President Barack Obama remains committed to ending unfair loopholes and tax breaks for international corporations, but congressional tax writers and others doubt that will happen without broader reforms, such as cutting the top corporate tax rate.
Obama ignited fear in corporate America earlier this year when he proposed about $200 billion in tax increases over a decade through tightening corporate tax rules for multinational companies, mostly related to offshore profits.
A White House spokeswoman on Tuesday said the president is committed to those proposals, commenting on a front-page article in The Wall Street Journal that said the Obama administration had shelved the plan.
While we have an open door to the ideas and concerns of business leaders, we remain as committed to reforming international corporate taxation to end unfair loopholes as we were the day the president announced the plan, said White House spokeswoman Jen Psaki.
U.S. lawmakers and tax experts say the plan to crack down on corporate taxes never had a chance on its own, given opposition from chairmen of several key congressional committees.
Marc Gerson, a former House Ways and Means Committee staffer, said lawmakers, guided by the efforts of the business community, recognized these as fundamental changes.
To the extent that they are considered at all, it will be considered as part of a larger consideration of reforming the international tax rules, said Gerson, who now councils corporate clients at Miller & Chevalier in Washington.
Obama's crowded legislative agenda -- which includes reforming U.S. healthcare, obtaining stricter financial services regulation and capping greenhouse gas emissions -- means any tax proposals are unlikely to move forward until 2010.
The House Ways and Means Committee is working on a broader plan to overhaul the tax code, which would include many of Obama's ideas and cut the top corporate rate.
The U.S. has among the highest corporate tax rates in the world at 35 percent. Ways and Means Committee Chairman Charles Rangel, a Democrat, is looking at lowering the rate to 28 percent, or even lower.
He is willing to go even lower if others come forward with loopholes to close, Rangel spokesman Matt Beck said.
Some mainstream economists had said that Obama's proposals on their own were unlikely to create U.S. jobs. Some even suggested they could cause companies to be acquired by foreign rivals, an argument of the business community.
A Republican tax aide said the administration has realized that raising business taxes is easier said than done.
It looks like good business tax reform policy might be trumping the easy politics of raising taxes on business to pay for enlarging already unsustainable social programs, he said.
(Additional reporting by Steve Holland; Editing by Gerald E. McCormick and Tim Dobbyn)