|Barack Obama made a renewed attempt to overhaul the tax regime for US businesses on Wednesday, proposing a Budget that would stamp out various breaks and loopholes but enable the main corporate tax rate to be cut.
America has the highest corporate tax rate in the industrialised world, at 35pc, a level that is seen as damaging to investment. The President wants to reduce it to 28pc, following the trend in other major economies such as Britain where Chancellor George Osborne has repeatedly slashed the corporation tax rate.
Mr Obama proposed a series of increases in other elements of the business tax regime, such as stopping firms dodging taxes by holding income overseas, and reducing tax breaks for energy companies and corporate jets.
However, he said most such business tax increases would be reserved to pay for the corporate tax cut, rather than designated for helping to reduce the deficit.
Deficit-reduction efforts were instead centred on measures taking aim America’s richest households, with the proposed introduction of the so-called “Buffett tax” on high-earners.
The tax would make households earning more than $1m a year pay at least 30pc income tax.
“The wealthiest individuals and biggest corporations cannot keep taking advantage of loopholes and deductions that most Americans don’t get,” Mr Obama said. He is seeking to raise $580bn in new tax revenues from the wealthy over the next 10 years.
The Budget also set out spending cuts that would replace the “sequester” reductions put into place last month.
The White House said the measures would together bring the US budget deficit down to 2.8pc of GDP by 2016, from 5.3pc this year, and would cut the US deficit by $1.8 trillion in a decade.
The Budget also gave the latest White House estimate of US growth for the year at 2.3pc, down from the 2.7pc it predicted in July. The forecast however remains above that of many analysts.
The Budget stands little chance of being enacted into law because of Republican opposition to tax increases.
In an attempt to reach agreement with Republicans Mr Obama has infuriated many in his own party by proposing cuts to pensions.
He has suggested adopting a less generous measure of inflation to calculate cost-of-living increases, effectively cutting benefits for most recipients of the Social Security retirement program.