* Plan to revamp corporate tax could come in May -source
* Obama plan would cut top corporate rate
By Kim Dixon
WASHINGTON, May 1 (Reuters) - The Obama administration is considering a plan to force more businesses to pay the corporate income tax, an industry group said, in an overhaul package that could be unveiled as early as this month.
Under the proposal, entities with more than $50 million in gross receipts would pay the corporate income tax, instead of the individual income tax they now pay. Partnerships like law firms and hedge firms would likely be the most affected.
"Treasury Department staff are working on a tax reform proposal that reportedly would include corporate taxation of any pass-through entity with gross receipts of $50 million or more," said a letter to members of the National Association of Publicly Traded Partnerships from its executive director Mary Lyman sent on Friday, obtained by Reuters.
Pass-through entities are those in which the income and tax liability "passes through" to the individual rather than being taxed at the company level.
The top corporate tax rate is now the same as the top individual tax rate -- 35 percent. Still, many firms such as private equity and hedge funds have certain income taxed at lower capital gains rates.
Lyman's group represents publicly traded partnerships investing mostly in energy companies. Such partnerships, also called Master Limited Partnerships, pay no tax themselves. Instead the tax is paid by individual owners.
The Obama administration is drawing up a plan to trim the top 35 percent corporate tax rate, among the highest in the world, while cutting deductions, credits and other breaks. Details could emerge as early as this month, according to a source familiar with the proposal.
Corporate America backs a lower rate, but is wary about what breaks it could lose.
White House spokeswoman Amy Brundage said the process is still unfolding.
"No decisions have been made about the content of any specific reform proposal or the timing or manner in which the administration will move this dialogue forward," Brundage said.
Many lawmakers object to reforming corporate taxes alone, because simply cutting the corporate rate excludes many businesses that pay tax through the individual tax code.
Treating more business income in the same fashion is one way to address this concern.
Many businesses would object to a plan that subjects them to the corporate tax.
"We believe that if this proposal is released in its current form, the fact that it sweeps so broadly will ensure widespread opposition from business groups and many in Congress," Lyman said in her email to members.
Treasury Secretary Timothy Geithner has suggested that changes to how types of business are taxed would be considered.
"Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses to choose whether they're treated as corporations for tax purposes or not," Geithner said at a congressional hearing this year. (Additional reporting by Rachelle Younglai; editing by Mohammad Zargham)