Both the House Republican budget and the GOP “jobs plan” released last week include a cut in the top corporate tax rate from 35 percent to 25 percent. Even though the Congressional Budget Office has found that cutting the corporate tax rate is not a particularly effective way to create jobs, the GOP has continually pushed this cut as a prescription for what ails the economy.
On Fox News Sunday today, conservative commentator Bill Kristol threw cold water on the GOP’s fixation with the corporate tax rate, saying that Republicans “are making a mistake” because “the corporate tax rate is not killing big business in America”:
Republicans are making a mistake if they focus on big businesses and corporate tax rates. Corporations have a ton of cash. The corporate tax rate is not killing big business in America.
Kristol is not right about much, but he is on the money here. Corporations are sitting on trillions in cash reserves and corporate profits have rebounded to record highs. In fact, “the Fortune 500 generated nearly $10.8 trillion in total revenues last year, up 10.5%. Total profits soared 81%.”
But none of that has translated into sustainable job growth. The only economic indicator that has been going up is CEO pay.
Republicans are not only looking to cut the corporate tax rate, but they have been pushing to open a permanent tax loophole by switching to what’s known as a “territorial” corporate tax system, which would mean that corporations could permanently park money offshore and never pay taxes on it. The Republicans have also endorsed a misguided push to give corporations a tax windfall worth tens of billions of dollars through a tax repatriation holiday.