Friday, February 24, 2012

Nobody's buying what he's selling

President Obama's plan to reform corporate income taxes is so wrongheaded that almost no one supports it.  Economists are nearly unanimous that the tax rates should be lowered to internationally competitive levels and that the tax base should be broadened by reducing industry-specific favors.  The President's plan does lower rates somewhat, but it continues to tax on a worldwide rather than a national basis and merely swaps favorable treatment from some industries to others.  Even the Associated Press isn't falling for it:
President Barack Obama wants to close dozens of loopholes that let some companies pay little or nothing in taxes. But he also wants to open new ones for manufacturers and companies that invest in clean energy.
To some analysts, the new loopholes risk upending the level playing field Obama says he wants to create.
Some also fear that companies could game the system to grab the new tax breaks.
"The administration is not making sense," says Martin Sullivan, contributing editor at publisher Tax Analysts. "The whole idea of corporate tax reform is to get rid of loopholes, and this plan is adding loopholes back in."
Economists across the political spectrum support a kind of grand bargain: cut corporate tax rates while deleting tax breaks that benefit a favored few.
When the AP, NPR, the Wall Street Journal, and Reason magazine are in general agreement, you might have a credibility problem.

Treasury Secretary Tim Geithner was quoted as saying "We want to restore a system in which American businesses succeed or fail based on the products they make and the services they provide, not on the creativity of their tax engineers or the lobbyists they hire."

This is a load of bunk. What he really meant was that "We want to restore a system in which businesses succeed or fail based on the tax engineers and lobbyists that we like, not those who Republicans like."