Obama: Cut the Corporate Tax Rate to Help the Poor
December 11, 2013
President Obama recently gave a lengthy speech on inequality, poverty, and what to do about it. He claimed inequality is increasing, which is debatable, and then offered a few populist ways to reduce it, such as raising the minimum age. However, the President dropped his usual demand that the rich pay more taxes. Instead, he pointed to private sector investment and economic growth as prerequisites for helping the poor and reducing inequality:
To begin with, we have to continue to relentlessly push a growth agenda. It may be true that in today’s economy, growth alone does not guarantee higher wages and incomes. We've seen that. But what's also true is we can’t tackle inequality if the economic pie is shrinking or stagnant. The fact is if you’re a progressive and you want to help the middle class and the working poor, you’ve still got to be concerned about competitiveness and productivity and business confidence that spurs private sector investment.
And that’s why from day one we’ve worked to get the economy growing and help our businesses hire. And thanks to their resilience and innovation, they’ve created nearly 8 million new jobs over the past 44 months. And now we’ve got to grow the economy even faster. And we've got to keep working to make America a magnet for good, middle-class jobs to replace the ones that we’ve lost in recent decades — jobs in manufacturing and energy and infrastructure and technology.
And that means simplifying our corporate tax code in a way that closes wasteful loopholes and ends incentives to ship jobs overseas. (Applause.) And by broadening the base, we can actually lower rates to encourage more companies to hire here and use some of the money we save to create good jobs rebuilding our roads and our bridges and our airports, and all the infrastructure our businesses need.
Indeed, cutting the corporate tax rate is probably the best way to increase hiring and grow wages. The President cited no studies to support this, because it is not really in dispute among economists. So why not cut the corporate rate, period, without any conditions or offsetting corporate tax increases elsewhere? Some people claim that tax revenue would fall, but this is very debatable. In any case, there are many other revenue options that are less harmful than corporate taxes.
Follow William McBride on Twitter