Business Coalition Seeks Reduction in Corporate Taxes
“The OECD is 25.3; the U.S. is 35. Call it the ‘Corporate Tax Competitiveness Gap,'” he adds.
Over the last thirty years the U.S. has found it increasingly difficult to compete in the global economy because the playing field is not level, thanks in large part to policies put in place by Democrats and Republicans alike. The fact that the United States has seen so many jobs move out of the country and overseas reflects the fact that, for many industries, the U.S. is not the best place to do business.
What makes the RATE Coalition’s proposal interesting and politically viable is that, like the successful 1986 Tax Reform Act authored by the Reagan White House and negotiated successfully through Congress with Democratic support, it follows the model of trading lower rates for the reduction or elimination of loopholes, tax credits, and other tax breaks that mask the true costs of doing business. The idea that such a move would be acceptable to as many of the nation’s Fortune 100 and Fortune 500 businesses and business leaders that have so far endorsed the overall idea is, to put it bluntly, remarkable.
Pinkerton advises that the coalition has not yet determined an exact item-by-item agenda for moving forward -- “Politics is the art of the possible,” he says -- but that the general goal is to return the U.S. to globally competitive status with the rest of the OECD, which is to say, 25.3 percent.
“Lowering the rate is a good idea not only for increasing competitiveness, but also for decreasing the rent-seeking politicization of the economy,” Pinkerton said. “It’s the overall gist of Lafferite GOP/conservative/libertarian tax thinking in the last few decades. But Democrats have had the same idea at times, viz. the ‘Bradley Block’ from the 80s and 90s which said ‘You have your choice between high rates on a narrow base, or low rates on a wide base.’”
“To be sure, there are lots of ideas out there [about] reforming the tax code, but the RATE Coalition has identified one specific tax reform goal that has a lot of ‘brand equity’ and public understanding built into it,” Pinkerton said. “There’s an excellent chance that if enough political and economic actors get involved in the effort, this rate-reduction could happen. And that would be a genuine success on behalf of the economy.”
Is it doable? Only time will tell. There is certainly more support in Washington for major corporate tax reform than at any time in recent memory, even as left-wing, anti-corporate protestors are occupying critical real estate on Wall Street and the president is teeing up a re-election campaign that -- harkening back to the days of William Jennings Bryan and Eugene V. Debs -- is going to be heavily populist in its themes. Pinkerton thinks the disgust many voters have for the partisan divisions -- especially centrist-leaning independents -- may lead to the critical tipping point that makes things happen.
“The American people always like to see their leaders coming together to solve urgent national challenges,” Pinkerton told PJMedia. “The weakness of the economy today is just such a challenge. So the RATE Coalition looks forward to working with all who wish to join with us in meeting the challenge of getting the economy moving again [and] to reducing, and hopefully eliminating, the Corporate Tax Competitiveness Gap -- bringing new jobs, growth, and, yes, hope to the American people.”