Giving with one hand and taking with the other
So we should all be grateful that President Obama is just now coming out for a corporate tax rate cut? But does anyone really believe he’s had a supply-side epiphany?
That this is an election year surely wouldn’t have anything to do with his apparent change of heart, would it? He’s been president for more than three years, and Republicans have been clamoring all that time for a reduction in the world’s second-highest corporate tax rate. So don’t you think that if Obama truly favored this, it would have happened long ago?
But there’s something more cynical about Obama’s new proposal. It wouldn’t operate as advertised.
As we get closer to the 2012 general election campaign, Obama wants to be positioned to compete with the eventual nominee on this issue. Newt would cut the current 35 percent rate to 12.5 percent. Romney would reduce it to 25 percent. And Santorum would reduce it to 17.5 percent for all corporations except domestic manufacturers, which would be exempted from the tax.
Obama calls for a modest reduction, to 28 percent, which would still be reason to cheer coming from him, but it’s not quite that simple. Underneath the smoke and to the side of the mirrors, we find it’s just another ploy to empower Obama to pick the winners and losers.
He pretends he’d merely be leveling the playing field by “closing loopholes,” which for him is code for eliminating legitimate deductions. So with one hand, he would extend corporations their tax rate reduction, but with the other — the one donning the magician’s white glove — he’d grab it back by eliminating the deductions — I mean sinister loopholes — for the evil corporations he’s made a practice of demonizing and bullying the past three years.
With his magician’s sword, he would stick it to — surprise — the insurance demons, the oil and gas monsters, and those evil owners of private jets, as opposed to the ones he, his family and his dog fly — sometimes separately, no less, in the interest of racking up their carbon footprint while ordering the reduction of everyone else’s.
Who would be outside his sword’s reach? Why, his green-energy cronies, of course, who would receive preferential tax incentives to encourage them to invest money in ways no non-subsidized entrepreneur would dare.
There will be no accounting for his most recent botched magic show, in which Solyndra and other clean-energy donees made off with goodies from his stash based on his bogus promise of creating permanent jobs and growing the economy. No, he will just pat himself on the back for his good intentions, expect us to forget that he created virtually no permanent jobs and that the ones that were created often cost millions of jobs apiece. Then he’ll do it all over again, demanding we bow down and praise him for his monarchical largesse.
Obama also has something in his trick bag for multinational corporations located in the United States — something they probably wouldn’t like too much: He’d tax their foreign earnings more heavily, which could very well induce them to high-tail it out of the United States or just sell out to a foreign buyer, thus defeating the alleged purpose of raising more revenue.
Sen. Orrin Hatch said the president’s plan is “a set of bullet points designed more for the campaign trail than an actual blueprint for fixing our tax code.” That’s being charitable. For though Obama is billing his plan as a corporate income tax reduction, it just so happens that he plans on it raising $250 billion of revenue over the next decade.
Lest you still believe Obama has become a tax cutter overnight, let me also remind you of his other little scheme to increase the tax rate on corporate dividends to 39.6 percent. When coupled with the phased-out deductions, the effective rate could reach 41 percent. And that’s not counting a 3.8 percent investment surcharge from Obamacare, bringing the rate up to 44.8 percent — nearly three times the current 15 percent rate.
As usual, Obama claims this tax hike would apply only to the wealthy, but as The Wall Street Journal’s editors tell us, corporations have historically responded to these tax rates by increasing dividends when they’re lowered and reducing them when they’re increased. So in the name of punishing the rich, he would be trickling down the misery to those same people he claims are benefiting from his latest $40-a-month payroll tax extension. As I said, he gives with one hand and takes with the other — all in the name of compassion and good intentions.