Obama backs tax reform, infrastructure/energy rebuild
We have an audio report from RFD Radio's Matt Kaye on the president's plan to create a federal trade enforcement unit.
Martin Ross
Published: Jan 27, 2012
In his annual State of the Union Address this week, President Obama directed Congress to address crumbling U.S. infrastructure, the need for expanded energy resources, and current inconsistencies in the federal tax code.
Touting what he deemed a “Blueprint for An America Built to Last,” Obama recommended fundamental tax reform, major infrastructure improvements with reduced project “red tape,” and an “all-out, all-of-the-above” clean energy strategy emphasizing continued renewable energy tax credits and natural gas development.
U.S. companies receive tax breaks for “moving jobs and profits overseas,” while “companies that choose to stay in America get hit with one of the highest tax rates in the world,” Obama noted. He proposed a new “basic minimum tax” for multinational companies that operate within the U.S.
In a news conference addressing the president’s remarks, Peoria Republican U.S. Rep. Aaron Schock called for comprehensive tax reform, proposing elimination of many current “loopholes and special carve-outs” to lower across-the-board income tax rates without reducing federal revenues.
At the same time, Schock recognized concerns within the farm community about future estate tax liability, continuation of current bonus depreciation, and “the long line of tax issues that affect their day-to-day businesses, that affect how much risk they take, that affect what kind of investments or capital outlays they’re going to make.”
Congress in 2010 approved a temporary $5 million individual estate tax exemption, at a 35 percent top tax rate. However, producers face a return to a pre-2002 $1 million exemption in 2013 if lawmakers can’t devise a long-term fix by Dec. 31.
That’s a “substantial” drop for farm families who have seen significantly higher land values over the past decade, Illinois Farm Bureau President Philip Nelson maintained. He warned against pushing an estate tax fix until the end of 2012, “with no certainty for our producers.”
“The sooner we can answer that question and the sooner we can resolve tax policy, the sooner entrepreneurs and businesspeople can go about their work of investing and growing their businesses in the United States based on that new policy,” Schock told FarmWeek.
Obama emphasized the need to “rebuild” U.S. infrastructure, noting the economic impact of “crumbling roads and bridges, a power grid that wastes too much energy, an incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.”
The president announced plans to sign an executive order that would reduce federal bureaucracy “that slows down too many construction projects,” and urged Congress to do its part by funding transportation/infrastructure projects.
Schock argued a five-year highway bill reauthorization is “truly something Republicans and Democrats can get behind in an election year.” The House is expected to vote on highway measures in February, tentatively including a Schock amendment that would use revenues from offshore drilling and natural gas exploration for highway improvements.
Obama pledged “every possible action to safely develop” natural gas deposits, and directed the Department of Interior to finalize a national offshore energy plan that makes 75 percent of potential offshore resources available for development by opening new areas in the Gulf and Alaska.
However, he recently rejected an application to build a 1,700-mile, Canada-to-Texas Keystone XL oil pipeline, arguing a congressionally-imposed deadline for a decision did not leave sufficient time for a necessary project review.
Despite bipartisan support for highway legislation, Schock was not as optimistic about funding for long-awaited Illinois-Upper Mississippi river lock improvements. While House Transportation and Infrastructure Chairman John Mica (R-Fla.) has proposed “maritime” provisions as part of the highway bill, Schock predicts “there will not be enough money” to fully fund new lock construction.
Further, he sees no shift in House resistance to an industry proposal to raise barge fuel taxes that would help leverage federal project dollars.
“There may be a small pot for emergency repairs and so on,” Schock said. “But I don’t anticipate the kind of money that would get my farmers and folks who use the rivers excited happening in this highway bill.”
The president used his address to announce creation of a new federal “Trade Enforcement Unit” that will be charged with investigating unfair trading practices in China and other countries. He plans more inspections “to prevent counterfeit or unsafe goods from crossing our borders.”
“I will go anywhere in the world to open new markets for American products,” Obama told lawmakers. “And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration –- and it’s made a difference.”
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