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Littered with Loopholes

January 26, 2012

Instead of focusing on tax reform that can create jobs, President Obama used this week’s State of the Union address to talk about how he intends to take more money away from employers, investors and savers in order to create new carve-outs for a few industries and projects favored by his administration.  Reforming our tax code to make it simpler, fairer and more conducive to job creation and economic growth has wide bipartisan support.  It is unfortunate that the President squandered an opportunity to lead on tax reform and instead signaled he prefers the game of picking winners and losers.  Editorial boards and tax experts agree and are speaking out loudly against the President’s tax proposals.

The President embraces a code that picks winners and losers:
“For a while there, I thought President Obama was going to embrace tax reform in his State of the Union address.  Instead, following the lead of his predecessors, he offered a laundry list of new tax subsidies, bragged about some old ones, and said almost nothing about a top-to-bottom rewrite of the Tax Code…Obama’s embrace of the tax code as a vehicle to pick winners and losers sounded more than a little discordant in a speech whose theme was ‘everyone gets a fair shot and plays by the same set of rules.’  Not so much in a tax code where you get special rules for the government’s favored activities.” (Howard Gleckman, Fellow at the Urban Institute)

The President’s proposals would complicate the tax code:
“Mr. Obama has said he wants to make the tax code simpler, but his proposals would further complicate it, adding or reshuffling preferences for manufacturing. This kind of picking and choosing between manufacturing and other businesses, or between different kinds of manufacturers (the president said he wants to double the deduction for high-tech manufacturers), or between towns that have lost factories and towns that haven’t, introduces needless complexity into an already unwieldy code.” (Washington Post Editorial)

Reforming the tax code to promote jobs and growth is not the President’s priority:
“Here we are four years later, and President Obama on Tuesday night linked the term ‘fair’ to U.S. tax and economic policy seven times. The U.S. economy is still hobbling out of recession, real family incomes are falling and 14 million Americans are unemployed, but Mr. Obama declared that his top priority is not to reform the tax code to promote growth and job creation. His overriding goal is redistributing income.” (Wall Street Journal Editorial)

The President’s tax increases will place the U.S. at a competitive disadvantage:
“Increasing taxes on U.S. worldwide companies who are already paying more taxes than their competitors is going to have a negative impact not only on those companies and their ability to compete, but also all along the supply chain.” (Dorothy Coleman, vice president of tax and domestic economic policy at the National Association of Manufacturers) 

State of the Union address threw “cold water” on tax reform:
“One of the few potential areas for bipartisan cooperation in Congress this year is tax reform…Unfortunately, Barack Obama effectively threw cold water on any tax reform effort in his State of the Union Address on Tuesday…[R]ather than proposing a cleaning-up of the tax code, Mr Obama is proposing several new tax preferences…Whatever the merits of these specific tax proposals, they do not move towards tax reform. They move in the opposite direction, by cluttering up the tax code with still more special tax breaks for activities in current political favour and penalties for individuals and businesses in disfavor. This is exactly the sort of thing that created America’s current tax mess.” (Bruce Bartlett, former senior economist at the White House and Treasury)

Let’s talk about comprehensive tax reform:
“We’re pleased that Master Lock and other companies are repatriating jobs, but a lower corporate tax rate would bring more investment…One thing we’d like to see the president talk more about is tax policy – both for corporations and individuals. We think that lower rates (with fewer sweetheart deals) could both attract more investment to these shores and produce more revenue for the government.” (Milwaukee Journal Sentinel Editorial)

The President complicates the tax code:
“With each minute of this speech, the tax code gets more impenetrable and the government’s meddling in the economy more entrenched…Are you keeping count of how many more tax deductions he is now proposing? The tax code is getting more complicated with every sentence. Tax reform? Left in the dust – and to the GOP. Tax simplification? He’s making it all much more complicated.” (Andrew Sullivan, The Daily Beast)