published Tuesday, January 8th, 2013

Corporate tax reform next

  • photo
    Senate Minority Leader Mitch McConnell of Kentucky, followed by Sen. Pat Roberts, R-Kansas, leaves the Senate chamber on Capitol Hill in Washington.
    Photo by Associated Press /Chattanooga Times Free Press.

Now that Senate Minority Leader Mitch McConnell has helped forge a path off the fiscal cliff by corralling Republican support for making Bush-era tax breaks permanent for all but the top 2 percent of American taxpayers, he pretends to think that he and his party are off the hook on reform of business taxes. He has spent most of the past week saying that now that President Barack Obama has gotten a tax increase on the wealthy, other tax reforms are off the table — and that it's time to cut spending on the earned entitlements, Social Security and Medicare.

His turn-around was predictable, but it's wrong. The biggest problem isn't spending; it's the decline in tax revenue, which is at a 60-year low of barely 16 percent of gross domestic product, well below the average level of 18-to-18.5 percent of GDP. A large portion of the slide owes to the Great Recession of 2007-2009, but it also reflects business tax loopholes, tax preferences and a range of other gimmicky tax expenditures for business interests.

These loopholes and tax expenditures carry a cost estimated at $1.1 trillion in lost tax revenue, or in shifts of tax burdens to other taxpayers. Until the loopholes are closed and business taxes are broadened, lowered and leveled, Washington can't begin to pull the country out of excessive national debt. It certainly would be premature, and unfair, to make earned entitlements the next subject for cutting.

President Obama, in fact, agreed to spending cuts, in the 2011 debt-ceiling deal, that would trim federal debt in scheduled future spending by more than $1.2 trillion over the next decade. Yet Republicans, for all their talk before the November elections about closing tax loopholes, have yet to specify a single tax loophole they would eliminate.

It's not hard to see why. Most members of Congress routinely trade political protection for business lobbyists and their crafty loopholes in return for campaign contributions and political support. Once they began talking about closing tax loopholes for businesses and corporations that make their tax-filing departments profit centers, lobbyists bombarded them.

Yet putting off tax reform just allows the myriad problems imposed by the flawed tax system to grow, annually worsening the damage to the U.S. economy and our job base. The cost of uneven tax breaks, loopholes and tax expenditures hurts economic productivity and growth. It fuels the off-shoring of jobs and associated tax losses and growth of off-shore, untaxed profits. And it constrains the competitiveness of the United States' industrial base.

The current statutory U.S. rate of 35 percent for corporate taxes, though among the lowest in industrialized countries when it was set, is now the highest. Still, the effective marginal rate paid by most companies after deductions for tax loopholes and expenditures hovers around 32 percent, the average for other major industrialized G7 countries. But it still doesn't compare in equity to the broader-based, lower rates elsewhere.

Loopholes and special tax breaks further create incentives for tax planning and avoidance that distorts economic efficiency, and that causes different sectors of the economy to pay substantially differentiated tax rates. Effective corporate tax rates, for example, range from 14 percent for utilities, to 19 percent for transportation and warehousing, to 31 percent for construction, and wholesale-and-retail trade.

U.S. tax loopholes also create a tax preference for businesses to finance growth by borrowing and creating debt rather than using equity, simply because interest payments on debt get better tax treatment. So businesses create financial risks for themselves by incurring debt which makes them more vulnerable to failure or bankruptcy, and thus more risk averse to investments and growth. Loopholes also create tax advantages for specially organized entities and tax-avoidance "pass-throughs," thus creating more complexity in tax filings, regulation and additional losses of tax revenue.

Indeed, the nation's business tax structure has become such a regulatory hodge-podge and smorgasbord that the IRS can't enforce it, and can't tame it. Only a full-blown overhaul will eliminate the complexity, duplicity and burdensome inefficiency that the current system imposes on the the U.S. economy. But Republicans will have to support reform before it can occur.

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BigRidgePatriot said...

Oh Brother!

"But Republicans will have to support reform before it can occur."

Obama is doing everything he can but republican's are stopping all progress? Our bloated, ridiculous tax code is the coveted child of both of the parties. Until mindless idiots like this author start holding both parties responsible nothing will get done.

January 8, 2013 at 2:47 p.m.
Easy123 said...

