The PJ Tatler

Obama's Corporate Tax Cut Good, But Not Enough

Looks like Obama is trying to portray himself as a tax-cutter:

The Obama administration will propose lowering the top corporate tax rate to 28 percent on Wednesday as part of a proposal to reform taxes on businesses, according to a senior administration official.

The White House wants to pay for reducing the corporate rate, which is currently 35 percent, by ridding the tax code of a number of preferences and incentives. Administration officials are also seeking to drop the effective tax rate paid by manufacturers to 25 percent.

Now, I am all for lowering tax rates, but 28% is still too high, and 25%, honestly, is at the top end. Not coincidentally, if you look at the tax plans for the GOP candidates, Mitt’s is the highest corporate tax rate proposal, at 25%. Newt’s is the lowest at 12.5%, lower even than Ron Paul’s. I’ll highlight the corporate tax rates in the summaries below.

Mitt Romney: Gov. Romney’s 162-page economic plan certainly hits the right rhetorical notes on tax reform. He writes, “The best course in the near term is to overhaul and to dramatically simplify the current tax code…”

Despite his emphatic rhetoric, his actual proposals are really minor tweaks. They include maintaining the Bush tax rates, lowering the corporate income tax rate to 25 percent and eliminating the death tax. His stated “long-term goal” is to “pursue a flatter, fairer, simpler [tax] structure,” but he offers no definite “near term” proposals.

Newt Gingrich: Gingrich’s plan is similar to Perry’s flat tax, except that he is proposing a 15 percent flat tax with a $12,000 personal deduction. He would maintain the earned-income and child tax credits and allow deductions for charitable giving and mortgage interest.

As with Perry, Gingrich is also proposing to allow individuals to choose between his 15 percent proposal and the existing tax code.

He’s also proposing to eliminate the death tax and tax on capital gains and reduce the corporate income tax rate to 12.5 percent.

Ron Paul:
More so than any of the above candidates, Rep. Paul has a very detailed plan when it comes to cutting spending. His tax plan, though, most closely resembles Romney’s and offers only minor tweaks to the current system.

He wants to maintain the Bush tax rates, eliminate the death tax, lower the corporate tax rate to 15 percent and eliminate all taxes on personal savings for retirement.

The article above didn’t summarize Santorum’s tax plan, so this is from his website:

Cut the corporate income tax rate in half to make our businesses competitive around the world, from 35% to 17.5%;

It’s also very interesting that a president who’s done his best to govern as far to the left as possible finds it desirable to be seen as someone who’s cutting corporate taxes. That speaks, I think, both to his own fear of losing because of a bad economy, and to the enduring popularity and wisdom of cutting taxes.