Paulson: U.S. Hurt By Corporate Tax Code

Treasury Secretary Says Current System Is A Drag On Global Competitiveness

(AP)  Treasury Secretary Henry Paulson said Thursday that the U.S. system for taxing corporations is too complex and acts as a drag on the country's global competitiveness.

"Our current business tax system is clearly not optimal," Paulson said. He said the question that must be asked is what kind of tax regime will best maximize "job creation and economic growth."

"Now when our economy is in a position of strength, it is an opportune time to discuss the business tax system and its impact on workers, investment and the United States' ability to compete in the global economy," he said.

Paulson said that the current system "includes ad-hoc policies and preferences that result in a narrow tax base and create distortions that divert capital from its most efficient use." He said that the U.S. tax code was riddled with complex, targeted provisions that hurt the country's overall economic performance.

Paulson's comments came at a one-day conference the administration was sponsoring to review business taxes and the impact they have on economic growth and job creation in the United States. The conference attracted a number of Wall Street and corporate luminaries and leading economists, including former Federal Reserve Chairman Alan Greenspan.

Greenspan said he believed that interest rates around the world would not stay as low as they are now. "The cost of capital is not going to stay down at this level," he said.

He said that while lower corporate tax rates can boost productivity, it was unlikely that the political system in the United States would support such a move, especially after the baby boom generation begins to retire, causing big increases in government spending for Social Security and Medicare.

He said this opposition will occur even though economists widely agree that lower corporate tax rates can boost jobs by increasing productivity.

"Regrettably, there is still a great deal of populism in this country," Greenspan said.

The administration's conference comes at a time when a number of Democrats in Congress have put forward legislation that would boost taxes on hedge funds and private equity firms as a way of getting money for their initiatives such as protecting middle-class taxpayers from having to pay the Alternative Minimum Tax, which was originally designed to cover only the wealthy.

In addition to Greenspan, who served as head of the Fed for 18 years, other participants were Martin Feldstein, a Harvard economics professor and Council of Economic Advisers chairman in the Reagan administration; and Michael Boskin, the council's chairman in the administration of President Bush's father and currently an economics professor at Stanford University. The leaders of such major corporations as Oracle Corp., Caterpillar Inc. and Fed Ex were also participating.

In an opinion piece published last week, Paulson did not make any specific recommendations for ways the tax code should be changed. But he said areas that should be examined include taxes that discourage capital formation, the current tax depreciation system which does not treat investments uniformly, and targeted tax provisions that add to the complexity of the tax code and contribute to the estimated $40 billion that businesses spend annually on compliance.

Paulson wrote in The Wall Street Journal piece that two decades after President Reagan succeeded in getting Congress to pass the landmark 1986 tax overhaul legislation which cut rates, the United States now has the second-highest corporate tax rates, on average, of any major industrialized democracy.

He said the average combined federal-state corporate tax rate stands at 39 percent, compared to an average of 31 percent for other major industrialized countries.

[terrapin78]

From above article:
"Now when our economy is in a position of strength, it is an opportune time to discuss the business tax system."


HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

In a position of strength? OMG, Paulson, step away from the Koo;-Aid!

ANOTHER REPUG ATTEMPT TO HELP THEIR CORPORATE OVERLORDS!

[omega39-2009]

If these companies don't want to pay their fair share they should just pick up and move like Haliburton did. They should not however expect the taxpayer funded military to bail them out when their 3rd world sh-it-hole becomes politically unstable.

[standlee5]

jetranger7, you're right small businesses are almost a thing of the past because of the high costs,B&O taxes, no breaks or incentives and ridiculous competition from those who hire illegal labor. Legitamately run small business is at an extreme disadvantage.

[jetranger7]

The Biggest Problem is with the States and their Ridlicious "Property Taxes" on "Small Businesses"!I've talked to many Small business owners who are having a very hard time just making it, because of the Extreme High cost of Property Taxes on their buildings, while many Big Corportations get lots of Tax Breaks, and other ways of cutting taxes, from cities and states. The Small Business owners will be phased out of business in the near future if something isn't done to halt the increase in these Ridlicious High property Taxes as well !!

[sanfelz]

The tax code should be revised---but certainly not in the ways Paulson would prefer.
All religious institutions should be taxed on property and income except for hospice care. All deductions for contributions to religious institutions must be eliminated.Any government required insurance for home or business should be eligible for itemization.
The list could go on but the current system puts an unfair burden on the individual.

[standlee5]

Are you frigging kidding me. Corporations have bled this country dry what more do they want. Send them out of here and we'll go back to small businesses. Who needs their rape and pillage, no accountability mentality.

[sjc_1]

As I understand it, the Social Security Trust Fund that was created in the 70s is required to invest in T bills. It is the only investment that they are allowed to make. This gives Congress and the President the green light to just borrow and spend using money from that fund.

It is shifting the payments from tax revenues to cover government spending to borrowing that will have to be paid back with future tax revenues, leaving even less to cover the expenditures. This has got to stop.

[sjc_1]

U.S. corporations USED to pay about 40% of the federal budget back in the 1960s and now they pay less than 7% of the federal budget.

I would say that we have given corporations WAY too many tax breaks already and it is time that they paid their fair share to help balance the federal budgets once again.

If "competitiveness" means a race to the bottom, where our government continues to run deficits and accumulate debts while the corporations turn in record profits and give away tax free dividends, then I say NO.

[lastdance2]

Criminal Corporate America's
Finest act of Patriotism - To the American People

It was under the Clinton Administration.

That former : Defense Secretary Rumsfeld - Was involved in selling
a Nuclear Plant to : North Korea
Along with the technology to refine : Uranium and produce Plutonium.
The main ingredients of a : Nuclear Weapon

More nuclear power plants in China
More "Nuclear Bombs" In China
More "Nuclear Missiles " In China

China allied to : %u201CNorth Korea%u201D allied to %u201CSyria%u201D allied to: %u201C Iran%u201D
Each Country - Hostile to the - United States
Now ! ! - All exchanging Nuclear Weapon Technology

Good old fashioned - American - Patriotism
Demonstrated By :
Criminal Corporate America
The Bush - Cheney Administration
The Republican Party (whole)

Profound Family Values ! ! !

There was a time when : "Treason"- was a :
Criminal Offense

Criminal Corporate America - Belongs on the :
"Gallows"

Lastdance

[wayne1231]

Paulson wrote in The Wall Street Journal piece that two decades after President Reagan succeeded in getting Congress to pass the landmark 1986 tax overhaul legislation which cut rates, the United States now has the second-highest corporate tax rates, on average, of any major industrialized democracy.

He said the average combined federal-state corporate tax rate stands at 39 percent, compared to an average of 31 percent for other major industrialized countries.

--

What a pack opf lies. I wonder how many of these so injustly agreived corporations pay any tax at all?!?

How about if they want lower US tax rates they have to do things that are beneficial to the US. Ship business overseas? Pay higher tax rates to help compensate for unemployment and maybe continued education.

Funding education for displaced workers. Remember that?!? No? Neither does President Cheney.