BRP,

You must not watch the news and/or read articles:

“The tax issue is, finished, over, completed. That’s behind us now. The question is: what are we going to do about the biggest problem confronting us and our future,” McConnell said.

Read more: http://thehill.com/blogs/blog-briefing-room/news/275791-mcconnell-punts-on-hitting-debt-ceiling#ixzz2HQu17bFC

That's the same Senate Minority leader (Mitch McConnell), mentioned in the article, nixing the tax reform idea. Like the you stated, Republicans are stopping progress on most fronts including tax reform. I guess we should blame both parties for what McConnell said, right?

Until mindless idiots like you start understanding that both sides are not equally deserving of blame, any progress, especially towards tax reform, will continue to move at a snail's pace.

January 8, 2013 at 7:19 p.m.
conservative said...

Same old Stuff.

The writer keeps using the word "loopholes" which are legitimate tax deductions written into law thinking he can convince the frail of mind to call for higher taxes on Corporations so they can pass the cost of higher taxes onto the same frail of mind in the form of higher prices for the goods and services the frail of mind will purchase.

January 9, 2013 at 11:07 a.m.
Easy123 said...

conservative,

"The writer keeps using the word "loopholes" which are legitimate tax deductions written into law "

That's what loopholes are. Ways to circumvent the intent of the system.

"thinking he can convince the frail of mind to call for higher taxes on Corporations so they can pass the cost of higher taxes onto the same frail of mind in the form of higher prices for the goods and services the frail of mind will purchase."

Corporations get billions in tax subsidies. Much more than the "entitlement" programs that you and your ilk demonize. I thought you were a "Conservative". Oh wait, that's what Conservatives are. Apologists for the rich and corporate America, demonizers of the poor and working class.

January 9, 2013 at 11:21 a.m.
conservative said...

"President Obama, in fact, agreed to spending cuts, in the 2011 debt-ceiling deal, that would trim federal debt in scheduled future spending by more than $1.2 trillion over the next decade"

That's a lie! The debt will go up trillions in Owebama's own plan.

January 9, 2013 at 12:43 p.m.
Easy123 said...

conservative,

"That's a lie! The debt will go up trillions in Owebama's own plan."

Wrong again.

"Obama also moved closer to Boehner on the proportion of a ten-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending."

"Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal."

http://www.cnbc.com/id/100322887/In_New_039Cliff039_Bid_Obama_seeks_12_Trillion_in_Revenue

You're a liar.

January 9, 2013 at 12:50 p.m.
think123 said...

There should be no cuts to Social Security or Medicare until Social Security is changed so that there is no maximum. As it is now, Social Security withholdings stop when earnings reach $113,700. Why should there even be a maximum? And earnings should include bonuses and stock options as well. The higher paid persons are not sharing their portion of the problem with Social Security and Medicare.

January 9, 2013 at 1:21 p.m.
NirvanaFallacy said...

Easy, you don't think the politicians intended to put those "loopholes" into the code. That's ridiculous.

There are no "loopholes" in the tax code as you define the term.

January 9, 2013 at 1:34 p.m.
Easy123 said...

NirvanaFallacy,

"Easy, you don't think the politicians intended to put those "loopholes" into the code. That's ridiculous."

No, it isn't.

"There are no "loopholes" in the tax code as you define the term."

Yes, there are.

January 9, 2013 at 1:53 p.m.
conservative said...

"President Obama, in fact, agreed to spending cuts, in the 2011 debt-ceiling deal, that would trim federal debt in scheduled future spending by more than $1.2 trillion over the next decade" That's a lie! The debt will go up trillions by Owebama's own plan:

"President Barack Obama‘s budget would produce a deficit of $977 billion in fiscal year 2013, the Congressional Budget Office said Friday, higher than the White House projected."

"The CBO, the nonpartisan budget cruncher for Congress, said that, if the president’s budget were enacted, the deficit would rise $3.5 trillion more over 10 years than originally expected."

http://blogs.wsj.com/economics/2012/03/16/cbo-issues-higher-deficit-projection-for-obama-budget/

January 9, 2013 at 3:35 p.m.
Easy123 said...

conservative,

"That's a lie! The debt will go up trillions in Owebama's own plan."

Wrong again.

"Obama also moved closer to Boehner on the proportion of a ten-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending."

"Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal."

http://www.cnbc.com/id/100322887/In_New_039Cliff039_Bid_Obama_seeks_12_Trillion_in_Revenue

You're a liar. Your article is from March.

