The repugicans
claim to support free market capitalism and the idea that any operation
must bring in revenue over and above expenses to increase profit.
However, when it comes to government their goal is reducing revenue at
all costs, and if there is new revenue they demand it is transferred
directly to corporations and the wealthy. The repugican’s primary
purpose in governing, besides killing jobs, is increasing corporate
profits at all costs by providing them with low tax rates and in many
cases allows them to operate tax-free. America’s corporations enjoy some
of the lowest tax rates in the world and it is primarily because the
tax code provides write-offs, loopholes, credits, and tax breaks that
allow many of the largest and most profitable corporations to pay
nothing in taxes on perpetual record earnings.
The repugicans, at
the behest of their corporate masters, complain bitterly that
corporations are burdened with crushing federal taxes and spent the past
four years demanding that President Obama support corporate tax cuts
and reforms to increase business’s bottom line as well as reduce
government revenue. On Tuesday, President Obama proposed corporate tax
reform to
increase
government revenue for job creation primarily aimed at the shrinking
and economically suffering middle class. As is their wont, repugicans
demand that tax reform is revenue neutral because they will not tolerate
spending one penny to create jobs and boost economic growth. In fact,
Americans should be well aware by now that every policy proposal,
agenda, and piece of legislation repugicans support in Congress and the
states is solely to increase corporate profits while killing Americans’
jobs.
The corporate tax rate is, on paper, 35% but the real rate is 12.6% as of 2010 due to tax code
loopholes allowing corporations to pay a
lower rate
than middle-class Americans. The President’s proposal will eliminate
some of those loopholes while reducing the tax rate to produce new
revenue he intends to use to create jobs. Corporations and repugicans
demand
that tax reform reduces the corporate rate and remain revenue neutral
to prevent the federal government from bringing in new revenue to fund
$50 billion on infrastructure spending. Incidentally, a recent analysis
shows that America desperately needs to
invest $1 trillion
in infrastructure to keep up with the rest of the civilized world, so
$50 billion will hardly help the nation’s competitiveness, but it will
create much-needed middle class jobs. The repugicans claim reducing the
corporate tax rate will lead to greater economic growth, but it is as
false as their thirty year contention that giving the rich greater tax
cuts is the key to job creation and a booming economy.
The President’s proposal includes raising revenue by
taxing
offshore profits that allow the largest corporations to enjoy obscene
income tax free, but repugicans support big business’s proposal to
bring their hoards of cash back to America only if they are given a “
no-tax”
holiday. In 2004, repugicans allowed corporations to bring untaxed
earnings home and gave them a one-time-only tax rate of 5.25% if they
repatriated the profits within a year, but the deal barely increased
short-term revenue, and was a huge long-term revenue loss. Corporations
that took advantage of the deal used
92% of $300 billion of
repatriated profits for payouts to their wealthy shareholders while
eliminating thousands of jobs to cover their “
burdensome”
one-time repatriation tax rate. While corporations profited from the
“tax holiday” and killed thousands of jobs, the government lost billions
in revenue over the long haul that contributed to the deficit repugicans are using as a reason to cut spending, kill jobs, and oppose
new job creation measures. As is usually the case with any proposal repugicans support, the economy, the people, and government loses to
increase profits for their precious corporate donors.
President
Obama’s proposal is not giving corporations a tax holiday for bringing
their profits back to America as some critics complain because his
reform plan includes changes in the way that corporations pay tax on
international income. The benefit to the nation is it raises more
much-needed revenue immediately than in later years, and curtails
corporate domestic tax expenditures according to director of the
National Economic Council. He
said, “
This
is not…a repatriation tax of any kind… In any corporate tax reform
that’s been done in other countries or any proposal that you see
currently, there is one-time revenue” and it is exactly what the
President is demanding to help create jobs. The President even
pre-empted repugican demands that corporate tax reform be revenue
neutral by making it clear that any reform has to be judged on the
revenue raised in the second ten years of enactment and not just initial
increases.
The President is offering a fair deal to corporations
that have not paid taxes on their profits for too long, and eliminating
tax-free gimmicks in exchange for a lower corporate tax rate is more
than a generous offer from the American people who are
picking up the tab
when corporations avoid taxes. The repugicans complain that expecting
corporations to pay their fair share on profits retards growth, but an
Economic Policy Institute (EPI) economist
debunked their claims as not holding up to scrutiny. He
said “
there
is no apparent association between the statutory corporate tax rate and
economic growth after examining every possible scenario including
statutory tax rates, effective rates, effective rates on capital income
rather than corporate income, as well as inserting a one-year lag in the
data to see if the putative growth effects were being hidden.”
However, the benefit to the nation’s economy is immeasurable in the jobs
created if repugicans can concede spending a measly $50 billion on
infrastructure improvement.
In repugican parlance, revenue
neutral means giving corporations reduced rates, a tax-free holiday on
repatriated profits, and an all-clear to kill more jobs by keeping their
operations overseas to take advantage of unfair tax incentives. The
President cannot change the tax code on his own, and his proposal is
more generous than corporations deserve, but repugicans will oppose any
offer that does not reduce government revenue. It is important to
remember that repugicans have signed a solemn pledge to Grover Norquist
to never increase taxes under any circumstances, and coupled with their
blind obedience to the U.S. Chamber of Commerce, the Koch brothers, and
Wall Street to oppose any reform that does not starve the government of
revenue (their definition of revenue neutral), it is unlikely they will
even consider the President’s proposal.
President Obama is
putting repugicans in a no-win position with the public by proposing to
cut the corporate tax rate in exchange for reforming the corporate tax
code. Many of the largest corporations are hoarding hundreds of billions
of dollars offshore on international profits, and besides the most
profitable American corporations paying zero taxes, those that do pay
enjoy a low 12.6% rate that is a lower than most Americans in the middle
class. Americans in the middle class are quickly slipping into poverty,
and even though $50 billion in infrastructure spending is twenty times
less than what the country requires to remain competitive, it will
assuage the devastating effects of the $85 billion sequester cuts and
help offset the millions of jobs being eliminated indiscriminately.
Americans
have experienced a thirty-year experiment in giving tax breaks to the
wealthy and corporations that has decimated the middle class and created
a nation of peasants barely able to survive. Although President Obama’s
proposals will not completely solve the economic malaise or create full
employment, it is a step in the right direction that leaves repugicans
with little choice but admit their goal is killing growth, jobs, and
transferring what is left of 98% of the population’s wealth directly to
the uber-rich and their corporations, or pass the President’s tax reform
and invest in infrastructure spending to create jobs. However, with
their stated war on the people
in full swing, their apparent joy at killing jobs, cutting domestic
programs, and creating poverty, the chance they will break their no-tax
pledge to Grover Norquist or disobey their corporate masters means they
will block the President’s reform proposals. With the President’s recent propensity
to speak to the people with brutal candor and take his case to the
public, repugicans are going to face an angry middle class that, like
the President, has had enough of the repugican cabal.