Tax reform? Absolutely! I’m all for it, especially business and corporate taxes. Our corporate tax structure is by far the worlds most complex, confusing, easily evaded and unfair of any system on the globe.
On the surface our corporate tax structure would lead one to believe that U.S. business taxes are the world’s highest and most confiscatory. But as usual with things of this type involving tax laws and policies, what you see is not necessarily what you get.
Today U.S. corporations complain their taxes are too high. And by international comparison they probably are. Major corporations, including pharmaceutical giant Pfizer Corporation, have threatened to merge with foreign corporations and move their headquarters to Ireland where the corporate tax rate is lower. But this is probably an empty threat. Through tax loopholes, accelerated depreciation, favorable write-offs, evasion strategies and other tax dodges nobody, I repeat, nobody pays the full 35% corporate tax rate.
In 2014 fifteen Fortune 500 companies paid no federal income taxes at all and 27 major corporations paid none last year. Who? Does Level 3 Communications, United Continental Airlines and General Motors (whom, incidentally, we bailed out from bankruptcy eight short years ago) ring any bells. Then what would be a fair, equitable tax policy that would preserve revenue sources but would also discourage the flight of U.S. corporations to offshore tax havens?
In the 2016 campaign Trump proposed to cut the corporate tax rate from 35% to 15% and allow certain partnerships and single-owner firms to take advantage of the lower corporate tax rate. But these changes were seen as far too generous and too broadly-applied, even by Trump’s own Republicans. On the other side Hillary Clinton favored keeping the existing 35% corporate rate and closing some of the tax loopholes. But this would amount to a substantial tax increase for most businesses. But considering the fact that so many corporations avoid paying any federal income taxes at all, with the right revisions Hillary’s plan might not be all that unrealistic. But we’ll never know, will we? Hillary also failed to consider some responsible, bi-partisan research showing that much of the cost of corporate tax increases is passed on to the workers in lower wages and benefits. If any changes at all are made by Congress they will probably be more in line with Trump’s proposal, but with significant modifications. Then what will the final product ultimately look like? We will soon know, won’t we?
It is becoming increasingly clear, to some at least, that Donald Trump is likely to be a one-term president. But today’s congressional members plan to be around a little longer and the wealthy elite who bankroll both parties will be there in perpetuity. Therefore, we can expect a broadly-based tax reduction bill, but, as usual, one heavily biased toward the super rich, the heavy donors. But one thing we can depend on for sure, nothing will be done to address the outrageous skyrocketing federal budget deficit that can sink us for sure. It’s not a question of "if," but "when." And I’ve asked this before: which are more detrimental to our national welfare, "Tax and Spend Democrats" or "Borrow and Spend Republicans?"
George B. Reed Jr., who lives in Rossville, can be reached by email at email@example.com.