President Barack Obama will propose cutting the U.S. corporate tax rate to 28 percent from 35 percent while reducing the tax on manufacturers to 25 percent, according to news reports Wednesday.

A senior White House official told the Associated Press that under the plan, companies would be forced to give up a number of loopholes and subsidies, while companies with overseas operations could face a minimum tax on their foreign earnings.

Treasury Secretary Timothy Geithner will outline the Obama administration's proposed tax overhaul Wednesday, the AP and the New York Times reported. News of the proposal was first reported by the Times early Wednesday. 

The plan, which faces scrutiny in Congress, is part of Obama's wider tax strategy, which itself is a central plank of his re-election platform.

The United States' 35 percent nominal corporate tax rate is the highest in the world besides Japan, but in reality corporations can apply for exemptions and credits that help reduce their tax burden.

The administration maintains that closing loopholes and taxing overseas earnings will negate any loss in direct tax revenue.

The proposed changes, if approved by lawmakers, could lead to a heavier tax burden on companies that now use loopholes or subsidies to push their effective tax rate below 35 percent. Others could end up paying less, or at least benefit from the comparative simplicity of the revised system Obama proposes.

Last week Geithner told a House of Representatives committee that the administration wants to create more incentives for corporations to invest in the United States.

We want to bring down the rate, and we think we can, to a level that's closer to the average of that of our major competitors, the AP quoted Geithner as saying before the tax-writing House Ways and Means Committee.