Corporate Taxes Hitting the Editorial Pages
August 21, 2008
Richard Rahn of the Cato Institute warned of the domestic and global impacts of America's corporate income tax in a Washington Times commentary this morning. Rahn cited the latest OECD report that shows America's corporate income tax rate being the second highest among industrialized nations, 50% higher than the average, a report that we have delved into as well. While confirming that the corporate income tax is the most harmful to economic growth, Rahn goes on to vilify politicians, like Sen. Byron Dorgan (D-ND), who seem to think that corporations aren't paying their "fair share":
Unfortunately, the corporate income tax is often the favorite tax of fiscally irresponsible politicians because it is not easily seen. In fact, the corporate tax is paid by workers in lower wages and fewer new jobs, by consumers in higher prices and by savers and investors in lower rates of return.
After correctly contextualizing the GAO report on corporate income tax payments, a study the AP incorrectly reported on (but we were glad to fix), Rahn apparently has no problem getting rid of the corporate income tax:
The corporate tax should be abolished because it is the most destructive tax. In a typical year, it only produces about 10 percent of federal revenue. This static revenue loss would be quickly made up by the increase in shareholder dividends that should no longer have a tax preference (in the way that sole proprietorships, partnerships, and limited liability companies are now taxed), and through the additional productivity, international competitiveness and job growth that would result from abolition of the corporate income tax.
Whatever your opinion that proposal, the point is taken. We hope to drive the discussion on America's declining global competitiveness through our recently launched CompeteUSA campaign.
Rahn isn't the only one hitting politicians this morning. R. Glenn Hubbard, Bush 43's former CEA chairman, has a piece in today's Wall Street Journal going after Barack Obama's tax plan tethered to saving Social Security and Medicare, but has interesting perspectives on how much "change" we're actually going to see:
If Mr. Obama is going to increase spending, will he raise the money by higher business taxes instead? He has already distanced himself from John McCain's call to reduce America's corporate tax rate, and he is committed to raising tax rates on successful small business owners who pay individual as opposed to corporate income taxes. Does this mean he will raise tax burdens on individuals with annual incomes less than $250,000? …
The problem with Mr. Obama's fiscal plans is not that that they lack vision. On the contrary, the vision is plain enough: a larger welfare state paid for by higher taxes. The problem is not even that they imply change. The problem is that his plans are statist.
Surely we'll see responses from the war room of the Obama campaign. Let the games begin!