Editorial: Reform corporate taxes, together
/ Credit: AP
Amazingly, almost everyone in Washington agrees on the basic outline of corporate tax reform. The mantra of Democrats and Republicans alike has become: Lower the rates and eliminate breaks and loopholes.
It's a recurring theme for the leading Republican presidential candidates. And it's the concept behind the recent proposal from President Barack Obama. That's an uncommon amount of common ground for Washington. And it's a sound approach to a simpler tax code.
What would be truly amazing -- and good for the economy and job creation -- is if that harmony is enough to get corporate tax reform done before the election.
The "framework for business tax reform" unveiled by Obama last week calls for cutting the top corporate income tax rate from 35 percent to 28 percent, and to 25 percent for manufacturers. And, with an eye to deficit reduction, he listed tax breaks he would end or curtail.
Among them are those for oil companies and corporate jets. He would end the scandalous break that allows billionaire hedge fund managers and private equity firm partners to pay the 15 percent capital-gains rate on their earnings, and instead tax them at the same rates paid by other wage earners, which top out at 35 percent.
Mitt Romney would cut the corporate tax rate to 25 percent; Rick Santorum would go to 17.5 percent and end the tax for manufacturers. But promising tax cuts is easy. Neither Republican presidential candidate, nor congressional Republicans, has said what loopholes they'd close. And Obama is calling for a minimum tax on U.S.-based corporations' overseas profits, even if they don't bring the money home. Republicans want no tax on most foreign profits.
The best approach of all would be to eliminate federal corporate taxes entirely, whether overseas or here. Some lost revenue could be recaptured by ending the 15 percent rate on capital gains and taxing investment income at the rates that apply to other individual earnings.
Corporate tax reform will send lobbyists into a frenzy, making a deal difficult. But by getting it done, Congress could begin to polish its tarnished public image.
