Obama’s Tax Piracy
His budget treats corporate profits as booty ready for looting.
Reforming the corporate tax structure in the United States has been a long time coming. Both parties agree it is sorely in need of an overhaul, but the change Barack Obama has in mind is not one that will help our economy. In fact, it’s nothing but piracy on the high seas.
Obama’s 2016 budget proposal includes a plan to force corporations to pay a 14% tax on accumulated overseas profits. In the past, businesses earning money overseas were able to defer taxes on those profits until the money was brought back to the U.S. This new 14% tax does away with that practice.
The second part of Obama’s one-two punch proposes a 19% minimum tax on foreign profits. Companies that reinvest foreign profits directly into the U.S. would be exempt from walking the plank the additional penalty.
This is all part and parcel of Obama’s call for “economic patriotism” – defined as paying what he deems is a “fair share” of taxes.
The president claims his corporate tax proposal is necessary to help fund badly needed infrastructure investment to the tune of $478 billion over six years. He wants multinational corporations to cover at least $238 billion of that tab.
Republicans have expressed interest in more infrastructure spending, and it may be one of the few points of agreement they have with the president’s $4 trillion budget plan. Such spending can upgrade America’s roads and bridges, ports and railroads, as well as create more jobs.
But Obama’s corporate tax hike is not the way to pay for it. “Changes to our tax code just to fund more spending by our already bloated government is not the way to boost our economy and encourage job creation,” said Rep. Pat Tiberi (R-OH).
Higher taxes on corporations won’t encourage investment in the U.S. or motivate those companies to bring that money back home. The federal government’s corporate tax rate is already 15 points higher than most of our global competitors. The U.S. is also the only nation that taxes foreign income on our own companies. With a corporate tax policy like this in place, it’s no wonder the U.S. has been losing its competitive edge.
Obama claims he’s doing companies a favor by charging a 14% tax on earnings not yet repatriated rather than what current law demands. The profits he’s looking to plunder, however, have not specifically been earmarked for U.S. investment, so, according to current law, they should not be taxed at all.
The White House says the suggested rates in the president’s proposal are still open to debate. “When people are putting out numbers, you’re opening up a process for negotiation,” said Gene Sperling, liberal economic guru and former top economic adviser to Obama. The president will negotiate? Right, and we have oceanfront property in Arizona to sell him.
The truth is, Obama sees a glut of cash and he wants to get his hands on it. U.S. companies have accumulated foreign profits in excess of $2 trillion. To a statist pirate like Obama, that’s a lot of booty just begging to be confiscated.
Obama’s corporate tax “reform” is a mask to hide further government plundering in the private sector. As for using it to balance out spending, when has the federal government ever been concerned about that? With an $18 trillion debt and a 2016 budget that includes a 7% spending increase, does it really matter if an additional $238 billion in spending goes unfunded?
Real corporate tax reform would overhaul the system to make the U.S. more competitive in overseas markets. It would encourage multinational corporations to bring profits back home and invest in infrastructure and job creation, things Obama supposedly cherishes. It might even end the practice of taxing foreign profits altogether. Real reform would help shore up the economy that, despite platitudes and projections, is far from stable. Democrats lauded Obama’s handling of the economy in the third quarter of last year when GDP grew by 5%. They were quieter in the fourth quarter when that growth dropped to 2.6%.
Obama claims, “This country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.”
But that’s not the policy he’s followed since taking office. Every one of the seven budgets the president has submitted to Congress included massive deficit spending backed by sharp, punitive tax hikes on the same individuals and corporations. If everyone is supposed to be playing by the same rules, then why is Captain Obama picking winners and losers from his pirate ship?
