The Obama Administration today released a business tax reform plan which is hardly worthy of the name.  It raises taxes on employers by hundreds of billions of dollars over this decade, makes both larger and smaller companies less competitive than today, and would do nothing to make American companies more competitive around the world.  

Raises taxes on employers with unemployment over 8 percent.  The Administration plan is shameless in admitting that this is not actually business tax reform.  Rather, it's a net tax increase on business with some shiny baubles that might remind one of real tax reform.  How does it make any sense to raise taxes on job creators at a time when unemployment is at persistently-high levels?

Cuts the corporate rate, but not nearly enough.  It's important to factor in state corporate income taxes when comparing corporate tax systems internationally.  Using that metric, the U.S. corporate income tax rate under this plan drops from 39.2 percent to 32.3 percent.  While that is a small amount of progress, it just isn't enough.  The OECD average rate is 25 percent.

What about the rates of our biggest global trading partners?  Our new 32.3% rate would only beat out France (34.4 percent) and Japan (38 percent as of later this year).  We would not be competitive with the OECD average, nor with Canada (27.6 percent), the United Kingdom (26 percent), Mexico (30 percent), or Germany (30.2 percent).  Rate reduction this inadequate makes the plan a lemon right from the start.

We've said before how "20 is the new 25."  To have a truly globally-competitive corporate rate, you need to get the federal rate down to 20 percent or below.

Doubles down on international double-taxation.  The U.S. is one of the only countries left in the world which seeks to tax the worldwide income of her companies (on top of income taxes already paid overseas).  The smart move would be toward a territorial system, where only U.S.-source income is taxed (as Obama's own jobs commission recommended).  This could be transitioned into with a round of repatriation

Rather than embracing this common-sense and globally-accepted idea, the Obama Administration wants to make the double taxation worse by imposing a global minimum tax rate.  They also want to take away several of the tax provisions in law today which make this international double-taxation regime bearable for many companies.

Discriminates against family-owned smaller businesses.  The Administration plan broadens the tax base (read: eliminates exclusions, deductions, and credits) for everyone, but only cuts the tax rate for corporate employers.  What about the 30 million sole proprietorships, partnerships, LLCs, and S-corporations that face taxation at the individual rates?  Their tax rate goes up, from 35 percent today all the way to over 40 percent in 2012 (39.6 percent top rate plus a new 3.8 percent Medicare payroll/surtax).

Tax reform is many things, but it is NOT "raise the rates and broaden the base."  Yet that's what this plan does to mid-size and smaller employers.  There are a few fig leaves of tax deductions in here for these employers, but the plan overall is grossly-unfair to flow-through businesses.

Raises the cost of capital across the board.  The Administration plan lengthens depreciation lives, which makes no sense considering the President's budget calls for another year of full business expensing.  The proper policy is permanent full business expensing.  Businesses should be able to deduct the cost of all business inputs in the year incurred.  Lengthening depreciation lives (and, likely, amortization periods) uses inflation and the time value of money to steal these ordinary business deductions.  A deduction delayed is a deduction denied.  More importantly, it incents business to consume rather than to invest in new plant and equipment.

Raises taxes selectively on producers of American energy.  For a plan that claims to abhor "picking winners and losers," the Administration outline sure does pick one loser–energy producers.  It reads them out of the Section 199 exclusion, repeals LIFO, curtails legitimate cost recovery, and increases the double taxation of international income (a sore point for the industry).  At a time when news reports are speculating about a $5 gallon of gasoline, why is the Administration raising the cost of energy for every American family?

Picks a winner–green energy manufacturers.  All manufacturers are picked as winners by this plan, with a new effective marginal rate of 25 percent.  Green energy producers are given super-winner status, with a set of new tax incentives.  All business income should be taxed one time, at the same rate.

Raises capital gains taxes under the guise of business tax reform.  In an outlier, the Administration proposal highlights taxing carried interest capital gains as ordinary income.  What does this have to do with business tax reform?  Capital gains earned by an investment partnership manager has nothing to do with this discussion, which merely serves to highlight that this effort is just a tax revenue money grab.

In short, the Administration plan is a net tax increase on America's job creators with very little in the way of rate reduction.  In total, it would kill jobs and retard economic growth.