Tax reform is boring and complicated, so I'll summarize the corporate tax plan Treasury Secretary Tim Geithner released earlier today by quoting President Obama:
We’re gonna punish our enemies and we’re gonna reward our friends.
That one sentence pretty much sums up Obama's entire proposal (if not his entire presidency).
Sure, Geithner's press release talks about "simplifying the tax code and eliminating dozens of tax loopholes and subsidies" but then it turns right around and promises to "strengthen American manufacturing and innovation." The double-speak deployed by Geithner is shameless.
Page 4 of The President's Framework for Business Tax Reform declares, "Currently, tax expenditures in the tax code vary dramatically by industry. ... The result is a tax system that distorts investment decisions. By allocating capital inefficiently, this system lowers living standards now and could impede technological innovation." This is all 100 percent true. The right policy prescription would be to close loopholes for all industries and lower the corporate tax rate. But that is not what Obama does.
Instead, he identifies industries he doesn't like (e.g. "oil and gas" "insurance industry" "aircraft") and takes away their loopholes, but leaves other industries alone. This selective enforcement of tax simplification would be bad enough by itself, but then Obama makes it far worse by expanding other loopholes and creating brand new ones.
Specifically, to "strengthen America's manufacturing sector" Obama cuts the top corporate tax rate on manufacturing income to 25 percent "and to an even lower rate for income from advanced manufacturing activities." Obama also "Extends, consolidates, and enhances key tax incentives to encourage investment in clean energy." This will all be a boon for K Street as they fight to make sure their business qualifies as either a manufacturer, clean energy firm, or (like Solydra) possibly both!
All told, Obama's tax plan will increase taxes on Americans by $250 billion over ten years.