The Kansas City Star, Feb. 4, 2012
Commentary:
Obama's corporate tax charade
by E.
Thomas McClanahan
Mr. McClanahan opines:
... [President Obama] said to businessmen: “Ask
yourselves what you can do to bring jobs back to your country, and your
country will do everything we can to help you succeed. … We should start
with our tax code.†Whoa, I thought. He’s going to push for corporate tax
reform.
... Here’s Obama himself explaining it: “Companies that
choose to stay in America get hit with one of the highest tax rates in the
world. It makes no sense, and everyone knows it. … So let’s change it.â€
... Given the sluggish economy, the challenge for
policymakers is how to move business psychology from fear of loss to fear of
losing opportunity. Reforming corporate taxes would be a huge lift to the
“animal spirits†of entrepreneurs.
... More than that, it would be a gateway to wider tax
reform — to the lower rates and broader base suggested by a presidential
commission in late 2010.
2-4-8 Response:
You are correct about President Obama’s $40 to $50
billion tax on those earning above $1,000,000 as amounting to “more
deductions, loopholes and tax-code complicatorsâ€. It is an attempt to
redistribute wealth to his favored programs (i.e. green energy and selective
manufactures). You are also right in the country’s need for, “a gateway to
wider tax reform - to the lower rates and broader baseâ€.
I would be remiss if I did not invite you to consider the 2-4-8 Tax Plan.
1) Make all business tax returns publicly available online for free.
Cheating will be substantially reduced. Business contributions (political or
otherwise) will be public and become part of the business’s reputation. The
market (not the government) will more easily and transparently identify the
businesses which are productive.
2) Adopt the 2-4-8 Tax Plan which is a simple mix of three flat rate taxes.
Tax 2% on individual net wealth, 4% on retail sales and 8% on individual and
corporate income. The exact same rates apply to the rich and poor. There are
no different tax brackets, deductions or credits, and no favoritism. The
three taxes would yield about $2.6 trillion per year (slightly more than the
current combination of Income, Social Security, gasoline and other federal
taxes and fees).
At the risk of over simplification the process of upward mobility can be
illustrated by contrasting a flat rate income tax of 28% versus a combined
8% income tax and 2% wealth tax for each of the next ten years. The latter
combined tax would permit an individual to keep 20% more salary each year
and tax another 2% of the amount not consumed for the next ten years. If one
saved the 20% for 5 years it would be like having a year’s of salary in the
bank on top of what might have otherwise been saved under a 28% flat tax
rate (conservatively assuming the 2% wealth tax was offset by investment
interest).
It is hard to imagine anyone that wouldn’t welcome a 2% tax on net wealth
and a small 4% sales tax, in exchange for drastically reduced 8% individual
income tax rate. Even Bill O’Rielly (a/k/a the “Factorâ€) supports a national
sales tax (of 3%) as part of much needed tax reform. The concurrent
elimination of social security, capital gains, estate and gift taxes; and a
significant reduction of the corporate income tax rate to 8% should
guarantee near universal support from social liberals and business
conservatives alike.
3) More jobs through improved business competition, restored upward
mobility, problem solved!
Eugene Patrick Devany JD, MPA
www.TaxNetWealth.com
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