As we head toward the Senate’s tax bill endgame, the GOP finds itself forced to choose between a couple of unappealing options. On the one hand, you could vote in favor of an unpopular corporate tax cut that raises middle-class taxes and violates a number of key campaign promises. On the other hand, you could accept a humiliating defeat on your party’s signature tax issue.
But even as Republicans continue to tinker with the plan to try to resolve the dilemma, they are totally unwilling to revisit the core choice that’s landed them here — the decision to cut the corporate income tax rate from 35 percent all the way down to 20 percent.
The irony, or perhaps tragedy, here is that the basic concept of a significant cut in the corporate rate is totally sound and reasonably bipartisan.
- Barack Obama had a plan for a 28 percent corporate rate that he thought would also raise some revenue.
- Mitt Romney, who didn’t want to raise revenue and made some more aggressive assumptions, proposed a 25 percent rate.
- The Business Roundtable, the main CEO group pushing for a corporate rate cut, was proposing 25 percent as recently as 2015.
The reason for these numbers is that if you look at the difference between the statutory corporate tax rate and the effective rate of taxes the government actually collects, you quickly reach the conclusion that base-broadening corporate tax reform could pay for a rate cut down to somewhere in the high 20s. Getting that done is still hard work politically. But it makes sense as policy, and in a general sense it’s broadly supported.
But when you push to 20 percent, all kinds of problems arise. You need to blow up the deficit, pair with unpopular spending cuts, or pair with unpopular Read More Here