RATE call for lowering tax rate and National Retail Federation lobbies for online retailers to collect taxes

On Tuesday, September 20, a coalition made up of 13 corporations sent a letter calling the White House and the Gang of 12 to work towards lowering the corporate tax rate. RATE (Reducing America’s Taxes Equitably) Coalition argues that reducing the tax rate will boost investment in the U.S., create more American jobs, and increase economic growth. It contends that U.S. corporate tax rate is the second highest among other OECD countries, which together have an average corporate tax rate of 25 percent.

Coalition members include Altria Client Services, Association of American Railroads, AT&T, Boeing, FedEx, Lockheed Martin, National Retail Federation, Nike, Raytheon, Time Warner Cable, UPS, Verizon and Walt Disney.

Dr. Elaine Kamarck, former advisor to President Clinton and Vice President Gore, and James P. Pinkerton, former advisor to Presidents Reagan and George H.W. Bush, will serve as RATE co-chairs.

The Coalition appears to be flexible about the details of how to lower rate and did not take a stance on whether the U.S. should switch to a tax system that only taxes American multinationals on profits made in the U.S. Currently, the U.S. taxes American corporations on profits made globally.

The Coalition underscore a rift within the corporate community over a corporate tax holiday that would allow multinationals to temporarily bring offshore profits to the U.S. at a lower rate than 35 percent. Among the supporters of a tax holiday include GE, Apple, Google, and the U.S Chamber of Commerce.

But AT&T has been among the corporate giants that have said they believe a holiday push could distract from the broader goal of reform. “This is not the tax shelter coalition. This is not the tax break coalition,” Pinkerton said.

The makeup of RATE Coalition membership also appears to highlight the divide within the corporate community on tax reforms as members are mostly companies that have a big domestic focus. Those companies tend to pay higher effective tax rates than many of their multinational counterparts, due in part to the ability of multinational to shift profits offshore. “There’s potential for high-stakes conflict between domestic and multinational firms, if some of those breaks for foreign operations are targeted to offset the cost of lowering the corporate rate.”

Also, the National Retail Federation is lobbying to push legislation that would require online retailers like Amazon.com and Overstock.com to collect sales tax like their store-front counterparts. Senator Dick Durbin (D-Illinois), author of the sale tax sale tax legislation introduced in July, said that requiring online retailers to collect sales tax will generate as much as $250 million for state governments.