Happy Days Are Here Again?
by FRANK HILL
November 8, 2010
Here's a sure-fire hit that both the Obama Administration and the new GOP House can agree on to create millions of new jobs in America:
-Abolish the US corporate income tax
Now before they send Robert Gibbs out to castigate someone in public for speaking such heresy, hear us out.
The economy would correct itself in almost no time flat (relatively); unemployment would plummet; people could buy houses and goods once again...and both President Obama and the Republicans will be praised and fanned with palm fronds down Constitution Avenue come next spring for being able to 'do something to get our economy going again' in a bi-partisan way.
'Happy Days Will Be Truly Here Again!'-- (and at least 7 years sooner than when it took 10 years for our parents and grandparents to get out of the Great Depression)*
Let's look at the numbers:
The slack economy drove the receipts of the corporate income tax down to only $130 billion in 2009. That is less than the amount Washington receives from all various federal excise taxes including gas and cigarette taxes paid directly by the consumer.
Corporate taxes are just another form of 'excise tax paid by the consumer' except in a more indirect way each time you pay for any good or service. There is no corporate tax that is paid solely by the corporation without you, the consumer, paying it first in the form of higher prices. So start to think of a corporate tax repeal as being the same as a 'direct tax cut' for you as an individual consumer.
Corporate tax receipts are expected to only be around $180 billion in 2010. Both of the 2009 and 2010 amounts represent the almost pitifully low level of around 1% of GDP.
That hardly seems worth fighting for nowadays in the land of trillions and gazillions of debt being accumulated. And all the lobbying and legal fees and accounting and PACs and fundraisers that go along with the corporate income tax...honestly, wouldn't the world be a little better off without a few of those types on K Street in Washington, DC?
Corporations would save billions in lobbying, legal and accounting fees alone if the corporate tax was eliminated simply because there would be no tax code to fight or loopholes to find and protect. And probably pass along those savings to you in the form of lower prices because their competitors certainly will.
'But' as Keith Olbermann on MSNBC (who shoulda stayed on ESPN with Dan Patrick) would fulminate and fluster, 'wouldn't that increase the very debt you (crazy, stupid, idiotic, ignorant) conservative Republicans say you want to reduce?'
'Glad you asked that question, Keith! Let me tell you how we would pay for it...if you would quit glaring at me.'
Mr. Chambers' idea of repatriating foreign profits back to the US at, say a 5% tax rate instead of 39%, would yield close to $50 billion in new tax revenue that is not already assumed to be in the federal budget revenue baseline totals. That would pay for at least a third of the 'loss' of corporate tax revenue for 2010 from the existing baseline.
But the repatriation of $1 trillion in new privately held money would lead to an unprecedented boom in capital available to the every companies and people who can and will create new jobs under more favorable circumstances. It is $ONE TRILLION, all available on Day 1, not spread out over 5-10 years like the $787 billion Obama Stimulus that has not proven to be stimulative at all yet.
With no massive bills such as cap-and-trade to worry about and the more onerous parts of the Obamacare legislation already showing signs of being pulled out and eliminated (such as the reporting requirement for every expenditure over $500), 'gridlock' is already working to creating an environment where businesses can once again do what they do best which is to invest, create jobs and make money for shareholders and employees alike.
The ensuing economic boom and job expansion will generate far more than enough revenue to cover the loss of the corporate tax forever and then some. But just to be sure that these two changes can be made to our tax code and be completely and irrefutably 'budget-neutral' and not add to the deficit, we have added specific line-item budget cuts at the end of this posting, any of which or combined in some fashion could total close to $4 trillion in scored budget savings over the next 10 years.**
You don't think many American companies with plants overseas and foreign corporations as well will start flocking to the US if they could see that The United States would soon become a 'corporate tax-free zone'? That strains credulity when you consider that one of the major factors corporations go overseas in the first place is to flee high taxes in the US, aside from lower wages, of course.
And the 'wealth effect'? When stockbrokers start cranking out present values for stocks without a 39% tax rate in them, their computer consoles may melt down with all the bigger numbers. One way to get people spending again and regain confidence is to see their savings and 401(k)s rise again...this will do that in spades overnight.
You wanna get out of the chute right away on January 1, 2011 with a plan to defibrillate this American economy?
Call or write your representatives in Washington and tell them to tell Speaker-to-be John Boehner and the New GOP (we hope and pray!) leaders to pass these two tax bills on January 2, 2011.
And then we will truly be on our way to the 'Happy Days Are Here Again!' scenario our parents and grandparents could only imagine in 1930.
* Lyrics to "Happy Days Are Here Again!' from the movie 'Chasing Rainbows' (appropriately enough) and sung because of the impending repeal of Prohibition and the end of moonshine and out-running the revenooers.
So long sad times. Go long bad times. We are rid of you at last. Howdy gay times. Cloudy gray times. You are now a thing of the past. Happy days are here again. The skies above are clear again. So let's sing a song of cheer again.
Happy days are here again. Altogether shout it now. There's no one; Who can doubt it now. So let's tell the world about it now. Happy days are here again
Your cares and troubles are gone. There'll be no more from now on. From now on ...
Happy days are here again
The skies above are clear again
So, Let's sing a song of cheer again
Are here again!
· Repeal or rescind any and all stimulus money that has not been already spent on 'shovel-ready' projects. Which, according to the President, should mean close to $500 billion of it since he admitted there were no 'shovel-ready' projects
Allowing the Bush tax cuts to expire would free up close to $4 trillion over 10 years (hey! you either do it for individuals or corporations...which one do you think would generate the most job growth?)
Hold overall spending growth to about 2% annually and allow the economy to grow and generate sufficient revenues to balance the budget in 2020 or so, even with the repeal of the corporate income tax code
FamilySecurityMatters.org Contributing Editor Frank Hill ran for Congress at the age of 28 and served as chief of staff for former Congressman Alex McMillan (NC-9) and Senator Elizabeth Dole (NC). He was a budget associate on the House Budget Committee for 4 years and worked on the 1994 Commission on Entitlement and Tax Reform. He now lives in Charlotte, North Carolina where he does some consulting and lots of worrying about federal spending issues.