Obama's 'Grand Bargain' On Taxes Is Neither Grand Nor A Bargain
Posted 07/30/2013 06:22 PM ET
Fiscal Policy:
President Obama has proposed a "grand bargain" with Republicans: They
get a tax cut for corporations, he gets more money to spend on worthless
government stimulus. That's no bargain — that's surrender.
In the latest attempt by Democrats to disguise GOP capitulation as centrist "compromise," Obama said he'll sign off on a cut in the corporate tax rate from 35% to 28% — with an even lower rate of 25% for manufacturers — if Republicans will agree to spend more on Obama's "investments" and OK a tax hike on U.S. companies doing business overseas.
Republicans, beaten up daily by the mainstream press for being "extremists," might be tempted to take Obama's offer of what he calls a "grand bargain for middle-class jobs." They shouldn't.
To begin with, Obama's big spending — nearly half a trillion more per year — has met with zero success, so why pour more money into failure?
That higher spending, along with slower economic growth due to Obamanomics, is the main reason why we're stuck with record annual deficits of close to $1 trillion — and why the national debt has doubled to more than $17 trillion in just five years.
Since Obama's "stimulus" took effect, job growth has been subpar, GDP gains are at record lows, median incomes have shrunk and the number of Americans on welfare has surged.
So we know that won't work. But what about corporate tax cuts?
The nonpartisan Tax Foundation reckons a simple cut in the corporate tax rate to 25% would boost GDP more than 2% and wages by nearly as much. And capital investment would jump more than 6%.
Moreover, a corporate cut would increase federal revenues and help lower our deficits — assuming, that is, Obama doesn't spend the new money.
Unfortunately, part of Obama's "bargain" is to increase taxes on U.S. companies that operate abroad and to reduce business write-offs for investments — the seed corn of future economic growth.
Even at 28%, Obama's new tax rate would be higher than the 25% average paid by our main competitors.
So with one hand the president giveth, and with the other he taketh away. Worse, he seems intent on rewarding big companies with tax cuts while punishing small companies that account for 85% of all new jobs.
Most small businesses aren't corporations, so they won't pay the lower tax. Instead, they'll continue to pay a top rate on their income of close to 44%, thanks largely to Obama's tax hikes on entrepreneurs.
The nonpartisan Americans for Tax Reform minced no words, calling it "part of a larger pattern of this president siding with giant, well-funded companies with D.C. lobbyists instead of Main Street small employers."
Amen. Republicans must not sign off on a plan that punishes 30 million small businesses, kills future job growth and makes government even bigger. Identifying with failure is always a mistake.
In the latest attempt by Democrats to disguise GOP capitulation as centrist "compromise," Obama said he'll sign off on a cut in the corporate tax rate from 35% to 28% — with an even lower rate of 25% for manufacturers — if Republicans will agree to spend more on Obama's "investments" and OK a tax hike on U.S. companies doing business overseas.
Republicans, beaten up daily by the mainstream press for being "extremists," might be tempted to take Obama's offer of what he calls a "grand bargain for middle-class jobs." They shouldn't.
To begin with, Obama's big spending — nearly half a trillion more per year — has met with zero success, so why pour more money into failure?
That higher spending, along with slower economic growth due to Obamanomics, is the main reason why we're stuck with record annual deficits of close to $1 trillion — and why the national debt has doubled to more than $17 trillion in just five years.
Since Obama's "stimulus" took effect, job growth has been subpar, GDP gains are at record lows, median incomes have shrunk and the number of Americans on welfare has surged.
So we know that won't work. But what about corporate tax cuts?
The nonpartisan Tax Foundation reckons a simple cut in the corporate tax rate to 25% would boost GDP more than 2% and wages by nearly as much. And capital investment would jump more than 6%.
Moreover, a corporate cut would increase federal revenues and help lower our deficits — assuming, that is, Obama doesn't spend the new money.
Unfortunately, part of Obama's "bargain" is to increase taxes on U.S. companies that operate abroad and to reduce business write-offs for investments — the seed corn of future economic growth.
Even at 28%, Obama's new tax rate would be higher than the 25% average paid by our main competitors.
So with one hand the president giveth, and with the other he taketh away. Worse, he seems intent on rewarding big companies with tax cuts while punishing small companies that account for 85% of all new jobs.
Most small businesses aren't corporations, so they won't pay the lower tax. Instead, they'll continue to pay a top rate on their income of close to 44%, thanks largely to Obama's tax hikes on entrepreneurs.
The nonpartisan Americans for Tax Reform minced no words, calling it "part of a larger pattern of this president siding with giant, well-funded companies with D.C. lobbyists instead of Main Street small employers."
Amen. Republicans must not sign off on a plan that punishes 30 million small businesses, kills future job growth and makes government even bigger. Identifying with failure is always a mistake.
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