Dallas News, June 2, 2012
Cornyn chides Obama for not working on tax reform in GOP’s weekly address
by Sean Collins Walsh
... Sen. John Cornyn chided President Barack Obama for
not working with Congress to revamp the tax code in a fiery edition of the
Republican Party’s weekly address ... “As the 2012 election campaign heats
up, rather than hope and change, President Obama has opted for fear and envy
... The good news is that we now have an emerging bipartisan consensus on
tax reform. The bad news is that President Obama is missing in action. ...
The
bipartisan consensus is simple: We should lower the rates and broaden the
base.â€
... While both sides say they want to close loopholes
to broaden the tax base, they differ about which types of companies should
lose their exemptions and which should hold on to them.
2-4-8 Response: For example, Consider two
loopholes:
Business Research and Jobs for Veterans
Tax reform requires that congress, "close loopholes to
broaden the tax base". Traditional studies such as the Bowles-Simpson
Commission only looked at the trillion plus dollars in income tax
expenditures (a/k/a loopholes) that might be eliminated through bipartisan
agreement. Over 200 loopholes exist because no one wants to vote against
helping a good cause and voters (and many members of congress) don’t
understand that tax breaks are really scattered spending programs that are
paid for with higher tax rates on everyone even though the wealthy benefit
the most. Average workers in the $40,000 to $80,000 income range and retired
seniors with a minimal fixed budget can no longer afford to subsidize
business owners, investors or even more sympathetic groups.
For
example, there is a self-destructive mindset that would not hesitate to use
the tax code to help returning veterans obtain jobs. Since all agree the
defense budget must be reduced it is very tempting to try to help veterans
by supporting a tax credit for businesses. President Obama supports a credit
for every veteran hired even if 9 out of 10 businesses would want to hire
veterans anyway. The unintended consequences are that it is expensive
because it will apply the credit to 90% of the jobs that don’t need it and
job discrimination will occur to faceless non-veterans – (thus also
extending and increasing the cost of their unemployment benefits). The good
intention of helping veterans will actually result in business owners
getting a windfall at the expense of the taxpayers who can least afford it.
If the measure comes to the floor there will be few politicians who will
vote against “veterans†even though all know it is very bad tax policy.
Another example of tax code madness is in the area of research and
experimentation. Although we have the most comprehensive intellectual
property laws in the world the tax code offers large credits to most
businesses that set up a research department. The credits are given, year
after year, even if the research accomplishes nothing. Obviously businesses
with successful research don’t need any tax credits because successful
research will translate into business profits. The unintended consequences
of the research tax credits are to support a great deal of failing research
by businesses ill suited to do it. Fewer research departments focused on
their tasks by full business risk is just as likely to produce quality
results without any taxpayer subsidy. At least President Carter gave lip
service to cost benefit analysis of government grants. The research tax
credits are just an expensive perk for big business that sounds too good for
congress to say no.
It is beyond the scope of this comment to
elaborate on real expansion of the tax base by considering sales and wealth
in the mix. For more information see www.TaxNetWealth.com.
|