Potential Republican 2012 presidential candidate Haley Barbour (MS) has been rolling out his economic vision this week, with his stated desire to “change the damaging policies that pose an even greater threat to our economic future.” One of the cornerstones of his economic plan is a huge cut in the corporate tax rate:
There is a global battle for capital, and right now, American companies are sitting on more than $1 trillion locked overseas because of our mistaken tax code. We need to unlock that capital so it can be invested in new plants, new equipment and new jobs here in America, not overseas. While we’re at it, let’s finally cut our corporate income tax rate as nearly every one of our competitors has done over the last decade.
Barbour envisions cutting the current corporate income tax, which stands at 35 percent, in half. “We need to cut the corporate income tax in half like the rest of the world,” he said.
Already, corporate tax revenue in the U.S. is at one of its lowest points in history, and the U.S. raises less in corporate tax revenue than many of its main trading partners. And the reason for this is simple: there are myriad loopholes, credits, and outright giveaways in the tax code that allow many corporation to pay little or no corporate income tax. Major corporations such as Boeing, Bank of America, and General Electric have paid nothing into the Treasury in recent years.
The Congressional Budget Office has found that a cut in the corporate tax rate is an ineffective job creation measure, saying that such a move “does not create an incentive for [corporations] to spend more on labor” and “is not a particularly cost-effective method of stimulating business spending.” But Barbour may have another motivation for gifting a tax break to the corporate world.
After all, Barbour spent years as a D.C. lobbyist, during which time he represented some of the largest multinational corporations. Barbour’s clients have included Microsoft, Bellsouth, Lockheed Martin, Nestle, United Health Group, “and a bevy of energy, pharmaceutical and tobacco companies.”
As governor of Mississippi, Barbour currently presides over a state with a 10.1 percent unemployment rate. He also has a history of implementing regressive tax hikes, while Mississippi has been mired at the bottom of national rankings when it comes to education, quality of life, and business climate. But as we showed in this report yesterday, Barbour is hardly alone amongst conservative governors in believing that corporations need lower taxes while the working class should pay more.