Intro: "The Obama administration is proposing to lower corporate taxes from the current 35 percent to 28 percent for most companies and to 25 percent for manufacturers. ... Why isn't the White House just proposing to close the loopholes without reducing overall corporate tax rates? ... The Administration's initiative doesn't even make sense as a bargaining maneuver."
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Obama's Corporate Tax Cut Makes No Sense
23 February 12
he Obama administration is proposing to lower corporate taxes from the current 35 percent to 28 percent for most companies and to 25 percent for manufacturers.
The move is supposed to be "revenue neutral" - meaning the Administration is also proposing to close assorted corporate tax loopholes to offset the lost revenues. One such loophole allows corporations to park their earnings overseas where taxes are lower.
Why isn't the White House just proposing to close the loopholes without reducing overall corporate tax rates? That would generate more tax revenue that could be used for, say, public schools.
It's not as if corporations are hurting. Quite the contrary. American companies are booking higher profits than ever. They're sitting on $2 trillion of cash they don't know what to do with.
And it's not as if corporate taxes are high. In fact, corporate tax receipts as a share of profits is now at its lowest level in at least 40 years. According to the Congressional Budget Office, corporate federal taxes paid last year dropped to 12.1 percent of profits earned from activities within the United States. That's a gigantic drop from the 25.6 percent, on average, that corporations paid from 1987 to 2008.
And it's not that corporations are paying an inordinate share of federal tax revenues. Here again, the reality is just the opposite. Corporate taxes have plummeted as a share of total federal revenues. In 1953, under President Dwight Eisenhower, a Republican, corporate taxes accounted for 32 percent of total federal tax revenues. Now they're only 10 percent.
But now the federal budget deficit is ballooning, and in less than a year major cuts are scheduled to slice everything from prenatal care to Medicare. So this would seem to be the ideal time to raise corporate taxes - or at the very least close corporate tax loopholes without lowering corporate rates.
The average American is not exactly enamored with American corporations. Polls show most of the public doesn't trust them. (A recent national poll by the University of Massachusetts at Lowell found 71 percent with an unfavorable impression of big business - about the same as those expressing an unfavorable view of Washington.)
The Administration's initiative doesn't even make sense as a bargaining maneuver.
Republicans will just accept the Administration's lower corporate tax rate without closing any tax loopholes. House Republicans have already made it clear that, to them, closing a tax loophole is tantamount to raising taxes. And corporate lobbyists in Washington know better than anyone how to hold tight to loopholes they've already got.
Big business will fight to keep their foreign tax shelters. After all, it's almost impossible to distinguish between their foreign and domestic earnings, which is why the U.S. Chamber of Commerce and other business lobbies have spent the past three years trying to make it even easier for companies to defer U.S. taxes on income they supposedly earn outside the country.
Representative David Camp, a Michigan Republican who heads the House Ways and Means Committee, has already proposed a 25 percent corporate top rate and changes that would let companies avoid paying U.S. taxes on even more of the income they say they earn outside America.
Nothing is going to be enacted this year, anyway, so it would have made more sense for the Administration to support a hike in corporate taxes - and use it to highlight the difference between the President and his likely Republican challenger.
Mitt Romney wants to reduce the corporate tax rate to 25 percent before eliminating any tax loopholes. Rick Santorum wants to cut the rate to 17.5 percent and eliminate corporate taxes for manufacturers. Newt Gingrich wants to cut the rate to 12.5 percent and let companies write off all capital investments immediately.
It's discouraging. The President gives a rousing speech, as he did on December 6 in Kansas. Then he misses an opportunity to put his campaign where his mouth is.
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Comments
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Remember when dealing with the Republicans you are dealing with Bizzaro people and thinking. The Confederates were serious people that could not cope with the concept that slavery was passe. OK, so there are some similarities, but Bizzarro they were not.
You really are incapable of doing any arithmetic, and then adding context to the result. 1 + 1 is 2, but 1 apple plus 1 orange is 2 fruits. That is context. What a political party did 100 years ago is only relevant if the party holds to the same core belief system. The Democratic party, on the issue of Race has evolved. So haven't Republicans. It's the Tea Bagging, Tea Partiers that devo'd
Finally the dems came to the table and joined the republicans - the dems still had a higher rejection rate then the republicans.
