U.S. businesses alarmed by Senate plan on corporate taxes

For years, American businesses have been clamoring for Congress to wipe out a profusion of special-interest tax breaks and use the proceeds to lower the 35 percent tax on corporate profits, now the highest in the developed world. Last week, the Senate’s chief tax writer rolled out a series of proposals to do just that.

But after one look at the potential trade-offs, businesses large and small have been reacting with alarm.

“We certainly are not happy,” said Dorothy Coleman, chief tax lobbyist for the National Association of Manufacturers. “There are certainly a lot of red flags in there that are really very concerning to us.”

Part of the problem, Coleman and others said, is what’s missing from the trio of “discussion drafts” offered by Senate Finance Committee Chairman Max Baucus (D-Mont.). The proposals would end the practice of indefinitely deferring U.S. taxes on foreign earnings, impose an immediate 20 percent tax on roughly $2 trillion in profits accumulated overseas and sharply curtail the ability of businesses to quickly deduct certain expenses, such as advertising.

While Baucus released reams of paper detailing the potential pain of tax reform, he has so far failed to give businesses a concrete idea of the potential pleasure. Baucus says his ideas will generate enough revenue to let him lower the 35 percent rate significantly without losing money for the U.S. Treasury, but he has declined to propose a new rate, saying only that he is aiming to get it under 30 percent.

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