John Kerry on corporate taxation
The Washington Post reports that John Kerry is giving a major economic speech in Detroit today, proposing a mixture of temporary and permanent cuts in corporate tax rates in return for “the most sweeping reform of international tax law in over 40 years.” The gist: In today’s speech at Wayne State University in Detroit, Kerry ...
The Washington Post reports that John Kerry is giving a major economic speech in Detroit today, proposing a mixture of temporary and permanent cuts in corporate tax rates in return for "the most sweeping reform of international tax law in over 40 years." The gist:
The Washington Post reports that John Kerry is giving a major economic speech in Detroit today, proposing a mixture of temporary and permanent cuts in corporate tax rates in return for “the most sweeping reform of international tax law in over 40 years.” The gist:
In today’s speech at Wayne State University in Detroit, Kerry will reiterate his call for the elimination of all tax breaks that encourage U.S. companies to locate operations and jobs overseas. For the first time, he will target a popular tax incentive, known as “deferral,” offered to most U.S. companies that do business in lower-taxed foreign countries. To soften the blow to corporations, Kerry will propose a one-time, one-year offer to tax at 10 percent any profits a company brings back to the United States and invests here, an expanded tax credit to companies that create domestic jobs, and a reduction in the corporate tax rate to 33.25 percent from 35 percent — a 5 percent cut. “The most salient feature, or at least symbolic feature, is the corporate tax rate [cut],” said Roger Altman, a top economic adviser to Kerry. “When is the last time you saw a Democrat propose a corporate tax cut?” Gene Sperling, another Kerry economic adviser, said the tax cuts for business will be fully funded by the international tax changes. But R. Bruce Josten of the U.S. Chamber of Commerce said the Kerry plan seems to ignore the complexity of the global economy. “There is a broader point he completely misses: There are companies that open up overseas” for reasons other than tax avoidance, he said.
Here’s the Associated Press analysis: “[Kerry] settled on a blend of loophole-cutting populism and business-friendly moderation, casting his package as jobs-producing tax reform.” Discuss below. UPDATE: Reaction at The Corner and Hit & Run. Here’s a link to the details of the proposal. My gut reaction is three-fold: 1) This is a lot more about symbolism than substance. According to the Post story, the total sums involved in these tax changes are around $12 billion. That sounds like a lot, but it’s around 1% of the federal budget. Not a lot of money either way. 2) That said, the symbolism is important, in that “corprate tax reductions” sound a lot better to the business community than “Benedict Arnold CEOs.” 3) The economic advisors quoted in the Post story are Roger Altman and Gene Sperling. They fall decidedly into the “sane” camp of Democratic economic advisors.
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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