U.S. President Barack Obama delivers remarks at the White House in Washington November 28, 2012.

WASHINGTON | Thu Jan 31, 2013 6:19pm EST

WASHINGTON (Reuters) - The chief of a group of more than 200 CEOs said on Thursday that President Barack Obama had told the business community last month he might back a territorial tax system, a regime that would exempt offshore corporate profits from U.S. taxation.

Corporate America is pushing for the United States to move to such a regime to make businesses more competitive against foreign rivals that pay no taxes on overseas earnings. The United States currently taxes corporate profits earned abroad only when they are brought into the country.

In 2011, then Treasury Secretary Timothy Geithner privately agreed to move to such a regime in failed talks with Republicans to secure a major budget deal, according to aides present.

During last year's presidential election campaign, Vice President Joe Biden criticized a territorial tax system, employing populist rhetoric to blast companies that shift their business and jobs abroad.

John Engler, president of the Business Roundtable, a CEO lobbying group, said that in meetings during last month's budget standoff between the White House and Congress, Obama was moving back in the business community's direction on the issue.

"He reaffirmed his support for corporate tax reform and he was acknowledging the importance of ... a territorial system, which I think had been a little bit of a question," Engler said.

A White House official on Thursday said Obama is eager to "pursue corporate tax reform that lowers the rate ... but does not believe that a pure territorial system is the best way to achieve this goal."

A territorial system is seen as having a chance of winning approval in Congress only if it were to be coupled with a major budget deal, where Obama could win some of his priorities.

The Business Roundtable is composed of chief executives from marquee companies ranging from mega-retailer Wal-Mart Stores Inc to Wall Street's JPMorgan Chase & Co.

TAX REVAMP UNCERTAIN

Lawmakers in Congress have been working on a tax code overhaul for more than a year, though its prospects are unclear given a crowded legislative agenda and disputes over revenue.

Obama last year pitched a corporate tax revamp that included cutting the top corporate tax rate to 28 percent from 35 percent and closing a number of business tax breaks to pay for the cut.

Pam Olson, assistant treasury for tax policy under Republican President George W. Bush and now chief of PricewaterhouseCooper's Washington tax practice, said Obama's plan carefully opposed a "pure" territorial tax system, but left the door open for hybrid systems that might, for instance, exempt some but not all offshore profits from U.S. taxation.

"The use of the term 'pure' I think, was a signal that they were willing to consider it," Olson said.

Critics of moving to a territorial system say it will cause further U.S. jobs and business to move offshore.

A report by the Congressional Research Service, a nonpartisan think tank for lawmakers, this month said U.S.-based global companies are increasingly shifting profits into tax havens like Bermuda and Switzerland.

Critics say this proves companies are aggressively skirting the law to avoid U.S. tax. Business groups say the trend is the result of the relatively high U.S. tax rate.

TOUGH CHOICES

The notion of trimming the top corporate tax rate is a rare area of agreement between Democrats and Republicans on tax policy, though Republicans want to lower the rate more.

A major hurdle in any tax code revamp would be how to "broaden the base" of taxpayers, which both sides say is needed to help fund a tax rate cut. That would mean making hard choices about scrapping tax deductions, credit and loopholes that some companies hold dear.

Engler said his CEOs would be willing to give up some perks if it meant the corporate tax rate could be cut to 25 percent.

"There are credits for the way you handle depreciation, there are credits on R&D (research and development), there are credits on this type of manufacturing or this type of manufacturing product," he said. "They have to be on the table."

(Editing by Kevin Drawbaugh, Howard Golle, M.D. Golan and Andrew Hay)

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U.S. Environmental Protection Agency Administrator Lisa Jackson testifies at a hearing of the House Subcommittee on Oversight and Investigations on Capitol Hill in Washington, September 22, 2011.

WASHINGTON | Mon Dec 31, 2012 10:34am EST

WASHINGTON (Reuters) - Regardless of who takes the reins, the U.S. Environmental Protection Agency will likely face continued legal battles in President Barack Obama's second term as it tries to finalize pollution rules for power plants, analysts said.

EPA Administrator Lisa Jackson, who spearheaded the Obama administration's regulation of carbon emissions, said on Thursday she will step down after almost four years.

Her tenure was marked by opposition from industry groups and Republican lawmakers to the EPA's first-ever crackdown on carbon emissions, as well as other anti-pollution measures.

