As President Obama tours Asia, and Democrats lick their wounds and contemplate the next two years, all eyes are watching Washington to see which of the so-called ‘Bush Tax Cuts’ will survive their December 31 sunsets.

The President has repeatedly come out against extending the tax cuts on the richest Americans, those making over $250,000 per year. Republicans have objected, saying that the effect on small business owners will harm the economy. Earlier this week, the President’s deficit-cutting commission released a report that raised some eyebrows.

Among their suggestions:

1. Eliminate all deductions for individuals. That includes the mortgage interest deduction, long thought to be an untouchable option. In fact, I have had clients take out a mortgage simply for the tax write off (not that that makes any sense – paying $1 in interest to save 28 – or even 39 – cents is a bad idea. If you want to throw good money away, go to a casino. At least there you can have fun while doing it).
2. Cut out business deductions, such as R&D credits. This would allow the corporate tax rate to drop to 26%. But when company such as Google pays only 2.5% in taxes, does the actual tax rate matter? Even better, this plan would, ostensibly, represent a tax increase for the larger corporations, while being a tax cut for smaller businesses.
3. Shrink the tax brackets. Under the plan, the current personal tax brackets would shrink, since no deductions would be allowed. The lowest bracket would drop to 8% from 10%, and the upper bracket would be in the 25% range.
4. Develop a territorial tax system. Under a territorial tax, foreign income would not be taxed on repatriation – so companies could bring profits ‘home’ without a penalty. In theory, they would then spend those profits in the U.S. -  though it may also encourage multinationals to invest more abroad.

The plans, obviously, are rather complex, and incomplete. But two things are obvious: First, that it is fairly likely that there will be some movement on corporate tax; second, that the movement is likely to benefit large corporations with significant market presence abroad, and either have no impact on, or negatively impact, smaller businesses.

Stay tuned.