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Morning Brief: Romney Presents Rival Tax Reform Plan

by Jonathan Masters
February 23, 2012

Republican candidate for president Mitt Romney announced his plans for tax reform (The Hill), including a 20 percent across-the-board reduction in individual rates and an end to capital gains taxes for most. The proposal would cut the top statutory corporate tax rate from 35 to 28 percent and establish a territorial system that exempts U.S. companies from paying taxes on income earned overseas.

Corporate Regulation and Taxation

Assessing Obama’s Corporate Tax Reform

U.S. President Barack Obama’s proposal for corporate tax reform “is better than what America already has,” says the Economist‘s Free Exchange blog, “but not by much.” The White House plan is unclear on several important aspects of the code including: depreciation, interest deductibility, and the use of non-corporate business forms. In keeping many of the tax breaks, however, but simply allocating them differently, the administration would make the tax system more complicated, not less.

CFR’s Edward Alden says the United States needs a “real corporate tax cut.” The country has failed to appreciate the mobility of corporate capital as primary factor that forces nations to compete for investment. While the president’s reform plans may make for a fairer system, it would not address the fundamental U.S. competitive disadvantage.

Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.

Debt and Deficits

Republican Presidential Candidates and the Debt

A new report from the Center for a Responsible Federal Budget (CRFB) provides a detailed accounting of the debt effects of each of the GOP candidate’s proposed tax and spending policies. Out of the four candidates—Mitt Romney, Rick Santorum, Newt Gingrich, and Ron Paul—only Mr. Paul’s plan would bring the debt as a percentage of GDP down by 2021 from a CRFB baseline that assumes the Bush tax cuts are extended and a number of planned spending cuts are ignored.

The Obama administration’s 2013 budget plan has revived debate over the sustainability of U.S. spending. This CFR Backgrounder outlines the competing policy paths on fiscal reforms and the global consequences for failing to bring down U.S. debt.

Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.

International Trade and Investment

The Future of China’s SOEs

China’s state-owned enterprises make up nearly half of the country’s economy, according to a report for the U.S.-China Economic and Security Commission, a ratio that began declining from 100 percent after Beijing opened the economy in the 1970′s. The Obama administration has used negotiations over the Trans-Pacific Partnership (WSJ), a trade pact, to try to alter the trading practices of these firms in other Asian countries and put pressure on China to cut subsidies and other government support for state-owned enterprises.

International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.

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