You just have to love his optimism, his can-do spirit. Oh wait...
"President Obama elevated talks of tax reform last week when he proposed to lower the corporate tax rate and invest in infrastructure. But Senate Minority Leader Mitch McConnell (R-KY) all but pronounced dead the prospects of a comprehensive overhaul."
"President Obama elevated talks of tax reform last week when he proposed to lower the corporate tax rate and invest in infrastructure. But Senate Minority Leader Mitch McConnell (R-KY) all but pronounced dead the prospects of a comprehensive overhaul."
“Well, I honestly don’t see how we get there,” he told reporters Thursday. “Back in the ’80s there was a bipartisan agreement between President Reagan and Speaker Tip O’Neill that the whole purpose of comprehensive tax reform was to make the country more competitive, not to raise revenue for the federal government. … So yeah, I think we’re stymied. I mean, we’re stymied by the desire of the majority to raise taxes again and that’s not what most people [want].”
“So I think we have a real stumbling block here in trying to figure a way forward,” he said.
Yes, that's the spirit Senator. As usual, you're promising to get nothing done, even vowing it. At least you're consistent. It's true that the Dems have moved the goalposts by asking for more revenue-I like the way Harry Reid puts it-it can't be close to revenue neutral.
Yet, while the Dems may have moved the goalposts at least they're offering something. What has Mitch McConnell offered to the Dems in any show of good faith that he has any interest in getting anything done? As usual it's just the GOP game of My way or the highway.
McConnell mentioned 1986-and this is always mentioned. I really didn't like many aspects of 1986. The top marginal rate of 28% was in my view, way too low. Meanwhile there was only one other rate-15%, so we were as close to a flat tax as we've ever been. Also at least some of the deductions eliminated really hurt the middle class and the poor-like the interest deduction on all interest not just mortgages-the mortgage deduction benefits mostly upper middle class families which I'm all for but what about those in the middle and lower income brackets?
Having said this, at least the conservatives were willing to offer something, they showed some interest in even making a deal. When has McConnell ever shown this? I mean the President just made a major offer that many in his base won't like-I don't know that I like it-in dropping the corporate tax rate to 28%., though he does say that this will actually raise tax revenue.
If this is true, then he must close a lot of the big corporate deductions, exemptions, and loopholes. In any case, at least this should be a starting point for debate. Yet McConnell has offered nothing but blanket dismissal. My way or the highway. He wants a deal with everything he prefers and nothing that he doesn't. That's his definition of negotiation.
The 1986 reform actually raised the capital gains rate by 40%. If McConnell and friends want to lower top marginal rates they should offer something like this. Indeed, in the link above about what I think real liberal tax reform would look like, I argue that what we as liberals should aim for is ending tax preferences for the rich: basically the goal should be to bring the top marginal rate, the capital gains rate, the dividends rate, and the corporate rate in line.
Actually we're pretty close to that after the fiscal cliff deal to start the year. Nevertheless, while I overall liked the deal, the GOP did get one huge concession in the capital gains rate going to just 20% and not 39.6%. If it had, we'd basically have what I'm talking about-we'd have 39.6% for capital gains, income, and dividends, with the corporate rate at 34.7% in the neighborhood.
Of course, the rates for the rich went back to the Clinton rates and the top capital gains rate was 20% when Clinton left. This preference for capital gains, however, has to go. There is just no support or the claim we always hear-that capital investment is very sensitive to small tax changes.
In a way then, Obama's proposal can be seen as a big step back. Of course, what we really need is not so much the nominal rates of all 4 taxes in line but rather the real effective rate. If Obama's proposal really does raise revenue then it actually is a tax hike-while presumably making the mode of collection more efficient than at 35% but with lots of loopholes.
So if it does work as he says it will, then the effective corporate rate will go up. I'd be interested in seeing the math on this. Unlike McConnell. Who seems to have little interest in anything related to actually governing.
P.S. Yep, I'm not a Mitch McConnell fan. However, it seems that neither are his Republican Senate colleagues.
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