Josh Barro thinks President Obama’s corporate tax reform plan is basically a good one:
I have objections to many details in the plan–the manufacturing preferences and the new minimum tax on foreign profits are particularly bad ideas–but overall, I think the vision is sound and the plan is pretty good. Obama says we need a corporate tax with a broader base and lower rates: that’s right. His plan errs mostly when it strays from that vision.
It’s important to remember that this plan is an opening bid. The president has a good vision on corporate taxes with some bad details. So, we should try to make sure that Congress takes this proposal and improves it. Keep the rate reduction and good base broadening ideas, like limiting the deductibility of interest. Strip out bad proposals, like expanded preferences for domestic manufacturing and clean energy. Done right, these fixes could even create room to lower the corporate tax rate farther than 28 percent.
In short, those who really dislike the plan, like me for instance, are throwing the baby out with the bathwater. Now, I am a huge Josh Barro fan, so I take his critique quite seriously. Let’s say all the bad stuff was stripped out. And let’s say the plan moved to a territorial tax system. Well, then I think we are talking about a very different plan, completely different—but one where the tax rate is still too high. That would be a lot of ground for Team Obama to concede.
And I can’t imagine Obama ever agreeing to some of the other changes Josh wants. For instance, a bias against fossil fuels and in favor of “clean energy” has become a core liberal belief, it seems to me. Anyway, I don’t get a sense from the White House that this is a starting point for some sort of negotiation to achieve real reform since the economic case for the stuff Josh wants is so strong. It just shows me that the White House is more interested in checking a box than passing reform in an election year. This is a missed opportunity to boost long-term economic growth. And that really ticks me off.