Daily Tax Update - February 7, 2011: Obama Asks Businesses For Support In Changing "Burdensome" Corporate Tax Code

OBAMA ASKS BUSINESSES FOR SUPPORT IN CHANGING "BURDENSOME" CORPORATE TAX CODE:  Today, in a speech to the US Chamber of Commerce, President Obama talked about the challenges businesses face today.  The President said, "We know what it will take for America to win the future.  We need to out-innovate, out-educate, and out-build our competitors.  We need an economy that's based not on what we consume and borrow from other nations, but what we make and sell around the world.  We need to make America the best place on earth to do business.  And this is a job for all of us.  As a government, we will help lay the foundation for you to grow and innovate.  We will upgrade our transportation and communications networks so you can move goods and information more quickly and cheaply.  We will invest in education so that you can hire the most skilled, talented workers in the world.  And we'll knock down barriers that make it harder for you to compete, from the tax code to the regulatory system.  But I want to be clear: Even as we make America the best place on earth to do business, businesses also have a responsibility to America."

  • The President said, "I understand that you're under incredible pressure to cut costs and keep your margins up.  I understand the significance of your obligations to your shareholders.  I get it.  But as we work with you to make America a better place to do business, ask yourselves what you can do for America.  Ask yourselves what you can do to hire American workers, to support the American economy, and to invest in this nation.  That's what I want to talk about today – the responsibilities we all have to secure the future we all share."
  • The President added, "Now, another barrier government can remove – and I hear a lot about this from many of you – is a burdensome corporate tax code with one of the highest rates in the world.  You know how it goes: because of various loopholes and carve-outs that have built up over the years, some industries pay an average rate that is four or five times higher than others.  Companies are taxed heavily for making investments with equity, yet the tax code actually pays companies to invest using leverage.  As a result, you’ve got too many companies ending up making decisions based on what their tax director says instead of what their engineer designs or what their factories produce.  And that puts our entire economy at a disadvantage.  We need something smarter, something simpler, something fairer.  That’s why I want to lower the corporate rate and eliminate these loopholes to pay for it, so that it doesn’t add a dime to our deficit.  And I’m asking for your help in this fight.  I think it can be done."
  • The President continued, "And if we as a nation are going to invest in innovation, that innovation should lead to new jobs and manufacturing on our shores.  The end result of tax breaks and investments can’t simply be that new breakthroughs and technologies are discovered here in America, but then the manufacturing takes place overseas.  That, too, breaks the social compact.  It makes people feel as if the game is fixed and they’re not benefiting from the extraordinary discoveries that take place here."
  • The President’s remarks can be accessed here.

SHAY APPOINTED TO HARVARD LAW SCHOOL AS PROFESSOR OF PRACTICE:  Harvard Law School has announced the appointment of Stephen Shay, Treasury Deputy Assistant Secretary for International Tax Affairs, as a Professor of Practice.  The professorships of practice at Harvard Law School are given to outstanding individuals whose teaching is informed by extensive expertise from the worlds of law practice, the judiciary, policy and governance.  

  • Shay, a longtime practitioner of tax law, is currently Deputy Assistant Secretary for International Tax Affairs in the Department of the Treasury. At Harvard Law School, he will teach basic, international and other taxation courses.  Harvard’s press release said, "Our students and faculty will benefit enormously from Steve Shay’s extraordinary expertise and 35 years of practice in tax law and policy. We are beyond fortunate that he has decided to bring his talents and experience to Harvard. He possesses a terrific combination of skills and wisdom, a treasury of knowledge of domestic and international tax law and policy, a profound understanding of government and the budgeting process, wide experiences in counseling individual and multinational corporate clients, and a superb record of written scholarship. He will bring great knowledge and ideas to our students and to his new colleagues on our faculty." 
  • Shay said:  "I am honored to join the Law School’s distinguished faculty as a Professor of Practice.  I look forward to teaching and sharing my public policy and practice experience with the Law School’s extraordinary students."
  • Additional information can be accessed here.

As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country.  The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court.  The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them.  Read more information on Steptoe's tax practice.