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Santorum and Romney plan to cut corporate taxes by putting it on the national credit card

President Obama outlined his plan yesterday to modernize business taxes to support the competitiveness of American businesses and encourage companies to hire and invest in the U.S. rather than overseas. On the trail over the past few weeks, Rick Santorum and Mitt Romney have been preferring to ignore the President’s strong business priorities, instead attempting to characterize him as being anti-business.

Santorum wrote that the President’s treatment of business “creates class warfare or envy between one group of people and another.” Yesterday in Arizona, Romney said President Obama’s plan “sounds like he’s lowering taxes, but he’s raising taxes—raising taxes on businesses by hundreds of billions of dollars.” He went on to say: “Raising taxes will kill jobs. My plan will create jobs. That’s the difference between the two of us.”

There are clear contrasts in President Obama, Romney, and Santorum’s plans to improve the business environment here at home. President Obama is working to cut business tax rates, encourage U.S. investment, and strengthen manufacturing and small businesses without adding a dime to the deficit. On the other side of the coin, Romney and Santorum have laid out plans that would slash corporate taxes by over a trillion dollars, protect corporate tax giveaways, and explode the deficit to do it.

Here’s a closer look at the significant differences between their plans.

Corporations:

  • Obama: To make America more competitive and increase investment in the United States, President Obama wants to lower the corporate tax rate from 35% to 28% (or to what is effectively a 25% top rate for American manufacturers). To pay for this reduction in the rate and to clean up the corporate tax code, the President’s framework will eliminate excessive special interest loopholes and subsidies—including the “carried interest” break for private equity and hedge-fund managers, special tax breaks for the oil and gas industry, tax breaks for private jets, and dozens of similar tax preferences. In light of the fiscal challenge facing this country, the President believes that business tax reform should not add one dime to the deficit.

  • Romney: Romney would blindly cut the top corporate tax rate from 35% to 25% without eliminating any of the same corporate tax giveaways. He has specifically defended the “carried interest” tax preference that allows wealthy money managers like himself to pay a 15% tax rate on payments they get to manage other people’s investments. This policy personally saved Romney $2.6 million in taxes over the last two years compared to paying the ordinary income tax rates, and he has no plans to close the loophole. Despite promoting these tax benefits for the wealthy, Romney doesn’t have a plan to pay for them—his corporate tax plan would add more than $1 trillion to the deficit over the next 10 years.

  • Santorum: Santorum would slash the corporate tax rate from 35% down to 17.5% without eliminating a single corporate tax preference or subsidy to balance the loss in revenue. Overall, his tax plan would add $10 trillion to the deficit over the next 10 years.

U.S. investment:

  • Obama: The President wants to create a new minimum tax on foreign earnings. That would reduce tax incentives for corporations to take jobs overseas, increase the incentive to invest in America, stop rewarding companies for using accounting tricks to shift profits to tax havens, and end the race to the bottom in corporate tax rates.

  • Romney: Romney would create a “territorial tax system” which would eliminate any tax on most foreign-earned income. That would increase the incentive for companies to ship jobs overseas and give even greater rewards to companies that use accounting tricks to report profits in tax havens that were really earned.

  • Santorum: Santorum similarly would make sure that the income businesses earn overseas is never taxed more than 5%.

Small businesses:

  • Obama: President Obama’s framework would simplify taxes for America’s small businesses and also provide them with tax relief. Specifically, it would allow them to expense up to $1 million in qualified investments—saving the businesses from having to keep track of complex depreciation schedules—and also make tax filing easier for small businesses and entrepreneurs by allowing more small businesses to use a simplified form of accounting, saving them countless hours and dollars.

  • Romney: Romney’s plan would offer no similar proposals for small businesses.

  • Santorum: Santorum also would offer no similar proposals for small businesses in his plan.

Romney and Santorum like to talk big about business, but only President Obama’s plan would encourage more businesses to invest in the U.S.—without adding a dollar to the deficit.