Mt. Vernon Register-News

Opinion

December 3, 2013

Why the corporate tax cut won't work

Sen. Max Baucus, a Democrat from Montana and the chairman of the Senate Finance Committee, wants to cut corporate tax rates. But he’s finding that corporations are lining up to criticize his proposal.

As it happens, they’re right to: Baucus’ misplaced priorities have resulted in an unnecessarily complicated and self-defeating plan.

There’s bipartisan support for lowering the 35 percent federal corporate tax rate, which is among the highest in the developed world. Both parties see the rate as a burden for the economy because it pushes investors — American and foreign — to seek their returns in other countries. Economists argue that the tax therefore depresses wage growth in the United States, a claim supported by numerous studies.

Yet business lobbyists are still complaining, for several reasons. The details of Baucus’ plan involve adding complexity to the tax code. It’s vague about where the rate would end up, aiming to get it somewhere below 30 percent. And it doesn’t make the clean shift that some activist groups (and economists) favor away from “worldwide” and toward “territorial” taxation.

The U.S., unlike most countries, taxes multinational companies based here on all their income as soon as it enters the country, regardless of where it was made. Most countries tax these companies on the income they make inside their territory. The Baucus plan generally moves away from territorial taxation, imposing significant levies on income before it even enters the country.

These features are not, however, the plan’s main defect. To pay for the reduction in the tax rate, the Baucus plan slows the rate at which companies can write off the cost of investment. This trade-off may have been made merely to get the numbers to work, but its effect is to favor past investments over future ones.

Text Only
Opinion
  • I signed what? When Dr. Sam said, "You've got the prostate of a 16-year-old," it was hard to keep from beaming. This must be how a woman feels when a complete stranger tells her she has a beautiful baby. Well, maybe not quite. Still, it was hard not to feel proud o

    April 19, 2014

  • Obamacare's winning numbers Obamacare's critics have had a bad week. On Thursday, President Obama announced that 8 million people have enrolled in new health insurance plans through the Affordable Care Act's marketplaces, and a significant portion of them are young Americans. Y

    April 19, 2014

  • The rise of big data: A double-edged sword Debates are raging about whether big data still holds the promise that was expected or whether it was just a big bust. The failure of the much-hyped Google Flu Trends to accurately predict peak flu levels since August 2011 has heightened the concerns

    April 19, 2014

  • Only love can re-make your heart Was Jeb Bush right to insert love into a political debate? Such was the gist of a question I was asked on talk radio in response to the former Florida governor's assertion that some immigrants come into the United States illegally as an "act of love.

    April 18, 2014

  • Stop big tobacco from promoting e-cigarettes The tobacco industry is sharply raising spending on advertisements and other marketing for electronic cigarettes to try to make smoking glamorous again and hook a new generation of Americans on nicotine. We shouldn't let them get away with it. If adu

    April 18, 2014

  • A mental health checkup The country's inadequate mental health system gets the most attention after instances of mass violence of the sort that the nation has seen repeatedly over the past few months. Not all who commit these sorts of atrocities are mentally ill, but many h

    April 18, 2014

  • Your new password: sur**nder Have you changed your passwords since the security flaw known as Heartbleed emerged? Have you made sure they're all long, alphanumeric and randomized? Did you use a unique one for every site -- every bank account, every e- mail address, every music-s

    April 17, 2014

  • Hillary leans on Bill, Obama Recently Hillary Clinton gave what appeared at first to be a rambling and unfocused answer when asked to name the proudest achievement of her four years as Secretary of State. The short version is, she doesn't have one. But Clinton's words make a lot

    April 17, 2014

  • If GOP lost culture war, liberals did, too The "culture wars" have been a feature of American politics for almost a century, but recently a number of commentators have declared their end. Conservatives have lost, swept aside by a wave of enthusiasm for marriage equality and sexualized mass cu

    April 17, 2014

  • Cable guys too slow with Internet upgrade Remember the good-old 1990s, when you could make a pot of coffee while waiting for the screeching dial-up modem to connect to the Internet at a leisurely 9.6 kilobits per second? Two decades later, the average American household's connection is 1,000

    April 16, 2014

Twitter Updates
Facebook
Stocks