Barack Obama called on Congress immediately to overhaul the US corporate tax code, as he laid out a $3,730bn budget request designed to improve America’s position in the global economy and start shrinking its large fiscal gap.

While signalling that tax reform could take several years, and was a painstakingly difficult process, the White House said it was necessary to transform a system that “makes our businesses and our economy less competitive as a whole”. The budget proposal said the US should eliminate special tax breaks and loopholes and use the savings to lower the corporate tax rate from 35 per cent, one of the highest levels in the developed world.

But it said that any reform should not add to US budget deficits, which could prove a sticking point with the business community, and did not offer any additional insight into which corporate tax incentives the White House would like to see cut – beyond certain tax breaks for oil and gas companies.