"At one time in the '80s, we had a competitive corporate tax rate," said Dorothy Coleman, vice president of tax and domestic economic policy for the National Association of Manufacturers. "We've fallen behind by standing still."
But the rate in the tax code isn't what many companies pay because of a host of deductions and tax credits. In 2011, the effective corporate tax rate in the U.S. was 29.2 percent, roughly in line with the 31.9 percent average of the six other largest developed economies, the Obama administration said.
The White House said that parity does not mean the statutory rate shouldn't be reduced. It simply means that many tax breaks should be eliminated, allowing the rate to be lowered without adding to the deficit.
Democrats and Republicans agree on that point. Those breaks, totaling $159 billion last year, include deductions for depreciation and research expenses as well as credits for domestic manufacturing, according to the Congressional Research Service.
Obama has proposed eliminating dozens of breaks for specific industries, particularly oil and gas production, while adding new breaks to encourage domestic manufacturing and alternative energy development.
Camp also wants to get rid of some deductions to bring the rate down to 25 percent for all companies. He wants a corporate tax overhaul to result in the same amount of money flowing from corporations to Washington.
Businesses have been pushing for such a revenue-neutral approach.The White House has said its plan would not add to the deficit because the elimination of breaks would raise $250 billion over the next decade, enough to offset the rate cut. But it has not committed to a revenue-neutral approach, leaving open the possibility that it would push for more revenue from corporate taxes to reduce the deficit.
Some Democrats believe that corporations should be paying more in taxes to Washington.
"There's a lot of offshore tax havens that we should not allow to be sucking up money from our Treasury," said Sen. Carl Levin, D-Mich.. "Tens of billions of dollars a year are involved in these corporate loopholes."
Obama wants to set a new minimum tax rate on foreign corporate profits, even if they are never brought back to the U.S.
The U.S. is one of the few countries that taxes foreign earnings when they are brought back to the country, which leads many companies to keep the money offshore. Companies with foreign operations also often plow those earnings back into those countries.
Obama's minimum tax on foreign earnings probably is the biggest hurdle for corporate tax reform, analysts said.
Republicans and leading business groups want the U.S. to go in the other direction -- changing to a so-called territorial system in which profits are taxed only in the country where they were earned.
"America is 5 percent of the world's market. It's in our best interest that our companies compete overseas ... which means generating profits in those markets," said Carl Guardino, president of the Silicon Valley Leadership Group, which represents the region's businesses. "Let's stop hindering these American companies from earning profits overseas and bringing them home."
Michael Ettlinger, vice president of economic policy at the Center for American Progress, a liberal think tank, said there's a way to satisfy both sides on the issue. The U.S. could change to a system in which profits are taxed in the country where they were earned, except in the case of countries with very low tax rates. Profits from those countries would be taxed by the U.S. at a minimum rate to discourage companies from using low-tax countries as tax havens. Japan and Germany have a similar approach.