The latest Business Week outlines President Obama?s plan to squeeze more tax revenue out of companies with overseas operations. Fortunately, a follow-up article has this headline: ?Here?s an idea: Cut corporate taxes. Obama could reduce red tape and boost job creation in the U.S. by trimming income tax rates for multinationals.?
Writer Michael Mandel begins his column with this assessment:
As the saying goes, the road to hell is paved with good intentions. For decades, Washington politicians have tinkered with corporate income tax rules, with the laudable goal of getting U.S.-based multinationals to pay their ?fair? share of taxes on growing overseas operations. The result has been a disaster: a corporate tax system that no one understands, that requires vast resources to comply with, and that altogether contributes only 10% of federal reveue, on average. And, oh, yes ? the current rules seem to encourage U.S.-based multinationals to move jobs overseas.
Unfortunately, President Barack Obama?s latest proposal to get U.S.-based multinationals to pay higher taxes on their foreign profits does nothing to fix these problems. The tax system will become even more complex, an unintentional stimulus package for tax lawyers and accountants. And U.S.-based multinationals will find themselves at a bigger tax disadvantage compared with competitiors headquartered outside the U.S., which operate under a different set of tax rules. The end result could well be fewer good jobs in the U.S.
Instead of adding more rules, President Obama should take a stand for simplicity and job creation by reducing the corporate income tax rate from its current 35% to 25%.
It?s an idea that fits well with Roy Cordato?s idea of
real tax reform.
