President Barack Obama launched a dialogue with corporate America on Wednesday over business tax reform, offering his first clear plan to cut the corporate tax rate, with little prospect of it becoming law in an election year.

The President proposed cutting the top corporate tax rate to 28 percent from 35 percent. This would address U.S. corporations' long-standing gripe about the rate being too high. It is the world's second-highest after Japan's corporate rate.

In return for lowering the tax rate on businesses, the plan calls for broadening the corporate tax base by ending a number of tax breaks, some spelled out previously in Obama's budgets, and most sure to be resisted by powerful corporate interests.

In a move partly to counter the unveiling of an economic plan by Republican presidential contender Mitt Romney, Obama's proposal was rolled out at a briefing by Treasury Secretary Timothy Geithner, likely marking the start of lengthy negotiations.

"The current Tax Code was written for a different economy, a different era," Geithner said. He plans to meet next week with members of Congress to try to win support for the plan.

"This process will take some time. It will be politically contentious, some will say these proposals are too tough on business, others will say they are not tough enough," he said.

Complicating the effort will be the approaching congressional and presidential elections in November, as well as deep divisions in Congress that have prevented lawmakers from dealing effectively with tax and budget issues for many months.

One tax break targeted in the Obama plan is the "carried interest" loophole that lets managers of private equity and some other funds pay the 15 percent capital gains tax rate on much of their earnings instead of the 35 percent top income tax rate.

The plan also tries to reverse tax incentives for corporations to relocate jobs and research overseas, while giving domestic manufacturing operations a special tax break.

In a new twist, the president proposed imposing a minimum tax on corporate profits earned in low tax countries.

Chances of a deeply divided Congress revamping a tax system regarded as convoluted across the political spectrum seems remote in an election year. The announcement is certain to fuel debate in the run-up to November's elections.

'Helpful Start'
The President's plan "is a helpful start to the much-needed discussion about how best to reform the corporate tax code," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a deficit hawk activist group.

"However, it would be best to reform the entire code - corporate and individual - as well as major spending programs, to pass comprehensive fiscal and tax reforms at once. That would be a real boost to the economy," she said.

After the presidential and congressional contests are decided in November, a number of major tax and budget issues will converge on Washington and new momentum for comprehensive tax reform may follow, analysts said.

Analyst Greg Valliere of Potomac Research Group called the timing of the release of the Obama plan a "cynical ploy" because Romney is expected to release his own tax reform plan shortly.

The administration's plan "has virtually no chance of winning enactment this year," Valliere said.

The last major rewrite of the tax code came in 1986 under Republican President Ronald Reagan, who raised corporate taxes.

Romney on Tuesday called for a flatter, fairer and simpler tax code. He is set to make a major economic speech on Friday in Detroit. Details of his tax plan were expected on Wednesday.

Obama last week unveiled a $3.8 trillion budget-and-tax proposal that called for aggressive government spending to boost the economy and for higher taxes on the rich.

On Friday, Congress approved extending a payroll tax cut through the end of 2012. Its expiration will coincide with several other fiscal earthquakes: the expirations of individual tax cuts enacted under President George W. Bush, and $1.2 trillion in automatic budget cuts across all government programs imposed as part of last year's deal to raise the debt ceiling.

After these events and others, analysts said, thorough tax reform may be a realistic prospect. For now, they said, tax proposals will largely amount to political messaging.

(Writing by Kevin Drawbaugh; Editing by Howard Goller and Will Dunham)

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