President Obama calls it "tax reform," and the headlines blared that he would lower rates and close loopholes. But behind the rhetoric and the headlines, Obama's new tax proposal is probably just a political document that replaces the "loopholes" he doesn't like with "incentives" he likes.
High rates, loopholes, complexity, and a hodgepodge system for foreign-earned income are all problems, the Obama plan notes. But the president responds with rates that are still too high, and he preserves his own loopholes, leaves complexity in place, and perpetuates our draconian and nearly unique system of worldwide taxation.
Obama's "Framework for Business Tax Reform," which was issued Wednesday, has plenty to praise, including lowering the corporate tax rate from 35 percent to 28 percent. Impressively, the 23-page document begins with a clear discussion about the evils of a high corporate tax rate riddled with loopholes, an arrangement that "is uncompetitive relative to other countries, distorts business decision making, and slows economic growth."
