Trade group: Administration wants to expand corporate tax umbrella

Generally speaking, Lyman’s group represents businesses that are publicly traded and pass-through entities. Its membership includes many energy companies.

Amy Brundage, a White House spokeswoman, has cautioned that administration officials were still discussing their tax reform options. Treasury Secretary Timothy Geithner told a Senate panel last month that the administration was working on its own corporate tax reform plan, and department officials have discussed the issue with stakeholders.

“No decisions have been made about the content of any specific reform proposal or the timing or manner in which the administration will move this dialogue forward,” Brundage said in a statement given to Reuters, which first reported the NAPTP letter.

The question of how to deal with pass-throughs would appear to be a pressing matter in the push for an overhaul of the tax code, something policymakers on both sides of the aisle say they favor.

Geithner and Sen. Max Baucus (D-Mont.), the Finance Committee chairman, both have expressed skepticism about allowing some businesses to pay taxes as individuals. The Treasury secretary also has indicated in the past that he believes the corporate code can be overhauled before the individual one, though President Obama did call for the individual code to be reformed in his deficit-reduction speech last month. 

“I think, fundamentally, Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses to choose whether they’re treated as corporations for tax purposes or not,” Geithner told the Senate Finance Committee in February. 

For their part, top Republicans like Rep. Dave Camp (Mich.), the chairman of the House Ways and Means Committee, have called pass-through entities one of the major reasons that the corporate and individual tax codes need to be revamped in tandem. The current top marginal tax rate for both individuals and corporations is 35 percent. 

Some have also said that they appreciated the flexibility offered by the pass-through option, and an Ernst & Young study released last month said that reforming the corporate code separately could hurt small businesses.

Responding to that study, Camp said in a statement that “as we develop tax reform policies, we must be mindful of the increasingly prominent role of pass-through businesses and be mindful of how to address their needs in the context of comprehensive reform.”

In her message to group members, Lyman said that she did not think a plan that brought certain pass-throughs under the corporate tax umbrella would be well-received. 

“We believe that if this proposal is released in its current form, the fact that it sweeps so broadly will ensure widespread opposition from business groups and many in Congress,” Lyman wrote.