In an op-ed in the Wall Street Journal George P. Schultz proposes four steps “to get America moving again”. They are:
- A resest on the personal income tax system with fewer, lower deductions, i.e. “loopholes”, and lower marginal rates.
- Bringing the corporate income tax into line with prevailing international practices.
- Streamlining the regulatory system.
- Putting the Federal Reserve on a rules-based regime.
His proposals remind me strongly of the column I wrote about a couple of days ago. You’d think his proposals were commonsensical and would attract bipartisan support but, alas, no.
As a group they are proposals that might attract Republican support, indeed might even be a Republican wish-list, but would be castigated by many Democrats as helping the rich, corporations, unleashing poisons on the American people, and snake oil.
We are long overdue for an overhaul of our personal income tax system. Tax systems are like ships. They leave the boatyard bright, shiny, and slick but after many years are covered with barnacles that slow progress to a crawl. You would think that corporate “inversions” would spur action. I mean action other than insisting on loyalty oaths as, for example, getting into line with the corporate tax laws of the United Kingdom, France, and Germany just to name a few.
I have been proposing simplification of our regulatory system for decades. Federal regulations alone run to nearly a quarter of a million pages while state and local regulations contribute probably ten times as many. The upshot of that is that nobody understands our system of regulations. Asserting that simplification is impossible or undesireable is absurd on its face.
And, of course, with a rules-based regime there would be little need for a Federal Reserve board. I can hear the howls of protest from here.
Go ahead, Congress! It’s chocolate-flavored.
Inversion seems to be a minor issue. According to the Joint Committee on Taxation, the government is supposed to lose 20 billion over the next decade due to it. So basically, chump change, and certainly not worth the cost in lower revenue.
But it’s in the news 24/7 because it’s an easy way to cast the lowering of the corporate tax rate as a necessity. Obviously, nobody who has spent the last forty years believing that government just has to get out of the way of business is going to admit that maybe they have no clue what the hell is going on, because the reason the nobodies got into the government bad business great game was because it was an easy scam requiring no standards. Still, this one is pretty obvious.
George Schultz? Can’t think of him without thinking of his conversation with Charlie Linger, the one that ends with, “Charlie, I do not want to think about this.” Makes me wonder about the usefulness of his advice.
I’ve read that US businesses have about $2 trillion in cash held overseas due to the tax avoidance. Repatriating that money to the US for investment or distribution to shareholders or whatever would not be chump change. It’s more important than ever to attract business and investment to the US.
The loss in tax revenue from eliminating or reducing the corporate tax rate could be made up in other ways. For example, eliminating corporate taxes completely or instituting a low flat tax would also eliminate much of the justification for reduced taxes on capital gains (Presumably, Drew will disagree with this).
Drew would ask “what’s the rate?” The concept is simple, the country is awash in risk averse capital and there is a shortage of risk capital. It is counterproductive to place one element of all cash flows (taxes) in the way of investment.
It would, however, be an interesting analysis and debate as to whether the merits of a flat tax trump all other considerations. That said, given the dems clutching to class warfare rhetoric for dear life and corporate repubs and dems trading votes for tax favors…………fuggetaboutit.
Regarding a flat tax I meant as a replacement for corporate taxes. I’m not convinced a flat tax is prudent for a personal income tax.
If it couldn’t be eliminated altogether and the incidence sorted out over time I’d take a flat corporate tax in a heartbeat.
Oh, screw you, Drew! (You should wish.)
The rhetoric from Republicans these days appalls even such a one as you, I hope.
http://youtu.be/MBxFTzxc0Bo
Bless his heart, Drew is a pedestrian.
I ride a Tennessee prancer.
Now, Drew, what do you think of Vanguard EFTs?
Hunh?
And you don’t get 2% for your advice, either.
Watch me, boy, I’m a born hellion and I’m riding wild.
Oh, my. Did I actually write that?
Don’t be ashamed, sonny boy, I have had about 20 English courses, some taught by Harvard. I’m good at it. 10,000 hours and all that.
John Lewis at SMU is the absolute best.
So, what now? Vanguard EFTs or what?
I wear a $125 Armani jacket to meetings, asshole. I come from Dallas. Baylor Hospital, and scrawny I was. Hell, my oldest brother was born in a farmhouse at 12.
Who y’all?
Goddamn, Dave, these people think I come out of the woods.
My last word:
http://youtu.be/V9VoLCO-d6U