Can GE CEO Jeffrey Immelt talk President Obama into a major corporate tax cut? Immelt has been appointed to the new Council on Jobs and Competitiveness, which replaces the disbanded Paul Volcker Economic Recovery Advisory Board. Immelt was a member of that original board. Now he has a more elevated position in the Obama 2.0, allegedly pro-business, move-to-the-center Clintonesque White House.
Regarding the new President Obama, I am still trust but verify. But yes, of course, Jeff Immelt is a businessman through and through. He is a trustee of the Ronald Reagan Presidential Foundation board, while GE is a big sponsor of the Reagan Centennial Celebration. (Recall that the Gipper worked for GE as a spokesman and television host from 1954 through 1962.) He’s also a registered Republican who contributed to both Hillary Clinton and John McCain during the 2008 campaign. And last year, he harshly criticized Obama at a dinner in Italy, where he basically said: Obama doesn’t like business, and business doesn’t like Obama.
But what goes around comes around. Many business people wanted senior executives in the White House, and now they have two -- with GE’s Immelt joining William Daley, the former banker and new chief of staff.
GE had a rough time of it during the Great Recession. But in recent quarters it has turned quite profitable; its stock just hit a 52-week high. In an op-ed for the Washington Post, Immelt set out his agenda for continued economic recovery. He would focus on manufacturing and exports, free trade, and innovation.
So where’s the corporate tax cut? Well, Immelt offered one short line about “a sound and competitive tax system . . .” No, not exactly a ringing call to action. But I believe he will, in fact, push for corporate tax reform.
There’s nothing more important than full-fledged corporate tax-rate reduction in order to maximize U.S. economic growth. At 35 percent, our highest-in-the-world corporate tax should be knocked all the way down towards 20 percent.
And businesses taxes should be made territorial, not worldwide, in order to stop the double-taxation of foreign earnings. Business revenues held overseas, now reported to be about $1 trillion, should be repatriated to the U.S. with a 5 percent tax holiday.
Businesses also should enjoy permanent 100 percent cash expensing for new investment in plant, equipment, and research. Studies have shown that this combination by far offers the biggest bang for the buck in terms of additional GDP and job-creation.
And yes, broaden the base with loophole closers. A lower tax rate and full expensing is much more important than all those K Street credits and deductions.