What large component of the US tax code could be repealed today for about 1/5th of the cost to the Treasury of the combined Obama stimulus and budget proposal for FY 2009 alone?
I asked several people this question yesterday, just to get a feel for the public’s appreciation of the magnitude of the problems facing us as a nation today.
One response was the capital gains tax, another suggested the excise tax. A couple mentioned the double taxation on dividends at the individual level and one other guessed the estate, or “death” tax.
The answer is the entire U.S. corporate tax code could be repealed tomorrow for about 1/5th of the cost, in terms of increased deficits, of the Obama stimulus and budget packages presented for this year.
There could not be two more starkly different approaches to stimulating the economy than these two choices. Repealing the corporate tax code would remove layers upon layers of complicated tax law scar tissue from the necks and shoulders of American corporations, both large and small. Business people, engineers and factory workers would be able to do what they do best and like to do the most…make great quality products and produce helpful services to the American consumer and around the world.
The Obama/Congress stimulus and budget packages have some tax relief in them for targeted individuals and small businesses but it is laden with hundreds of billions of dollars targeted for old-fashioned, 1930’s-style infrastructure programs and other federally-directed spending programs.
Which approach did you think has the greatest potential to unleash the creative spirit and energy of the American worker and business-owner and encourage them to invest, expand operations and hire people back to work at this critical juncture in our nation’s history?
Here are the facts, plain and simple. You can go to the link on the right side of this column marked “CBO” or click on www.cbo.gov and go to “Historic Budget Data” under “Budget and Economic Information” on the right side of the home page and see them for yourself in plain black-and-white:
* 2007 Tax Receipts from US Corporate Income Taxes--- $370.2 Billion
* Expected Costs Of Obama/Congress Stimulus/Budget Plan for FY2009 alone?
$1.7 Trillion to $2 Trillion (details forthcoming on a daily basis)
For about the one-year cost of the entire stimulus/budget packages now proposed or passed, we could “pay for” the repeal of the entire US corporate tax code for the next five years: $370 billion times 5 years or $1.85 billion.
These are extraordinary times and extraordinary times command extraordinary thinking and action. We are already doing many things that no one in their right mind would have even dreamed of talking about in polite company even 5 years ago.
There is probably not a computer on earth that could precisely predict just how many jobs the repeal of the corporate income tax would generate over the coming years. But we know from history that corporate tax rate cuts lead to rapid increases in investment and job creation because marginal projects and businesses all of a sudden become viable and productive without the excessive tax harness around their necks.
Remember: corporations don’t pay the corporate income tax…you pay it in the form of higher prices you pay for their goods and services. A repeal of the entire corporate tax is a tax cut for you on a scale unlike the $400-$800 proposed in the Obama budget and will generate an explosion in the American economy for the long-run.
It might not happen this year in this climate due to the mismanagement of the American banking, automobile and real estate industries over the past decade but it took awhile for Galileo and Copernicus to convince the “established authorities” that the earth moved around the sun, not the other way around.
The US economy does not have to revolve around Washington, DC either.