The moral cowardice of the dems pretending that republicans were responsible for everything the dems did is pathetic.
So basically, when you talk about Democrats "coming to the table", are you unaware of the history that lead to the Voting Rights Act, or is your misstatement intentional?
I'm not allowed to make certain allegations regarding your character, or my comment won't be displayed, but it gets a little tiresome to have to CONSTANTLY correct you about common knowledge that you could easily look up, and you're old enough to have lived through. It's also tiresome to correct you, and have you just drop the subject, only to bring it up again two weeks later, as if nothing had happened.
This really makes me question your motives. I really want to know if you're doing this on purpose? What are you trying to accomplish?
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RSN, PLEASE PLEASE PLEASE display this comment. I can't directly accuse him of being a troll because you won't display it. I avoided that. Please don't tell me I was insulting. I am being polite and respectful. But, I DO want an answer to these questions. PLEASE DON'T SHUT ME OUT.
instead hurling more vindictive?
Why am I not surprised?
Look at actual date vs claimed date,
look at voting percentages by party and by house for/against civil rights legislation - the democrats were last to the table and grudgingly so when they finally go there.
Look at who the Democrats were who didn't vote for it initially. Look at where there were from and what their constituents decided to do afterward.
This isn't just about politicians. THIS IS ABOUT VOTERS. What happened to Southern voter political affiliations after civil rights legislation was passed by that DEMOCRATIC CONGRESS and DEMOCRATIC PRESIDENT.
How did the repuglicans pass legislation while Democrats controlled the House, the Senate, AND the White House, IN SPITE of the fact that Democrats didn’t want it?
Was the Democratic Party TOO CONSERVATIVE to pass legislation THAT IT SPONSORED? If so, what happened to all of those CONSERVATIVE Democrats? Did they continue to make the Democratic Party too CONSERVATIVE, or did they join the MORE CONSERVATIVE repuglican party?
Are you saying that the repuglican party is actually the home of liberalism in America?
So, Pre-1965 Southern Democrats are now repugnicans.
The Civil War ended 100 years before 1965.
I'm surprised you didn't know that Martin. Are you sure your post was honest?
Of course, that still doesn't explain the "strategy" of making such a wildly UNpopular decision while running for re-election. What could his thinking be? The norm would be to promise a RISE in corporate taxes, only to whine that the repugs won't cooperate after the election and therefore he simply has to give them everything they want. What on Earth could possibly force him to make a campaign promise that only a repug could love, while trying to win an election against unbelievably unpopular repug idealogues?
There is constant mention of protecting American jobs in the Administrations proposals.These were outlined at the Presidents speech and on every appearance The President has made over the country since that momentous speech:
Tax cuts given to companies who ship jobs overseas will be eliminated; there will be a tax placed on corporations that take jobs overseas; there will be a tax break for companies that bring jobs back to the US and tax breaks for those who stay.
The tax breaks for those who stay is what Obama is proposing with the loopholes CLOSED. Robert knows this.
All of the other plans and policies this administration proposed, that Robert opposed, are working.
Maybe, this is why Robert did not get the position he had coveted in this administration. He does not have what todays times and challenges require .
Please do not give up hope.
(1)-Find a meaningful choice -- Socialist Alternative, Socialist Workers, Communist Party USA -- and vote for that. Thus you retain your franchise (thereby defying the Ruling Class effort to discourage us from voting), while simultaneously making your ballot meaningful as a protest.
(2)-If none of the socialist parties appeal, and if your state allows you the option of a write-in vote, write in "none of the above."
(3)-No matter what, don't be seduced into voting for "the lesser of two evils"; remember the "lesser" often proves to be the worst, as Obama has demonstrated time and again. Bear in mind whichever Ruling Class candidate wins, the future for us in the 99 Percent is going to be bad -- unspeakably bad, murderously bad, savage in ways we literally cannot now imagine -- and that it will remain bad as long as the capitalists control the government.
"Nothing in the world is more dangerous than sincere ignorance...." - Dr. Martin Luther King, Jr.
Sometimes things that make no sense are required to push something forward.
