For Kerry, A Positive Move on Corporate Taxes

During the early primaries, Senator Kerry's campaign spewed up some strong anti-corporate rhetoric. Now, with the Democratic nomination assured, the campaign may be signaling a change.

The international and corporate tax proposal announced today is a step in a more business-friendly direction. There are three major components:

1. A lowering of the corporate profits tax rate from 35 percent to 33.25 percent.
2. A one-year "amnesty" whereby companies who have parked profits overseas (to take advantage of lower tax rates) can repatriate funds and pay a temporary 10 percent tax.
3. A limitation on the ability to defer U.S. taxes on profits parked overseas.

On balance, Kerry's new proposal seems accommodating toward the private sector. Tax experts may debate the details in the coming weeks, but the overall tone seems much improved.

In net, these changes will not save corporate taxpayers money.

But this proposal meets the basic criteria of tax reform: broaden the base and lower the rate. It represents a market-based way to address worries about overseas investment and out-sourcing.

Too often, the political debate in Washington is starkly polarized: Republicans say big business is never wrong -- Democrats say it is never right.

The reality is in between, and public policy should reflect that.

Big companies aren't supposed to be angels. Their duty to shareholders is to make profits; their duty to the public is to operate efficiently and responsibly under the law.

That's why it's so generally so unhelpful when politicians issue blanket condemnations of particular industries. Kerry has criticized drug companies, HMOs, and energy companies.

But if these industries are so bad, what's the answer -- nationalizing them? We complain if gas prices go up, but does that mean we should have a government takeover of the oil companies? If Sen. Kerry doesn't like HMOs, does that mean he'd prefer we all had government-run health insurance? If drug companies behave badly, that's one thing. But is the solution to socialize research and development of medicines?

Of course, the public has a right to make sure corporate power isn't too concentrated, both for economic and political reasons.

However, we hope Kerry's strident anti-corporate rhetoric early in the campaign was an aberration, and a more balanced and thoughtful approach will be the rule.

Link:
Centrist Policy Network Kerry's Health Care Populism -- How Deep? (February 26, 2004)

Posted by Jeff Lemieux at March 26, 2004 07:44 PM