Obama wants to lower corporate tax rates in exchange for eliminating various loopholes. "Because our corporate tax system is so riddled with special interest loopholes," a White House budget office document states, "our system has one of the highest statutory tax rates among developed countries to generate about the same amount of corporate tax revenue as our developed country partners as a share of our economy; this, in turn, hurts our competitiveness in the world economy." Rep. Paul Ryan (R., Wisc.), the conservative golden boy of the moment, says the same thing in this video. Yet Ryan had nothing favorable to say today about Obama's proposal on corporate taxes. Neither did House Speaker John Boehner (R. Ohio). Neither did Senate Republican leader Mitch McConnell (R., Ky.) Instead, all three bellyached about how Obama's other proposal, the one to require millionaires to pay the same rate on their income taxes as middle-income families, would hurt "job creators."
Why couldn't McConnell, Boehner, and Ryan take half a minute to say that there was one part of the president's plan that they agreed with? Mainly for partisan reasons, of course. But also, I think, because Republicans don't actually care as much about the corporate tax as they'd like you to think. What they care about are personal tax rates, because that's what the business lobbyists they answer to care about, because that's what the corporate chief executive officers who the business lobbyists answer to care about. Who gives a damn how much my corporation pays in taxes so long as I get to keep my bonuses and my stock options? Another reason to be indifferent is that the top corporate tax rate has been dropping steadily since1969, when it peaked at 52.8 percent. Today it's 35 percent, which also happens to be the top personal income-tax rate.
Given the GOP's indifference, I think Obama ought to eliminate corporate tax deductions while maintaining the 35 percent top corporate rate. It's not that I have any strong feelings about what the corporate rates should be. I'd be happy to see the corporate income tax eliminated entirely, provided the revenue could be made up through higher personal income taxes on the wealthy. God knows I don't want to hurt America's competitive position.
I don't care what the corporate income tax rate is because I don't think corporations are people. Unfortunately, the Supreme Court happens to disagree. In last year's Citizens United ruling it found that corporations are people who enjoy the same First Amendment right you and I do to spend unlimited quantities of cash on "electioneering communications." How can corporations be people when it comes to the First Amendment and not people when it comes to the Sixteenth? They can't. Obama should therefore state that much as he would like to lower the corporate tax rate to improve the U.S. competitive position with respect to other advanced industrial nations, he is hemmed in by the Supreme Court. He cannot make the top corporate rate any different from the top personal rate until the Supreme Court reverses its Citizens United ruling. In the meantime, he'll maintain the top rate at 35 percent and raise it to 39.6 percent when the Bush tax cuts expire. As with families, he will impose this top marginal rate only on corporations that earn in excess of $250,000 a year. That's not very much for a corporation, but Citizens United is the law of the land. His hands are tied.