Patriot Corporations in the House, Very PC

By February 13, 2008Taxation

Sen. Sherrod Brown’s interview with The Nation about his legislation to give tax breaks to “Patriot Corporations” has finally drawn some much needed attention, at least in the blogosphere (our post here), magnified by Brown highlighting the support of cosponsor and presidential candidate, Barack Obama.

But the idea has been kicking around in the House and Senate for a while now, turns out. Last August, Rep. Jan Schakowsky (D-IL), introduced her legislation, H.R. 3319, the Patriot Corporations of America Act of 2007. (With 14 cosponsors from the left wing of the Democratic Party.) Here’s the CRS Summary:

Patriot Corporations of America Act of 2007 – Grants after 2007 a preference to Patriot corporations in the evaluation of bids or proposals for federal contracts. Defines ” Patriot corporation” as a corporation which: (1) produces at least 90% of its goods and services in the United States; (2) does not pay its its management-level employees at a rate more than 10,000% of the compensation of its lowest paid employee; (3) conducts at least 50% of its research and development in the United States; (4) contributes at least 5% of its payroll to a portable pension fund for its employees; (5) pays at least 70% of its employees’ health insurance costs; (6) maintains a policy of neutrality in employee organizing drives; (7) provides full differential salary and insurance benefits for all National Guard and Reserve employees who are called to active duty; and (8) has not violated federal regulations, including regulations relating to the environment, workplace safety, labor relations, and consumer protections.

Amends the Internal Revenue Code to: (1) reduce the income tax rate for Patriot corporations; (2) reclassify foreign corporations created or organized to avoid federal taxation as domestic corporations for income tax purposes; and (3) increase, for the period between January 1, 2007, and December 31, 2010, the income tax rate for individual taxpayers with adjusted gross incomes of $500,000 or more ($1 million or more for joint returns).

And Schakowsky introduced the same basic bill in 2006, as well, H.R. 5699.

The idea of the government designating this firm or that as “patriotic” based on things like its salary structure is repellent; implicit — or perhaps even explicit, sometime in the future — is the designation of “unpatriotic.” And just imagine the government power involved in administering the law. You’d need an entire agency along the lines of FDR’s National Recovery Administration.

Schakowsky and Brown’s bills have gone nowhere, being referred to committee to leave us alone, please. But if the political environment takes a sharp leftward turn come November?

Arnold Kling’s column (hat tip Glenn Reynolds), Mandates for Change, outlines a very believable scenario under which a left-leaning Administration and Congress would control the economy through regulation, not taxation. Interesting and troubling.

Join the discussion 2 Comments

  • DirtCrashr says:

    One way to get around earmarks and transparency in funding and spending is to squeeze businesses directly with promises of favoritism, shackled to the threat of regulation – this is how such a “progressive” idea worked in the 30’s Germany and Italy…

  • david foster says:

    “produces at least 90% of its goods and services in the United States”…how would this work in the real world in which value chains have many levels? If I assemble 100% of my computers in the U.S. but source 50% of the parts from the Far East, do I meet the 90% test? What if I buy a component from the Far East, the manufacturer of which pays royalties to a U.S. company?…do I get a credit toward the 90% for the royalty?

    How likely is it that the Congressional advocates of this bill understand the above questions?

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