I don't agree with all of Clinton's "14 ways to put America back to work," but I definitely believe he's right about one of them: cutting corporate taxes. Yes, you read that right. The chief paragon of the Democratic Party espouses cutting corporate taxes, while the majority of his political chums, including President Barack Obama, advocate raising taxes on the wealthy. In his Newsweek article, Clinton was emphatic: "Cut corporate taxes. ... I'd be perfectly fine with lowering the corporate tax rates (and) simplifying the tax code."
America's corporate tax rate is now the second-highest in the world. Since 1993, it has been 35 percent. Lowering it would better position America to compete with other countries, reduce the loopholes that cause unfair disparities and, mostly, bring production and offshore monies back within our country and economy.
Six months ago in his State of the Union speech, President Obama coddled the idea of lowering the corporate tax rate. But ever since, his actions have affirmed that it wasn't a very serious or long contemplation, especially in light of his proposals to further tax the wealthy, corporate jet owners and oil companies.
Robert McDonald, CEO of Procter & Gamble Co., and groups such as the Washington-based Business Roundtable have been trying for months to get the Obama administration and lawmakers to set aside deficit concerns and focus on decreasing the corporate tax rate. Even the Bowles-Simpson plan recommended it, but it, too, was rejected by the present administration.
So why hasn't the Obama administration given this corporate shot in the arm to our economy? Answer: According to the congressional Joint Committee on Taxation, each percentage point reduction to the 35 percent corporate tax rate could cost $8 billion or more a year in revenue to the Treasury. There's the rub!
The fact is that the federal government's actions and regulations have done more to cripple than they have to help Wall Street and Main Street businesses across America. Proof came this past Friday, when we learned that unemployment jumped back up to 9.2 percent. And the U.S. Small Business Administration recently reported that federal government regulations over small businesses cost our economy more than $1.75 trillion annually. That translates to $10,585 per employee for a business with fewer than 20 employees. Those same companies pay roughly $2,830 more per employee than those with 500 or more employees to comply with government regulations. If Washington is serious about reviving our economy for the long term, then major reform is needed to remove these types of federal barriers from the private sector.
America's economy and standing in the world scream for a corporate tax cut. But because the White House has a record of double talk, broken promises and underhanded tactics, the nonpartisan and pro-taxpayer organization Americans for Tax Reform drafted some principles for the White House to follow if it wants its corporate tax cut to have a stimulating effect on the economy:
1) "The rate needs to come down -- way down," ideally under the average European rate, 25 percent, so we can "attract jobs and capital from the rest of the world."
2) "Don't raise taxes." Corporate tax decreases "should not be an excuse to raise net taxes" (as Obama's deficit commission did).
3) "Move ... from 'worldwide' taxation (where all income of U.S. companies from all around the world is liable to be taxed by the IRS) to 'territorial' taxation (where only U.S.-source income is taxed)," making "international deferrals and credits unnecessary."
4) "Resist the temptation to lengthen depreciation lives," which "will only bias toward consumption and away from productive investment."
5) "Remember that the corporate income tax is only the first act of a two-act play. After-tax corporate profits distributed to shareholders are double-taxed as dividends. After-tax corporate profits retained by firms eventually come out in the wash as taxable capital gains to shareholders. An integration of both bites at the apple would truly be a pro-growth and comprehensive tax reform effort on the corporate side."
6) "Don't forget about corporate capital gains and dividends received. Unlike individuals, corporations don't have a preferential rate on capital gains, and cannot exclude all the dividends received from other corporations. Dealing with the capital stock and portfolio income of corporations is a necessary component to reform."
7) "Don't pick winners and losers. ... Favored companies should not get light treatment. Rather, the goal of a revenue-neutral corporate tax reform (as opposed to a simple rate cut, which remains ATR's preference) should be to broaden the base as much as possible in order to lower the rates as much as possible."
America's economy and national debt are at the brink, and it's time the White House quit living in a fiscal fantasy land. Even more, it's time Americans quit believing the present administration is going to wake up and fix our economy with its inadequate and inept solutions.
It's time that all Americans started working and preparing for a new president, before our country faces a collapse from which there is no recovery and a permanent vassalage to all the countries to which it owes money. As Thomas Jefferson once said, "we must make our election between economy and liberty, or profusion and servitude."