Tags: Obama | Corporate | Double | Tax

Obama’s Corporate Framework May Lead to Double Tax, Camp Says

Wednesday, 07 March 2012 12:49 PM

President Barack Obama’s suggestion that businesses that report income on individual returns could be taxed at a higher rate amounts to a “double tax,” House Ways and Means Chairman Dave Camp said.

Camp, a Michigan Republican, made the comments today at a committee hearing in Washington that focused on how closely held businesses should be treated in a U.S. tax code overhaul. These firms pass through their income to the owner’s individual tax return, allowing them to pay taxes on that income at the individual rate instead of the corporate rate.

In Obama’s proposed corporate tax revisions, which the administration released on Feb. 22, he said large companies are “increasingly avoiding corporate tax liability by organizing themselves as pass-through businesses.” Republicans maintain that such businesses are often small and should be protected. The tax treatment of these businesses will be an important element of any tax code overhaul that develops in Congress.

“Isn’t it better to have fewer business entities subject to double taxation?” Camp said at today’s hearing.

Obama’s hasn’t proposed a threshold at which pass-through businesses should be taxed at higher rates. He also hasn’t specified the tax rate he would impose for such businesses.

Camp and other Republicans say that raising taxes for pass- through businesses is a double tax because it effectively compels them to pay taxes at the corporate rate while the owners would still be subject to individual taxation.

“That would decrease our opportunities in terms of reinvestment and growth,” Mark Smetana, the chief financial officer of Naperville, Illinois-based Eby-Brown Co., told the House Ways and Means panel today.

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Wednesday, 07 March 2012 12:49 PM
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