President Obama released a corporate tax proposal last week which, while offering some sensible changes, unfortunately takes a political approach to an issue requiring an objective one. Changes to the tax code will affect every American, and I find it unfortunate that the President has waited until now to introduce his plan as a campaign talking point. The proposed lower rates are overshadowed by newly-proposed market-distorting loopholes which reward or punish areas of the economy based on his political agenda.
The President's proposal does have a good starting point by lowering the corporate tax rate from 35 to 28 percent. This is important for several reasons. Under the current 35 percent rate, the U.S. will soon have the highest corporate tax rate in the world. As we look for policies that will help ease the unemployment rate, a punitively high tax rate actually serves as an incentive for companies to move their operations overseas, where they can pay lower taxes.
Though 28 percent would still be above the international average, lowering the rate is a positive step forward, and one I hope will apply to small businesses and families as we discuss overhauling our entire tax code.
Yet the President's tax reform proposal goes astray when it begins picking winners and losers. That he would even begin to insert his own personal preferences into our country's already too-complex tax code is troubling. Tax reform should be about making our tax code simpler, fairer, and encouraging of job growth within the United States. Instead, the President has chosen to use it as a vehicle to reward friends and push his Administration's political agenda.
For example, the Administration's plan calls for higher taxes on oil and gas companies, while continuing to offer credits and incentives for his favorite green energy projects. Certainly alternative energy sources are an important part of our energy future, but increasing taxes on traditional energy sources only means more costs to be passed on to every American who drives a car. At a time when gas prices are already at historic levels, more pain at the pump for everyone is far from a responsible approach.
For four years, President Obama has been trying to find ways to boost our economy. His initial approach, bloated stimulus and deficit spending, did little to nothing to improve our economy but was devastating to our country's fiscal health. With corporate tax reform, there's an opportunity to make a positive difference, by bringing the corporate tax rate down to a level that eliminates the incentive to move jobs overseas. The President shouldn't let politics get in the way of this sensible goal.