January 9, 2013 at 4:41 p.m.
conservative said...

"President Obama, in fact, agreed to spending cuts, in the 2011 debt-ceiling deal, that would trim federal debt in scheduled future spending by more than $1.2 trillion over the next decade" That's a lie! The debt will go up trillions by Owebama's own plan:

NEW YORK (CNNMoney) -- Lawmakers on Friday were handed the official score card on President Obama's proposed budget for 2013 The president's budget would add $6.4 trillion in deficits between 2013 and 2022, the CBO said.

http://money.cnn.com/2012/03/16/news/economy/obama-budget/index.htm

January 9, 2013 at 4:54 p.m.
Easy123 said...

You're a liar. Your article is from March.

January 9, 2013 at 6:56 p.m.
conservative said...

President Obama, in fact, agreed to spending cuts, in the 2011 debt-ceiling deal, that would trim federal debt in scheduled future spending by more than $1.2 trillion over the next decade" That's a lie! The debt will go up trillions by Owebama's own plan:

Obama's Legacy: $20 Trillion in Deficits By Paul Roderick Gregory, Forbes - December 27, 2012

http://www.realclearpolitics.com/2012/12/27/obama039s_legacy_20_trillion_in_deficits_298546.html

January 9, 2013 at 7:30 p.m.
Easy123 said...

Conservative,

Wrong again.

"Obama also moved closer to Boehner on the proportion of a ten-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending."

"Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal."

http://www.cnbc.com/id/100322887/In_New_039Cliff039_Bid_Obama_seeks_12_Trillion_in_Revenue

You're a liar and willfully ignorant.

January 9, 2013 at 7:37 p.m.
conservative said...

"President Obama, in fact, agreed to spending cuts, in the 2011 debt-ceiling deal, that would trim federal debt in scheduled future spending by more than $1.2 trillion over the next decade" That's a lie! The debt will go up trillions by Owebama's own plan:

“Federal debt held by the public would double under the President’s budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021,” the CBO wrote.

Read more: http://dailycaller.com/2011/03/18/cbo-obama-budget-projection-underestimates-deficit-by-2-3-trillion/#ixzz2HWp0u8zP

January 9, 2013 at 7:40 p.m.
Easy123 said...

Conservative,

Wrong again. Are you having trouble reading? You're wrong. You don't understand the statement the author presented. The statement is factual. Nothing you have posted prices otherwise.

"Obama also moved closer to Boehner on the proportion of a ten-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending."

"Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal."

http://www.cnbc.com/id/100322887/In_New_039Cliff039_Bid_Obama_seeks_12_Trillion_in_Revenue

You're a liar and willfully ignorant. I'm sure you'll keep going but I'll be here to smack you right back down to earth. Again, your article is from March and has nothing to do with the statement from the author.

January 9, 2013 at 7:49 p.m.
joneses said...

Are you liberals so stupid to not understand that raising taxes on business increases the cost of their products that we buy. This means the consumer will pay these taxes. Are you liberals really that stupid not to see this? If the city of Chattanooga made the Times Free Press pay more taxes do you think the cost of a paper would stay the same? If you do then you are stupid. Why is it I never hear from a liberal or dummycrap an idea to cut spending?

January 10, 2013 at 7:12 a.m.
joneses said...

conservtive,

Do not waste your time arguing with easy123. The bane of his existence is arguing with people on here 24/7/365. This is all he has to live for in his miserable little life. He has nothing else but this. I have chosen to stop enabling him by responding to his stupidity and I suggest you do the same. Discussing anything with him is like dancing with an ugly woman, life is just to short to mess with it. Stop enabling him and maybe he will get up off his fat ass and go for walk or something. He will respond to this post with name calling, or possibly post some kind of stupid video he plagiarized from somewhere. I do not care as I take him for what he is, a very lonely, insecure, pathetic, minuscule person who has no life but sitting in front of his computer all day waiting for someone to argue with. What a miserable life he chooses to live, but I am sure his miserable life is someone else's fault. I have a life so I will not be sticking around to see his immature meaningless response to this post. Have a good day conservative I am going to get back to work.

January 10, 2013 at 8:08 a.m.
Easy123 said...

joneses,

"Do not waste your time arguing with easy123."

Conservative was wrong. There is no argument.

"The bane of his existence is arguing with people on here 24/7/365."

