Tax reform is dead; obama killed it with an assist form Reid. To be exact, its officially dead now for this year and next. Obama rejected the one thing that makes tax reform politically possible: revenue neutrality. It allows the tax base to be broadened and tax rates to be lowered. He wants reform that raises taxes revenues. He would kill tax preferences and loopholes, then use the windfall this produces to fund his favorite spending programs.
The president has been publicly committed to revenue-neutral reform of corporate taxes for years. The white house would happily go along with neutrality, but they insisted this was a concession on Obama’s part and would have to be matched by GOP concessions. For corporate reform to be neutral, republicans would have to agree to raise revenue with higher taxes on individuals. He proposed to cut the corporate rate to 28% from 35% through reform that would leave him with a bundle of money to spend. That’s not revenue neutrality. He also called for a permanent tax on profits that Americans companies keep profits in foreign countries to avoid corporate taxes here. He suggested a tax hike of $1 trillion, as called for in the budget endorsed by senate dems.
They regard the 1986 tax reform in which the top rate on individuals dropped to 28% as the holy grail of tax legislation. He’ll insist he agreed to bipartisan compromise to cut the corporate rate, only to have republicans refuse to cooperate. All he wanted in return, Obama will say was tax revenues to “invest” in roads, education, and job training and boost the economy
Obama operates under the illusion that government spending boosts the economy and produces a wave of new jobs. The government spent at record levels in his first term and produced a lame recovery and a serious decline in he percentage of Americans in the workforce. As a liberal ideologue who has now killed a proven spur to the economy: tax reform that cuts rates without adding more taxes.
Douglas Holtz-Eakin former CBO director wrote “the current rules were fine when US exports dominated a global economy…but they are ill-suited for digital age of intense competition.” David Camp wants to cut the top corporate and individual rates to 25%.
Sources—weekly standard, Politico, fred barnes