- The Treasury Department will release the president's plan on Wednesday
- The proposal would lower the overall corporate tax rate to 28%, an official says
- The top tax rate is currently 35%
- Obama has called for a system with incentives for domestic job creation
The Treasury Department will unveil President Barack Obama's corporate tax reform plan Wednesday -- a framework that would reduce the overall rate paid by corporations, a senior administration official told CNN.
The president's tax plan is intended to "enhance American competitiveness by simplifying the tax code and eliminating dozens of tax loopholes and subsidies, incentivizing job creation and investment here at home and lowering the business rate while broadening the tax base," the official said.
The proposal calls for lowering the overall corporate tax rate from 35% to 28%, and the effective rate for manufacturing to 25%.
The official, who laid out the plan's broad framework for CNN, said the proposal is essential to fixing a system that is "uncompetitive, unfair, and inefficient."
The official told CNN the lower rate would be largely funded by eliminating dozens of tax loopholes and subsidies, and broadening the business tax base.
The package would also encourage more research and development, and the production of clean energy. It would establish a new minimum tax on foreign earnings to discourage companies from shifting production or profits overseas.
The tax plan would also cut taxes and simplify the tax code for small businesses and entrepreneurs, the official said, while not adding to the U.S. deficit.
The Obama administration has been talking about unveiling a plan to fix the corporate tax system for well over a year.
In the State of the Union address and in subsequent speeches, Obama has called for ending tax breaks for companies that outsource jobs overseas and lowering rates for U.S. businesses that create jobs at home.
"Right now, companies get tax breaks for moving jobs and profits overseas," Obama said in his address to Congress in January. "Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it. So let's change it. "
Obama also said that it was time to end subsidies and tax breaks for the oil industry, which "rarely has been more profitable," while increasing tax credits for developing alternative energy sources.
Last year, the pressure for a corporate tax system fix heated up with news of General Electric's zero tax rate in 2010 due to profits overseas and losses at its financial unit. General Electric CEO Jeffrey Immelt is the chief of Obama's Council for Jobs and Competitiveness.
The current top corporate tax rate, among the highest in the world, has long been bemoaned by business leaders and tax experts. They say it discourages foreign investment in the United States and hinders the ability of U.S. companies to compete internationally. The bottom rate is 15%.
The Obama administration is expected to talk about lowering the top rate while axing some of the more than 130 business corporate tax breaks currently on the books and limiting companies' ability to shift profits to nations where tax rates are lower.
Treasury Secretary Tim Geithner told a Senate panel last week the plan will be an effort to find "common ground" on broad principles between Republicans and Democrats on Capitol Hill.
"We want to maximize the chance we can take advantage of that (common ground) to build consensus on something that's going to work," Geithner told the Senate Finance Committee.
"In short, it will help level the playing field for businesses and allow the government to collect needed revenue while promoting economic growth," Geithner said in his written statement to the Senate panel.