In a speech today in Indianola, Iowa, Governor Sarah Palin as part of a plan to get the economy going again proposed eliminating corporate taxes (as well as corporate bailouts). Using 2010 federal revenue figures that would mean giving up $192 billion or 9% in annual federal revenue.
To those not up-to-date on federal revenue statistics, eliminating corporate taxes sounds like a huge change in federal revenues. It's not. Corporate share of U.S. federal taxes has fallen from 30% in the mid-1950's to only 9% in 2010 (see chart below).
|graphic from the Financial Management Service of the U.S. Department of the Treasury|
Imagine the increased federal revenue if half of the 14 million currently unemployed were added to the tax rolls (not to mention the federal savings due to being taken off federally subsidized unemployment compensation--or their personal and family happiness at getting a job). Of course, that doesn't take into account the benefits for (or tax revenues from) the more than 14 million underemployed.
According to a White House prediction this week high 9% unemployment will remain this year and next, and nothing like "normal" unemployment (below 6%) return until 2017. A bleak future is the government outlook for employment if current parameters are not changed.
Where are new jobs going to come from? Not from $787 billion stimulus packages or payroll tax holidays which have not worked.
What easier way to bring unemployment down (and raise lots more in individual tax revenue) than by incentivizing corporate employment growth at all levels--especially small business (which is responsible for more than half of U.S. employment and ends up paying the highest tax rates)?
This will also stop the inequity of small business paying lots in taxes while big business pays much less than the official corporate tax rate. Sometimes big corporations pay no taxes and actually get billions in tax benefits (General Electric). The plan has the additional benefit that powerful corporate lobbyists will not be pressuring legislators to vote "no" as they would on current proposals of closing tax "loopholes". This is a win-win.
In fact we might actually see businesses locating to the United States rather than sending jobs and profits to their overseas affiliates.
In the end it isn't fat cats at GE, Google, Comcast or Exxon who pay the corporate taxes anyway. It's you and I, the consumer. If we don't give them money, they don't have income to pay taxes on. They pay their taxes out of money we give them. If (unlike GE), they aren't getting enough money to pay their taxes, they have a simple solution: make us pay more by raising prices.
NOTE: Again, C-SPAN proves why it is my favorite news source. It gives direct access to complete speeches, events and presentations. Thanks, C-SPAN for running Governor Palin's speech in Indianola live and uncut today.