« | »

Reuters Calls For Increased Corporate Tax

From a shamelessly shilling Reuters:


Analysis: Tax reform impossible? Reagan did it 25 years ago

By Patrick Temple-West [sic] and Kevin Drawbaugh
October 21, 2011

WASHINGTON (Reuters) – Tax reform can happen in the United States. President Ronald Reagan and a divided Congress defiantly proved it 25 years ago this Saturday.

On both sides of the acrimonious tax debate, no event is held in such awe today as the historical moment when Reagan signed tax reform into law on October 22, 1986.

“All of the betting was that (reform) was impossible,” said Michael Graetz, a tax professor at Columbia Law School.

But it got done. Even now, tax lobbyists still shake their heads in disbelief at the 1986 reform. The fact that no comparable achievement has followed, a quarter-century and four presidents later, makes the feat all the more remarkable.

And it begs the obvious question.

With the U.S. fiscal situation so much more dire, why is it not happening now? Even with wide agreement in both parties that the tax code is a loophole-ridden jumble of inefficiency and unfairness, even tentative reform has been unattainable.

Er, if Reagan’s 1986 tax reform did away with so many loopholes, then how come the code is still “a loophole-ridden jumble of inefficiency and unfairness.” The truth is, there just aren’t any real loopholes left.

The answers are four-fold, said academics and some of the tax experts who helped craft the reform of 25 years ago:

First, glaring loopholes are fewer today; second, the deficit’s size blocks agreement on revenue neutrality; third, Reagan raised corporate taxes, but this is harder now; and fourth, a lower capital gains rate is more deeply entrenched.

In effect Reuters is arguing that the only way to do away with these so-called loopholes is to increase revenues by raising corporate taxes. What a coincidence. That is just what Obama and the OWS crowd want, too.

Not many issues are hotter on the campaign trail than taxes. Republican presidential candidate Herman Cain has his “9-9-9” plan; rival Rick Perry wants a “flat tax;” Ron Paul wants to abolish the income and estate taxes entirely.

President Barack Obama wants tax reform as well. He regularly calls for closing corporate loopholes and making the wealthy pay their fair share of taxes.

Obama and the rest of the Democrats want higher taxes anyway they can get them. It has nothing to do with loopholes or ‘fairness.’ It has everything to do with buying power.

From the Occupy Wall Street protests to the Tea Party, taxes fuel voter anger across the political spectrum

We are already sick to death of this phony comparison of the mindless and minuscule OWS protests to the Tea Party.

Today’s tax expenditures — from tax-advantaged retirement savings to deductible mortgage interest — are more costly and more politically popular than the shelters of the 1980s

Note that Reuters calls things like mortgage deductions, where people are allowed to keep a little more of their money “tax expenditures.” And, for the record the Reagan tax reform actually increased the mortgage deduction. 

Also notice that Reuters is pushing for a tax on 401Ks.

Early in the 1986 negotiations, lawmakers decided to maintain revenue neutrality, or not raise new revenues. It was “the watchword and guiding star” for tax reform, Graetz said.

Lawmakers today, facing a massive budget deficit, are not as united on the revenue neutrality. “The fiscal pressures are far greater today than they were” in 1986, [said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a group that advocates for deficit reduction]…

In other words, the Democrats want to use ‘tax reform’ to raise taxes to pay for their massive increases in government spending.

With so much of the federal budget devoted to mandatory spending, such as the Medicare and Medicaid healthcare programs, the budget process is more constrained. To do future tax reform, “we will need more revenues,” MacGuineas said.

Gosh, what a surprise.

A key to 1986 was that cuts in individual tax rates were balanced by increases in corporate taxes.

The Reagan tax reform of 1986 actually significantly lowered both the individual the corporate income tax rates (the latter from 46% to its current 35%). But it broadened the tax base for both by eliminating or restricting a host of individual and corporate tax exemptions, deductions, and credits.

Changes made to the corporate tax system increased revenues while the changes to the individual tax system decreased revenues. The Tax Reform Act of 1986, thereby used corporate base broadening to offset individual tax reductions

But corporations are more powerful today and face more global competitive pressures, giving them more leverage to block tax increases

Eugene Steuerle, a senior fellow at the [leftwing] Urban Institute, a think tank, and an economist in the Treasury Department during the reform process, said reformers today should look at closing corporate loopholes as a way to broaden the tax base. “There’s actually a lot of room to maneuver there,” he said.

Which, obviously, where this nonsensical “analysis” came from. But how many more loopholes are there left to close? Even Obama can only come up with the depreciation on corporate jets. Which is laughable.

Raising the capital gains rate would also generate revenues today. But Weinstein said, “Any kind of increase in capital gains (taxes) is going to be controversial.”

And by “controversial” Mr. Weinstein means suicidal for our economy.

This article was posted by Steve on Friday, October 21st, 2011. Comments are currently closed.

2 Responses to “Reuters Calls For Increased Corporate Tax”

  1. bobdog says:

    Your first mistake was to consider anything from Reuters to be the source of any serious economic analysis.

    You might as well get your input from MIchael Moore or Joe Biden.

    These folks are so full of leftwing crap it’s not even worth the time to read their drivel.

    • JohnMG says:

      Reuters Calls For Sun To Rise in West.

      Reuters Calls For Pigs To Fly.

      Reuters Calls For Obama’s REAL Birth Certificate.

      Well………………..You get the idea.


« Front Page | To Top
« | »