This post has been corrected.
As the deadline to strike a deal on the debt ceiling draws closer, former president Bill Clinton criticized the nation’s corporate tax rate over the weekend, saying it should be lowered as part of an agreement between the parties, according to Politico.
“We’ve got an uncompetitive rate,” Clinton told a crowd at the Aspen Ideas Festival on Saturday, Politico reports. “We tax at 35 percent of income, although we only take about 23 percent. So we should cut the rate to 25 percent, or whatever’s competitive, and eliminate a lot of the deductions so that we still get a fair amount, and there’s not so much variance in what the corporations pay."
“But how can they do that by August 2?” Clinton added, referring to the cutoff point for negotiations, the date when the U.S. will reach the limit of its borrowing abilities and likely begin defaulting on its loans.
In practice, though, American corporations often end up paying significantly less than the full 35 percent. Through tax breaks and loopholes, The New York Times reported in May, "United States corporations pay only slightly more on average than their counterparts in other industrial countries."
And it's common for major corporations -- including, in the past year, General Electric, Exxon Mobil, and Boeing -- to sidestep taxes entirely.
Clinton also offered his thoughts on corporate tax policy on Thursday, June 30, when he spoke out in favor of a corporate tax holiday, which would allow companies to repatriate overseas profits at reduced tax rates.
In an interview with Bloomberg Television, Clinton said that a tax holiday would be welcome “under certain circumstances.” He suggested a tax rate of 20 percent for companies bringing in offshore cash -- less than the current rate of 35 percent, but more than the Republicans’ proposed rate of 5.25 percent. Clinton recommended that the tax rate fall to 10 percent if corporations “reinvest [the offshore profits] in increasing employment in America.”
The Obama administration has signaled its opposition to the idea of a tax holiday. A similar holiday, enacted in 2004, brought $299 billion into the United States but did little to stimulate the economy.
However, in his State of the Union address in January, President Obama nodded to the possibility of lowering the corporate tax rate. The U.S. has the second highest corporate income tax in the world, after Japan, and to characterize it as "uncompetitive," as Clinton did on Saturday, is a common conservative charge.
Besides urging a lower corporate tax rate on Saturday, Clinton also appealed to President Obama to accept a package of spending cuts that would allow for a six- to eight-month extension of the debt ceiling. Clinton said the parties would not be able to hammer out a final deal by August 2.
Overall, though, Clinton was supportive of President Obama, praising his performance on national security, gay rights, education, and the economy, and predicting that he would win a second term in 2012.
Correction: A previous version of this post failed to note that the story was first reported by Politico. It also mistakenly said the United States would go into default on August 2.