Excerpt: The deficit commission set up by the White House recommended cutting corporate tax rates to a single rate between 23% to 29%, replacing the current band of rates that peak at 35%. In its final report released Wednesday, the commission said that without a significant overhaul of the U.S. corporate tax system, the country’s competitive position globally would suffer. In exchange for lowering the corporate rate, the panel’s report recommended eliminating all other industry-specific subsidies. Doing so would both help pay for the lower corporate rate, and would end the current system where the government in effect picks winners and losers through subsidies, the report said. But in a move that drew praise from multinational businesses, the commission would end the taxation of overseas profits. The move to a territorial system would bring the U.S. more in line with most other countries which generally don’t tax profits earned abroad. Catherine Schultz, vice president of tax policy at the National Foreign Trade Council, another trade group, said it would depend on how such a territorial tax system was structured. For instance, she said, how would overseas oil royalties be treated and what kind of transition rules would be in place to allow firms to use foreign tax credits they have already accumulated? “There are a lot of territorial tax systems in the world, and none of them would work perfectly in the U.S.,” said Schultz. “People are very interested in looking at it, because it is one of the ways we could be most competitive,” she added.
