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The New Independent Party Blog

This Blog is maintained by Mike Barron, Executive Director and Founder of the New Independent Party. The views expressed here are not necessarily those of the Party, its Board of Governors or its Members.

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Obama's Proposal for Changing Corporate Income Taxes

The Administration has leaked that they are planning on proposing changes to the corporate income tax tomorrow, Feb. 23.

The good news is that, as they have indicated before, they would support lowering the top rate from 35% to 28%.

The bad news is that they would more than compensate for lowering the rate by eliminating enough deductions and credits to actually increase corporate tax revenue by a significant amount. They would also attempt to lower taxes on manufacturing (how is not quite clear) and impose a tax on U.S. Corporation's foreign earnings.

The New Independent Party's Platform calls for lowering the corporate rate to 20% and eliminating deductions and credits as much as possible to help pay for it. Absent the new sources of tax revenue outlined in our tax proposals and significant reductions in government spending as a quid pro quo, we would insist that the effect be revenue neutral (assuming no change in economic activity). It should be noted that the average corporate tax rate among developed countries is about 25%.

The desire to single out manufacturing for special tax benefits seems to me to be both unworkable and bad public policy for reasons explained in the blog comment on Santorum.

The notion of taxing U.S. corporations on their foreign income seems especially wrong headed and likely to result in less competitive U.S. corporations with a smaller share of global markets. Most other developed countries are moving in the opposite direction taxing corporations only on the income that they generate in the host country.

I suspect the special breaks for manufacturing are meant to appease the unions which are over represented in this sector and a major source of support for the President.

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