How much would it help our national budget woes if everyone were to contribute a 1% surtax on top of her/his final tax due bill?
- nothing is stopping you from doing it right now!
add 1 % to your total tax - not the bill at the end of the year, else people who over paid should get even more back - like an interest payment on their money that the government had free use of.
No one wants a tax increase, of course.
My simple but discomforting question goes unanswered... as Martintfre clarifies below, by everyone's chipping in that 1%, how might it affect the government's revenues?
Three decades ago here in Wisconsin, we paid a temporary 10% state tax surtax that set our books straight. It also made Tony Earl (D) a one-term governor, ousted by Tommy Thompson (R) who went on to serve four consecutive terms.
(1)-The reality of capitalism – infinite greed elevated to maximum virtue;
(2)-The reality of capitalist governance – absolute power and unlimited profit for the One Percent, total subjugation and genocidal poverty for all the rest of us;
(3)-The reality of Barack the Betrayer (see the second reality above) as proven by the (seductive) Big Lies maliciously uttered by Obama the Orator (for example, "change we can believe in");
(4)-The reality of Moron Nation – our electorate so dumbed-down (or so demented), we fall for the same Big Lies year in and year out;
(5)-The reality our constitutional dream is dead, slain on 22 November 1963, the final nail to be driven into its coffin-lid by NDAA on 3 March 2012.
No matter which team wins the elections – DemocRat Donks or GOPorker Dumbos – there's no change forthcoming. The One Percent will still be Tsars and Grand Dukes, We the People will still be their serfs. We'll have lots of Father Gapons to lead us to anther era of Bloody Sundays, but this time there's no Lev Bronstein even on the far horizon.
Apropos World War II, once you recognize fascism as the inevitable outgrowth of capitalism (and some form of Nazism as the inevitable outgrowth of fascism), then you understand WW II was the death struggle between two kinds of fascism: the blatant, jackboot fascism of the Axis and the euphemistic, velvet-glove fascism of the western allies and nationalist China.
However the Soviet Union understood the so-called Western Democracies as velvet-glove fascist states. Hence the Soviet name for WW II: "the Great Patriotic War against Fascism," also "the Great Motherland War against Fascism."
Hence too with the death of the USSR, the “Western Democracies” began their shift – especially obvious in the U.S. – to jackboot fascism. Though the USSR was never a workers' paradise, it did force capitalism to adopt the (quickly vanishing) humanitarian facade.
To your point about the Civil War, Lincoln had wanted to treat the South and the freed slaves fairly, not as conquered territory and second-class citizens. He didn't get very far with that; his second inaugural address sealed his fate. And again, we see the hand of those who wanted to exploit the South after the war, not "bind up the wounds." The same type of M.O. has prevailed ever since. It's just much more obvious now.
In 1865 the Tennessee River was navigable by steamboat from its source at the confluence of the Holston and French Broad rivers at Knoxville (navigability actually extended upstream to the first rapids in each of those rivers), thence all the way to its mouth, where it enters the Ohio River at Paducah (Kentucky).
But by 1900, the Tennessee was so silted from soil erosion due to clear-cutting it was not navigable at all.
Hardest hit by these capitalist depredations was of course Southern Appalachia which – irony of ironies – had supported the Union (the reason for example West Virginia seceded from Virginia and why there is a National Cemetery filled with Tennessee-born Union dead in Knoxville).
How sad these facts are forgotten in the Confederate-flag mania that sweeps Southern Appalachia today...
Indeed it was the ruination inflicted by clear-cutting that necessitated creation of the Tennessee Valley Authority in 1933 as part of the New Deal. TVA not only restored navigability to the Tennessee River but literally saved the entire region from the seemingly endless economic depression inflicted by the timber barons and other such predators after 1865.
Ah the shameless shill for big brother squeaks his disapproval --
Hey Reich -- I have an idea, Walk the walk
Live at the poverty level and send in all the rest of your money to the government.
Better yet. Lets round up all the folks lying on the Beach or at the pool at the most expensive resort in each state.
From each of them we take 1 credit card, max it out with cash withdrawals and hand the $$ back to those that don't pay taxes.
