Beware Liberals Bearing Tax-Cut Gifts
Kerry chimes in today with his economic plan. The central features are a lower corporate tax rate and the removal of tax breaks on companies who operate overseas. The so-called loophole at stake here is, itself, a form of “reform”– which Kerry now threatens to repeal. Unlike almost any other major nation, the U.S. now taxes U.S.-based companies on their world income. Letting companies thus afflicted defer taxes on earnings overseas has been a way of lightening that unfair burden. Now Kerry proposes to put that burden back. The supposed offset? A lowering of the overall corporate tax rate. That means an arbitrary windfall to anyone who hasn’t been smart enough to defer all these years–and an asymmetrical punishment to those who were smart enough. In fact, those smart people will probably just solve the problem by leaving the U.S. entirely and setting up shop in a country that doesn’t burden its productive corporations as heavily as the United States.