Well, that was quick.
Barely three days after an electoral realignment, where the leaders of the political party on the losing end were calling for more cooperation to advance policies for the common good, the knives are apparently coming out again.
Today the White House will be hosting a meeting with House and Senate officials and, according to media reports urgently-needed corporate tax reform will be on the table. So might a more immediate rate cut to “repatriate” dollars parked overseas. So far, so good, but get ready for the carving.
At a news conference on Wednesday, President Obama said he wanted to “hone in on a way to pay for” ambitious transportation funding plans in Congress “through tax reform that closes loopholes and makes it more attractive for companies to create jobs here in the United States.” Did you miss the sleight of hand that allowed the knife to sink in? Here’s a recap.
The U.S. has one of the most complex and burdensome corporate tax systems in the world, punctuated by a rate (over 39 percent when state and local taxes are factored in) that is close to 15 points higher than the OECD average. Broadening and simplifying the tax base, while dropping that rate to as rational a level as possible, is imperative to the very kind of job creation the President claims to want. Doing the first (base broadening) without doing the second (rate cutting) leaves the task half-finished, and guarantees its failure as an economy-booster.
Utilizing tax reform as some kind of slush fund for higher transportation spending will only embolden politicians to use “base broadening” for other pet projects, making the follow-through of cutting tax rates even less likely, and more paltry.
Reportedly lunch is to be served at today’s White House meeting. Here’s hoping this latest scheme to sabotage tax reform is off the menu.