Analysts said whoever succeeds Jackson will probably face a spate of lawsuits to challenge rules that the EPA will finalize governing power plants, industrial sources and oil and gas production.

"This is shaping up to be four years of litigation," said Christopher Guith, vice president for policy at the U.S. Chamber of Commerce's Energy Institute.

Given the partisan divide, Guith said, legislators would struggle to draft laws that could serve as alternatives to the EPA's pending suite of carbon and air regulation.

"As we look to an even more divided Congress, the action will be in the federal courts," he said.

The U.S. Court of Appeals for the District of Columbia circuit, which hears most challenges to federal environmental rules, is likely to be busy as industry groups and states bring their cases against the EPA's rules after they are finalized.

The court sided with the agency in most of the recent challenges, most notably upholding its decision to use the Clean Air Act to regulate carbon dioxide emissions.

David Doniger, policy director of the Natural Resources Defense Council's Climate and Clean Air Program, said this could bolster the EPA as it tackles rules that may be more controversial than those rolled out under Jackson.

"The agency has a very good batting record on the clean air side. Carbon and climate (regulations) have come through completely unscathed," he said.

CARETAKER ADMINISTRATOR?

After the EPA was a political lightning rod during the first Obama administration, the president is likely to seek out a safe, possibly internal choice as Jackson's successor, or to avoid the confirmation process altogether.

"There are just so many arrows pointed at this agency," said Susan Tierney, managing principal and energy and environment specialist at Boston-based Analysis Group

Bob Perciasepe, deputy EPA administrator, will take over on an interim basis and could continue in that role indefinitely.

He previously worked at the EPA during the Clinton administration, specializing in water and air quality. Before rejoining the agency, Perciasepe was a top official at the National Audubon Society, a major conservation group.

Tierney said she expects the EPA to stay the course on its current agenda, especially as the agency faces some court-ordered deadlines to finalize rules, such as for coal ash, industrial waste from coal-fired plants and ozone standards.

PRIORITY ON CLIMATE CHANGE?

Some environmentalists have criticized Obama for being too timid on climate issues during his first term. But in his acceptance speech on election night in November the president gave a nod to climate change, raising hopes for more activism.

The White House may lean on the EPA to tackle one of the largest sources of U.S. greenhouse gas emissions, the current fleet of power plants, said Jeremy Symons, senior vice president at the National Wildlife Federation.

"The president has made clear that climate change is one of his top three priorities for the second term, so that means EPA needs to do its job," Symons said.

This, he said, means the agency needs to finalize the rules for new power plants and the standards for limiting carbon emissions from existing power plants.

The NRDC's Doniger said once the EPA meets an April 2013 legal deadline to finalize the greenhouse gas rules for new power plants, it will then have to address standards for existing plants.

The EPA has to start promptly in the beginning of the second term, said Doniger, because the rulemaking process is "a multistep process that will take time."

The controversial task will almost certainly trigger lawsuits because the rules will target a large number of domestic power plants and could jeopardize electric reliability.

"It's high stakes litigation when you are talking about bringing 40 percent of generation under regulations. That's disastrous," the Chamber's Guith said.

Guith said that while the EPA does have the authority to regulate carbon dioxide using the Clean Air Act, its rules are too difficult for industry - forcing the litigation.

"This EPA has been so aggressive in pushing the envelope by way of the compliance timeline that it has made itself more vulnerable to lawsuits," he said.

The EPA may also face legal challenges from environmental groups and certain states. The NRDC, the Environmental Defense Fund and the Sierra Club joined a group of nine states led by New York that threatened to sue the EPA last year to propose air pollution standards for oil and gas drilling.

They said that the drilling, transportation and distribution resulted in a significant release of methane, a potent greenhouse gas that is not regulated by federal rules.

Doniger said the group is trying to negotiate a timeline with the EPA to set a rule but could sue the agency if it doesn't agree a schedule by February.

(Additional reporting by Ayesha Rascoe; Editing by Gary Hill)

(This story was corrected to fix the name of environmental group to Natural Resources Defense Council from National Resources Defense Council in the tenth paragraph)

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U.S. Environmental Protection Agency Administrator Lisa Jackson testifies at a hearing of the House Subcommittee on Oversight and Investigations on Capitol Hill in Washington, September 22, 2011.

WASHINGTON | Sun Dec 30, 2012 5:11am EST

WASHINGTON (Reuters) - Regardless of who takes the reins, the U.S. Environmental Protection Agency will likely face continued legal battles in President Barack Obama's second term as it tries to finalize pollution rules for power plants, analysts said.

