Bringing Us Together, IV

By May 5, 2009Economy, Taxation

The Washington Post’s lead editorial is entitled, “Corporate Tax Reform,” with the secondary headline, “The president’s tax plan can be the start of an important discussion.”

OK. But you don’t start an important conversation by punching your potential talking partner in the stomach and calling him names. From the President’s remarks:

And yet, even as most American citizens and businesses meet these responsibilities, there are others who are shirking theirs. And many are aided and abetted by a broken tax system, written by well-connected lobbyists on behalf of well-heeled interests and individuals.  It’s a tax code full of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share.  It’s a tax code that makes it all too easy for a number — a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all.  And it’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.

The President’s presentation yesterday clearly sought to conflate two separate issues, the taxation of U.S. companies with a global presence (most prominently, the deferral issue), and the “tax haven” issue. He appeared on stage with the IRS Commissioner, Douglas Shulman, sending a clear, intended message that the problem he’s addressing is one of corporate scofflaws, that is, bad actors.

In October 2007, House Ways & Means Chairman Charles Rangel unveiled broad changes of the U.S. tax code and corporate taxation, a legislative proposal, the Tax Reduction and Reform Act. In his news release, he said:

This legislation will provide tax relief to more than 90 million working families and cut the corporate tax rate to help American companies stay competitive internationally. For too long, hardworking families have struggled to keep pace with the rising cost of living in America. This legislation would put money back in their pockets to combat the growing economic insecurity gripping our nation.

The NAM issued a statement reacting to Chairman Rangel’s proposal:

While the package includes some tax relief supported by the NAM, including corporate tax rate cuts, we are extremely concerned about the tax increases that will impact manufacturers of all sizes. Based on our initial review, for many manufacturers, the proposed tax increases could well exceed the benefits of the proposed tax relief. 
Over the next few months the NAM will be taking a closer look at the tax package to fully assess how it would impact our members.  The Chairman has indicated that this is a long-term project and we look forward to working with congressional tax writers to develop a pro-growth, pro-competitiveness tax package that benefits all U.S. manufacturers and their workers.

Now, that’s how you start an important discussion. 

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