Michael Barone

"The tax system should be simplified and work for all Americans with lower individual and corporate tax rates and fewer brackets."

That's from the Obama administration's 2009 proposals for tax reform, straight from whitehouse.gov.

"Because our corporate tax system is so riddled with special interest loopholes," the document goes on, "our system has one of the highest statutory rates among developed countries to generate about the same amount of corporate tax revenue as our developed country partners as a share of our economy."

That is still accurate except that, now that Japan has lowered its corporate tax rate, the U.S. is not "among the highest" but is the highest among developed countries.

The first step in establishing good public policy is identifying problems with and weaknesses in current policy. On the corporate tax, President Obama and his administration started off on the right foot.

Unfortunately, they haven't moved any further.

Not while Democrats held supermajorities in both houses of Congress in 2009 and 2010. Not in the so-called grand bargain negotiations with House Speaker John Boehner in 2011.

And not in Obama's second term. Acting apparently on the belief that he voiced on the campaign trail, that the Republicans' "fever" would break once he was re-elected -- evidently he regards opposition to his policies as sickness -- Obama upped the ante.

His previous proposals for corporate tax reform were revenue-neutral. Rates would be cut and preferences eliminated so as to maintain the same revenue stream.

But his 2013 proposal was different. Corporate tax reform would have to increase revenue. More money to spend on infrastructure or food stamps or crony-connected solar panel subsidies.

Coupled with that was the appointment of Jack Lew as secretary of the Treasury. Participants in the 2011 grand bargain discussions reported that Lew was the most partisan and obdurate of administration negotiators. His appointment was a signal the president wanted no deal.

Even so, Senate Finance Committee Chairman Max Baucus, a Democrat, and House Ways and Means Chairman Dave Camp, a Republican, engaged in extensive negotiations with a view to overall tax reform.

They recognized that the high corporate tax rate handicapped U.S.-based firms. They understood as well that the U.S.'s near-unique worldwide taxation policy hurt them further.

Other countries tax only profits made domestically. The U.S. taxes profits made abroad minus any foreign corporate tax paid.

As a result, U.S. corporations leave trillions in profits overseas because they get taxed if they bring it back home to do nefarious things such as create new jobs.


Michael Barone

Michael Barone, senior political analyst for The Washington Examiner (www.washingtonexaminer.com), is a resident fellow at the American Enterprise Institute, a Fox News Channel contributor and a co-author of The Almanac of American Politics. To find out more about Michael Barone, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com. COPYRIGHT 2011 THE WASHINGTON EXAMINER. DISTRIBUTED BY CREATORS.COM