EPA Administrator Lisa Jackson, who spearheaded the Obama administration's regulation of carbon emissions, said on Thursday she will step down after almost four years.

Her tenure was marked by opposition from industry groups and Republican lawmakers to the EPA's first-ever crackdown on carbon emissions, as well as other anti-pollution measures.

Analysts said whoever succeeds Jackson will probably face a spate of lawsuits to challenge rules that the EPA will finalize governing power plants, industrial sources and oil and gas production.

"This is shaping up to be four years of litigation," said Christopher Guith, vice president for policy at the U.S. Chamber of Commerce's Energy Institute.

Given the partisan divide, Guith said, legislators would struggle to draft laws that could serve as alternatives to the EPA's pending suite of carbon and air regulation.

"As we look to an even more divided Congress, the action will be in the federal courts," he said.

The U.S. Court of Appeals for the District of Columbia circuit, which hears most challenges to federal environmental rules, is likely to be busy as industry groups and states bring their cases against the EPA's rules after they are finalized.

The court sided with the agency in most of the recent challenges, most notably upholding its decision to use the Clean Air Act to regulate carbon dioxide emissions.

David Doniger, policy director of the National Resources Defense Council's Climate and Clean Air Program, said this could bolster the EPA as it tackles rules that may be more controversial than those rolled out under Jackson.

"The agency has a very good batting record on the clean air side. Carbon and climate (regulations) have come through completely unscathed," he said.

CARETAKER ADMINISTRATOR?

After the EPA was a political lightning rod during the first Obama administration, the president is likely to seek out a safe, possibly internal choice as Jackson's successor, or to avoid the confirmation process altogether.

"There are just so many arrows pointed at this agency," said Susan Tierney, managing principal and energy and environment specialist at Boston-based Analysis Group

Bob Perciasepe, deputy EPA administrator, will take over on an interim basis and could continue in that role indefinitely.

He previously worked at the EPA during the Clinton administration, specializing in water and air quality. Before rejoining the agency, Perciasepe was a top official at the National Audubon Society, a major conservation group.

Tierney said she expects the EPA to stay the course on its current agenda, especially as the agency faces some court-ordered deadlines to finalize rules, such as for coal ash, industrial waste from coal-fired plants and ozone standards.

PRIORITY ON CLIMATE CHANGE?

Some environmentalists have criticized Obama for being too timid on climate issues during his first term. But in his acceptance speech on election night in November the president gave a nod to climate change, raising hopes for more activism.

The White House may lean on the EPA to tackle one of the largest sources of U.S. greenhouse gas emissions, the current fleet of power plants, said Jeremy Symons, senior vice president at the National Wildlife Federation.

"The president has made clear that climate change is one of his top three priorities for the second term, so that means EPA needs to do its job," Symons said.

This, he said, means the agency needs to finalize the rules for new power plants and the standards for limiting carbon emissions from existing power plants.

The NRDC's Doniger said once the EPA meets an April 2013 legal deadline to finalize the greenhouse gas rules for new power plants, it will then have to address standards for existing plants.

The EPA has to start promptly in the beginning of the second term, said Doniger, because the rulemaking process is "a multistep process that will take time."

The controversial task will almost certainly trigger lawsuits because the rules will target a large number of domestic power plants and could jeopardize electric reliability.

"It's high stakes litigation when you are talking about bringing 40 percent of generation under regulations. That's disastrous," the Chamber's Guith said.

Guith said that while the EPA does have the authority to regulate carbon dioxide using the Clean Air Act, its rules are too difficult for industry - forcing the litigation.

"This EPA has been so aggressive in pushing the envelope by way of the compliance timeline that it has made itself more vulnerable to lawsuits," he said.

The EPA may also face legal challenges from environmental groups and certain states. The NRDC, the Environmental Defense Fund and the Sierra Club joined a group of nine states led by New York that threatened to sue the EPA last year to propose air pollution standards for oil and gas drilling.

They said that the drilling, transportation and distribution resulted in a significant release of methane, a potent greenhouse gas that is not regulated by federal rules.

Doniger said the group is trying to negotiate a timeline with the EPA to set a rule but could sue the agency if it doesn't agree a schedule by February.

(Additional reporting by Ayesha Rascoe; Editing by Gary Hill)

View the original article here