brookings Institution. Among his remarks, he said:

Let me now turn to the specific components of the President’s framework for reform. The President’s proposal for a new business tax system has five pillars that represent an attempt to chart a bipartisan path forward.

First, we need to lower rates and close wasteful loopholes. This will make our business tax system competitive, fundamentally fair, and fiscally responsible. The President’s plan eliminates dozens of tax breaks and loopholes, and without adding to our deficits, reduces the current top corporate tax rate from 35 percent to 28 percent. This rate is in line with our trading partners, and it will help encourage investment in the United States. As we broaden the tax base, we can also create more certainty and make the system simpler and more efficient. And, we believe there is bipartisan support to move forward on this.

Second, we need to build on the resurgence of manufacturing in the United States. A vibrant U.S. manufacturing sector is fundamental to our capacity to remain innovative and competitive, and it is an important source of good-paying jobs for America’s workers. That is why the President’s plan makes it even more attractive for manufacturers to build and expand here rather than overseas. It lowers tax rates for domestic manufacturing to 25 percent. And it takes manufacturing incentives — including the Research and Experimentation Tax Credit — and makes them permanent. The Research and Experimentation Tax Credit jumpstarts private investment in research and technology, and it propels innovations that spark new jobs, new industries, and new breakthroughs in engineering and production. And this is another area of broad bipartisan support.

Here is the video of the speech and discussion:

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