A Positive Proposal in State of The Union

America should be the best, not one of the worst places on the planet to do business!

The State of the Union speech was long and as usual, was bland after expectations were built by weeks of media hype.  For the most part President Obama dug in his heels and avoided any concessions to his Republican/Tea Party adversaries.  He still sees government rather than The People as morally superior, supreme, and in charge.

But, there was one very positive proposal that could well have come from Ronald Reagan or Milton Friedman.  The GOP should pounce upon it, declare their bi-partisan support and write the enabling legislation, with all possible haste:

Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.

So tonight, I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years – without adding to our deficit.

Bravo!

There should be only one purpose for taxation: funding government.  The tax code should not be used to reward some and punish others.

At 39.3% America’s top corporate tax rate is third highest in the world.  Yet because of thousands of pages of loopholes and special preferences it doesn’t produce much revenue.

• The corporate income tax generated $370 billion in 2007, the most of any year ever.  Yet it was only 14% of total federal tax revenue.
• In 2010 the recession cut into corporate profits and revenue fell to $191 billion, or 8% of all federal tax revenue.

So, the corporate income tax has become the worst possible government boondoggle.  While generating little revenue it nevertheless:

• Is a barrier to companies locating in America when most other nations have lower rates;
• Corrupts the government as a horde of lobbyists continuously bribes Congress with campaign contributions in exchange for special tax breaks for politically connected companies and industries;
• Forces companies to spend billions on lawyers and accountants just to interpret and comply with its thousands of pages of arcane provisions
• Drives corporations out of the US to more business friendly nations.
  

Obviously Congress could attract more corporations to America by dramatically reducing the tax rate and by simplifying the code to cut compliance costs.   Additional corporations generating additional profits would likely generate more tax revenue than the high rate status quo, while creating thousands of new jobs.

The Republicans should make it their mission to transform America into the best nation on the planet to open or expand a business. Since the President is already on board why not start with corporate income tax?  If Congress can lower the rate and simplify the tax code by removing all special-interest preferences and penalties (thousands of pages) it’s likely revenue would increase as corporations start up or expand in America rather than elsewhere.

This is a no-brainer!  Let’s urge the GOP to act swiftly before the so-called “progressives” demagogue the idea to death with their usual, anti-business hysterics.