The best investment any corporation will ever make
This is why I'm skeptical of the "lower the rates, flatten the base" comprehensive tax reform of which all the Village and the White House is so enamored. They always say that the key is to lower taxes at the same as we eliminate loopholes and get rid of all the "tax expenditures" and presto change-o we'll end up with even more money. Isn't that great? Like magic!
Well, that might work in theory, I suppose, but unless they institute the kind of lobbying reform that's probably impossible in our cash soaked system, this is how it will work in the real world:
The top eight companies that spent the most on federal lobbying from 2007 to 2009 all saw their reported tax rates decrease from 2007 to 2010, according to a new analysis released Monday by the Sunlight Foundation.
The report notes that these top eight firms spent $540 million on lobbying from 2007 to 2009. They filed 332 lobbying reports that mentioned taxes and named 491 different tax bills in those reports.
The top eight companies that spent the most on lobbying were Exxon Mobil, Verizon Communications, General Electric, AT&T, Altria, Amgen, Northrop Grumman and Boeing. Exxon Mobil spent the most, some $81.92 million from 2007 to 2009.
AT&T recorded the largest tax reduction, with its tax rate falling from 34.0 percent to negative 6.4 percent from 2007 to 2010, or an estimated reduction of more than $7.3 billion. Altria, the parent company of Philip Morris, had the smallest decline from 2007 to 2010, with its rate declining from 28.9 percent to 27.4 percent. Six of the top eight companies saw declines of at least 7 percentage points.
The report comes as both President Barack Obama and Republican Party's presumptive nominee, Mitt Romney, have proposed lowering corporate tax rates. Obama has proposed lowering the corporate tax rate from 35 percent to 28 percent but eliminating loopholes and deductions. American manufacturers would get a bigger tax cut, having an effective rate of no more than 25 percent.
Romney has proposed cutting the corporate tax rate to 25 percent and repealing the corporate alternative minimum tax.
Comprehensive tax reform as currently constructed means lowering the rates. That's all. The money these companies spend on lobbying is the cheapest investment they make. The returns are astronomical. They'll keep spending it. Politicians will keep doing their bidding. And the deficit scolds will stay in business, ripping away at any program that benefits average citizens year after year.
Beware "comprehensive tax reform" in the era of Citizens United. It's a scam.
Update: More detail on why this is a bad idea, here.