Obama's State of the Union will promise tax rate cuts to corporate giants but leave small businesses out in the cold – while increasing government's overall take
Watchdog warns: Obama will head-fake by offering tax cuts to big businesses while closing loopholes on every company in America
The result, says Americans for Tax Reform, will be a bigger income for the government and no relief for small businesses
President Obama will deliver his annual State of the Union address on Tuesday night, and is expected to push 'income inequality' policies
Congressional Democrats need a defining issue while Obamacare recovers
Explaining away an apparent big-business tax cut will be hard for them, even if it's not a real tax cut at all' GOP campaign operative speculates: 'Obama is going to have to go back to his people and whisper, "Don't worry about that corporate tax cut – I don't really mean it"'
By David Martosko, U.s. Political Editor
PUBLISHED: 18:05 EST, 27 January 2014 | UPDATED: 18:23 EST, 27 January 2014
President Obama is expected to outline a seismic shift during Tuesday's annual State of the Union address in how much tax American businesses pay, but the devil is in the details.While his plan will lower the top corporate rate, smaller companies whose proceeds are considered individual income – since they're not organized as large corporations – won't see any benefit.
And the net impact, says one Washington, D.C. watchdog group, will be more money, not less, flowing into the federal government's coffers. Those funds, the group says, will be redistributed into public works projects calculated to benefit labor unions that support Obama and other Democrats.
Obama hinted at a corporate tax overhaul proposal in his 2013 State of the Union speech, never bringing anything forward until 2014 when a congressional election looms large
Corporate giants like Google would pay more taxes under Obama's plan when it kills deductions and closes loopholes, but the big companies would get a rate reduction in exchange -- unlike smaller businesses
Manufacturers love infrastructure projects near their factories, a fact Obama is hoping to leverage in order to get the GOP to go along with his plan: some of the new tax revenue would reportedly pay union-backed construction projects across America
'The President’s plan is a net tax increase,' the right-leaning anti-tax group Americans for Tax Reform said Monday. 'The plan raises taxes on all American employers, but only gives partial rate relief to the largest multi-national companies.'
Obama will reportedly dust off a proposal Tuesday night from his 2012 campaign, when he argued for lowering the top corporate tax rate from 39.1 per cent to 28 per cent in exchange for closing a series of tax loopholes and disallowing a wide range of business tax deductions.
Those give-backs Obama would affect all businesses, both small and large, while only the largest corporations would see a reduction in their overall rates.
The average top corporate tax rate among member nations in the Organization for Economic Co-operation and Development is 25 per cent, according to the nonprofit Tax Foundation. America's top rate is the highest.
IRS data show that 32 million businesses file tax returns every year, and fewer than 2 million of them are corporations that can tax advantage of tax rates and loopholes extended to General Motors, Apple Computer, ExxonMobil and other Wall Street titans.
The Wall Street Journal reported Saturday that a source who received a private White House briefing advised the paper to 'expect to hear Mr. Obama trumpet a proposal he made last year: reworking the business-tax system and directing proceeds to roads, bridges and other public works projects.'
ATR sees those initiatives as Democrat-aligned union construction projects.
Grover Norquist, the group's president, was aghast.
Oh, poop: Dog-walkers and other small businessmen and women will continue to pay individual income tax rates on everything they earn, but they'll have to give up the same deductions the big boys are slated to lose
Run your own consultancy from your kitchen table? You're out of luck, too -- stuck with a 44 per cent effective tax rate
Playing coy: A milquetoasty White House press secretary Jay Carney will say only that Obama will address 'the need to grow our economy in a way that rewards hard work and responsibility, that makes the middle class more secure'
That kiss Obama blew to his wife before delivering last year's State of the Union address might be redirected this year to congressional Democrats who need political cover to push his 'income inequality' philosophy on the campaign trail'Again?' he asked when MailOnline contacted him in Washington. 'Obama is spraying perfume on and recycling two ideas that have already failed.''One, "tax reform" – by which he means higher overall taxes on businesses targeting entrepreneurs and the self-employed – and two, taking all that tax revenue and having another stimulus spending spree.'
'It failed the last time,' said an exasperated Norquist. 'How stupid does he think we are?'
In his 2013 address, Obama promised several initiatives that never managed to arrive later in the year amid scandals that included Obamacare's sputtering start, an alleged Benghazi cover-up, The National Security Agency's data collection programs, the IRS's targeting of tea party groups and the Justice Department's spying on journalists.
Harping a year ago on the so-called 'Buffett rule,' Obama told Congress that Americans deserved a 'tax code that ensures billionaires with high-powered accountants can’t work the system and pay a lower rate than their hardworking secretaries ... and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America.'
A year later, the White House is gearing up to take some action. But ATR warned Monday that the net result would be a higher tax bill overall.
'The Republican House would never support a net tax increase, and using the money to fund Big Labor (and, by extension, Democrat campaign coffers) is hardly a sweetener,' the group said in a statement.Obama is emboldened by the populist appeal of his 'income inequality' argument, a Democratic Party insider told MailOnline. And he hopes to soften Republicans for a minimum-wage hike by offering big business a carrot instead of a stick.
'The president is now preparing speeches on income inequality,' said RNC chair Reince Priebus, but 'I believe he should give those speeches while standing in front of the mirror, because under his watch, everything has gotten worse'But the result may be a triple-whammy on employers if they find themselves squeezed simultaneously by a higher tax bill, higher wage costs and higher health care expenses.
Still, congressional Democrats desperately need a defining issue to run on in the November midterm elections, and the White House believes a rich-vs-poor argument can win the day with its base.
And anything that sniffs of a tax cut for the rich, suggests Democratic Rep. Steve Israel, won't play well with liberal voters. Israel chairs the Democratic Party's congressional campaign organization.
'Middle-class security is the defining issue of our time,' Israel told the Associated Press. 'Our candidates are going to talk about what priority makes more sense for the middle class: Increasing the minimum wage, or decreasing taxes for the wealthiest? Those contrasts are imperative and revealing.'
The danger for Democrats is that the current state of play for lower-income Americans has followed five years of Obama's presidency.
Republican National Committee Chairman Reince Priebus told a partisan crowd last week that Obama was trying to fix a problem that he caused himself.
'His economic policies are not working,' Texas Republican Sen. Ted Cruz added Sunday on the CBS program 'Face The Nation.'
Yes, you too: most U.S. farmers are sole proprietors of their businesses, making them ineligible for what may appear to be a massive Obama tax rate cutWhile many small U.S. businesses cope without any tax relief, Facebook founder Mark Zuckerberg will find his company's earnings taxed at a lower rate under Obama's expected proposal
After-tax U.S. corporate profits are at a level not seen since the years following World War II. And it has been 60 years since ordinary workers saw a smaller share of the nation's economic output than they did in 2013.
The campaign manager for a Republican House candidate in New York, Israel's home state, told MailOnline on background that Obama's foray into tax policy could blow up in his face.
'The president needs more Democrats in Congress, and he's not going to get there by offering what looks like a tax cut for Wall Street,' the political operative said, 'even if the result is shareholders getting smaller dividends and CEOs losing some of their bonuses.'
'It's the perception that counts in November, and it sounds like Obama is going to have to go back to his people and whisper, "Don't worry about that corporate tax cut – I don't really mean it."'
The White House has been mum on the content of Obama's speech. Jay Carney, his press secretary, told Reporters on Friday only that the president would address 'the need to grow our economy in a way that rewards hard work and responsibility, that makes the middle class more secure.'