I bet that would generate enough economic activity so that 1/2 those folks would earn enough next year to pay some taxes.
I call it the Robin Hood Economic Stimulus Program. Don't you just love it!
The poor are working, and working hard. Perhaps an iconic hero such as Sir Robin would make you understand what is going on today has been well understood for hundreds of years.
"Lets round up all the folks ..." - that is big brother with guns against people with no guns talk.
and becasue of the magic of the FED - it is not necessary to max any individuals credit card we3 already done it - it is called the national debt at the moment over 50,000 per person... At what point do you get the idea that endless theft is not a successful solution?
By the way We honest libertarians understand a simple idea of voluntary interaction between consenting adults.
Honest libertarians know that politicians with guns is how the Hitler's the Stalin's and Mao's come to power and how hundreds of millions are murdered because of it.
Since I qualify my Libertarianism, you cannot lump it into your sad concept of governance.
The whole confiscation rap was to bring home a point. The rich folks got more of America's money than they should. This fiscal imbalance over time creates a societal imbalance. We are seeing it today. The rich and their sycophants call the demand to restore the balance necessary for a politically free and open society "class warfare". All that means is they got more than their share and they will use that excess money to destroy those that want to restore balance.
I stated that Robin Hood is iconic; a symbol that sometimes those that are taxed beyond their means and whatever little wealth they have is taken from them need a leader that can evoke the hope of freedom. JFK was able to do that, BHO some believed naively would be a Robin Hood as well. So far he has not.
Does your flavor of Libertarian-ism even take into consideration the concept of the whole? That a whole human is better than a trillion independent cells? LiberalLibertar ian-ism does.
You qualified socialism - collectivism, and falsely claim it to be Libertarianism.
For people who actually care about the truth, take a minute go do the worlds smallest political quiz http://www.theadvocates.org/quiz
and see for your self what real libertarian mind set is about - not the faux one here masquerading as a libertarian and totally messing up the message.
The rights of individuals are important
- enslaving those of ability to satisfy others wants is not a libertarian message.
A just government respects the rights of all people equally and grants special favor to none.
By the way LiberalUnLibert arian - I score 100,100 .. what is your score?
I don't really care what the text book definition is. However, I define Libertarianism as theory of government where the gov. does not interfere in interpersonal interactions, unless that interaction results in harm to the entirety. Individual Liberty as in any free society always end where my nose begins. As a Liberal, that means the gov has more to protect me from than direct physical harm. Indirect harm, such as pollution, unethical banking activities, are also where my nose begins. Educating the whole of society is critical for the "enlightened" exercise by all citizens of their individual freedoms and responsibilitie s that are the market price of those freedoms. Thats a nutshell, like it or hate it, I don't care. But if you cannot accept the label I bestow upon myself at no harm to you then either ignore it or just call me a boy named sue or a girl named steve.
And what the heck is a score of 100,100?
When you going to 'round up' a bunch of people that is total interference in their lives, And your purpose is to enslave them for others benefit.
Try the link www.theadvocates.org/quiz
and you can see what the heck a score of 100,100 is.
instead hurling more vindictive.
Why am I not surprised.
NOW THAT I'VE TAKEN YOUR QUIZ ARE YOU GOING TO ANSWER MY QUESTION?
It's even SHORTER than your biased quiz.
He never answers a question, just falls back on his standbys.
He hasn't pulled out the one about the Political Parties being Corporations yet!
I have taken the quiz.
Economically I rated LIBERAL
Personal Rights I rated LIBERTARIAN
hmmm. isn't that what I claimed;
A LiberalLibertar ian!
Of course the poll is totally devoid of any substance but I do have a soft spot for irony.
HaHaHaHa,
LL
My bet is that when the dust settles, corporations will have a lower tax rate and more loopholes. And more tax credits, so that if they owe less than $0 they will get rebates from the US regime.
Thieves don't stop stealing until you kill them or lock them up for life. US corporations are run by thieves. Now Obama is trying to work with the thieves to make their lives easier. Give me a break. And also consider who is now Obama's chief of staff -- Jacob Lew, former CEO of Bain Capital, Romney's old company. Whose side do you think he is on?