You aren't using that phrase correctly.

"This is all he has to live for in his miserable little life."

Nope.

"He has nothing else but this."

Wrong again.

"I have chosen to stop enabling him by responding to his stupidity and I suggest you do the same."

You chose to stop addressing me because you know you are intellectually incompetent.

"Discussing anything with him is like dancing with an ugly woman, life is just to short to mess with it."

That's probably the worst attempt at a pun I've ever heard.

"Stop enabling him and maybe he will get up off his fat ass and go for walk or something."

Blah, blah, blah, blah, blah...

"He will respond to this post with name calling, or possibly post some kind of stupid video he plagiarized from somewhere."

You're the one talking sh!t, sweetheart. Posting a video isn't plagiarism. You are highly ignorant.

"I do not care as I take him for what he is, a very lonely, insecure, pathetic, minuscule person who has no life but sitting in front of his computer all day waiting for someone to argue with."

If that's the case, then why are you talking about me now? You know nothing about me. You're making this all up as you go. You're like an imaginative child. You have the intellect of a child as well.

"What a miserable life he chooses to live, but I am sure his miserable life is someone else's fault."

You know nothing of my life but I'm sure you'll keep building this straw man. It's what you people have to do in order to actually argue. You can't talk about facts. You just make everything up as you go along.

"I have a life so I will not be sticking around to see his immature meaningless response to this post. Have a good day conservative I am going to get back to work."

You don't have a life. You post here under different names and everyone has seen your copy and paste-laden posts, insane rants and every other ignorant and idiotic thing you've ever said. Your pretentious act isn't believable and you aren't smart enough to say anything worth reading. So you'll post your rant and then leave like a coward. You're fully aware that getting in a debate with me would be a huge mistake for you.

I post here just like you do. But apparently you are intimidated by my opposition of the lies posted here. Like most people that think like you do, you hate being told you're wrong. Heck, you hate even being questioned about your opinion. That's why you go off on these rants. You don't have the intellect or the vocabulary to discuss something, anything like a civil human being.

January 10, 2013 at 8:38 a.m.
Easy123 said...

joneses,

"Why is it I never hear from a liberal or dummycrap an idea to cut spending?"

You must be illiterate.

"President Obama, in fact, agreed to spending cuts, in the 2011 debt-ceiling deal, that would trim federal debt in scheduled future spending by more than $1.2 trillion over the next decade"

Let me misquote you: Are you Conservatives really that stupid not to know this? If you didn't, then you must be stupid.

January 10, 2013 at 8:51 a.m.
conservative said...

Joneses:

I would have to read what "easy" wrote to argue with him. I just wait for his hate and nonsense and then make another comment, that way I get to make several comments that I want other Liberals/atheists to read without them being in succession.

It doesn't matter if they know my strategy for they can't wait to self destruct. However, I do confront them occassionally just to keep them reading.

Been quite awhile with Easy though, I own him.

January 10, 2013 at 12:03 p.m.
Easy123 said...

Conservative,

"I would have to read what "easy" wrote to argue with him."

Yes, you would and you do. You're just being pretentious.

"I just wait for his hate and nonsense and then make another comment, that way I get to make several comments that I want other Liberals/atheists to read without them being in succession."

That's funny, I just wait for your hate and nonsense too. Then I point out your lies, logical fallacies and ignorance. And the cycle continues.

"It doesn't matter if they know my strategy for they can't wait to self destruct."

You always seem to hang yourself with every one of you posts. You have a terribly hard time saying anything factual/truthful. You've already self-destructed. You're mentally compromised.

"However, I do confront them occassionally just to keep them reading."

No sane person believes anything you say. The fact that you believe you have a readership is maniacal in it's own right.

"Been quite awhile with Easy though, I own him."

Isn't there something in your Bible about boasting? What about lying? I'm sure your god would be disappointed. But I guess your holy book does promote slavery. You must really need those personal ego boosts. You use them all the time. You have to tell yourself that so you will believe you "won". The only thing it does is make you look even more delusional than you already are.

I enjoy rebuffing/debunking every lie you spew and I will continue to do so. You won't address me directly because you know you are intellectually incompetent. That fact is very obvious to any sane person that has read anything you've ever written on here. But that's what Christians like you are good at; being sanctimonious, pretentious cowards.

January 10, 2013 at 12:22 p.m.
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