The rhetorical strength of bringing Corporate profits back into the US is worth millions of votes. The fact that it will not add a single job and only offsets the current tax breaks will never be talked about by the MSM.
Add the above to the rhetorical advantage of claiming that he forced or tried to force GE, Exxon and others to pay more taxes is also worth millions of votes.
This is not negotiating by caving. He has just grabbed the Republican territory outright; and forced them to stake out positions that will not get them back the votes Obama just stole.
I guess I am just feeling a bit optimistic today!
DISCONTINUE THE CORPORATE TAX DEDUCTION FOR EMPLOYER PROVIDED HEALTH CARE.
This is one of the few transfers not taxable to either the payer or recipient. Taxing either side of the transaction could advance the movement toward "health-care-for-all." Most likely corporations, without the tax detectability, would restrict the health care benefit to high income employees. Alternatively, the health care benefit could be made taxable to all who receive it. This way health care benefits received by public sector workers would not be tax free while the corporate provided benefit was taxed. Taxing employer provided health care on one side of the transaction would level the playing field for those who don't receive tax-free health care, who pay out of pocket for their care and insurance, don't itemize deductions and are fortunate to not have medical expenses in excess of the 7.5% threshold that allows deduction.
Why should the average taxpayer subsidize the subversion of the political system?
I hope we don't think that the extra money corporations get from further tax cuts will end up in the pockets of the workers.
It is immaterial whether he could get this passed but just one more example of him saying things merely to gain political cover without seriously considering the ramifications of his rhetoric if enacted.
http://www.accuracy.org/release/business-leaders-want-big-corps-to-pay-more-not-less/
I don't understand. Isn't lowering the corporate tax rate and closing the loopholes part and parcel of the same legislation? Can Republicans actually choose to accept the lower tax rate without closing any tax loopholes? How does that work?
I am no economist and I respect Dr. Reich. But this doesn't seem like a bad idea to me. If the end result is the elimination of loopholes and the entire reform is revenue-neutral, that seems like a good result despite the lower rate. And it seems to put the onus on corporations to bring back the manufacturing as well as make the USA more attractive to international companies for manufacturing jobs.
If the missed opportunity to close loopholes without an offset is the only reason Dr. Reich doesn't like this bill, I wouldn't consider that enough to condemn it. Obama has made a number of moves the efficacy of which only came into focus over time. This President is doing things to create jobs. I'll bet this does just that if it passes. Let's see what happens.
Still, I won't hold my breath.
However, (1) isn't going to happen, and they've already lost on (2) because of their own irrational stance.
You have other options. Here's one - Jill Stein - and read carefully what she explains about the payroll tax cut which some of use have been trying to tell you about (it cuts FICA and is the road to getting rid of Social Security), the sham deal Obama cut with the banks re foreclosures and so on.
Wake up people. We are dead in the water if Obama or any of the Republicans get in. In case you haven't noticed, Obama has escalated the fake war on terrorism, kept Gitmo open, is heavy into torture, has signed the NDAA which makes America a full-fledged police state and Obamacare is despotism disguised as health care reform. Those are just a few things.
Start thinking out of the D and R box most of you are stuck in.
http://www.jillstein.org/same_old_trickle_down_policies?utm_campaign=dc_va_az_nm&utm_medium=email&utm_source=jillstein
Jill Stein has run for office here in MA a few times. When allowed into the debates for Gov. the last time around, she showed that a so-called "fringe" party candidate is not necessarily on the fringe. Even the Conservative Boston Herald took her seriously.
Presuming that MA is in Obama's pocket come November, Jill Stein will be getting my vote. It is critical to vote for the Green Party in order to maintain their legal standing to automatically get on the ballot for the next election. I would not be surprised if that was true in other states as well.
Because everything our President understands about economics he learned in Kindergarten, or at least could have.
He treats economics like the student only there to pass the test.
And because he continues to rely on economists that channel Larry Summers, and rely on forecasts made by Mark Zandi as a "coping mechanism."
It's either that... or it's because you, Stiglitz, Johnson, Krugman, Rogoff, De Soto and Volker are all refusing to talk to him.
I'd be happy to send him a copy of "Aftershock" tomorrow if you think there's any chance he'll have an Eccles-type awakening?
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