House Ways and Means Committee Chairman Dave Camp (R-MI)

House Ways and Means Committee Chairman David Camp (R-MI) today released his long-promised plan to overhaul the country’s corporate tax code. As he’s been hinting, the plan not only cuts the corporate income tax rate from 35 percent to 25 percent, but also implements what’s known as a “territorial system,” which exempts U.S. corporations from paying taxes on money they earn overseas.

Currently, U.S. corporations pay to the Treasury the difference between the tax rate of the country in which they earn money and the U.S. rate. (So money earned in a country where the rate is 25 percent would require a corporation to pay 10 percent — the difference between 35 percent and 25 percent — to the U.S.) However, corporations are allowed to defer paying their U.S. share of taxes until the bring the money back to the U.S., giving them every incentive to shift and keep money (and jobs) offshore.

Instead of fixing this problem, Camp’s plan to shift to a territorial system, as Citizens for Tax Justice explained, will make it even worse:

First, [under a territorial system] corporations would have a greater incentive to engage in profit-shifting, meaning practices used to disguise U.S. profits as foreign profits. A common example is the manipulation of transfer pricing to shift corporate profits into tax havens (countries that do not tax, or that barely tax, certain types of profits).

Second, corporations would have a greater incentive to shift actual operations — and jobs — to other countries.

Our current system already encourages these practices because U.S. corporations are allowed to “defer” their U.S. taxes on their offshore profits. But the incentives would be even greater under a territorial system, in which corporations would NEVER pay U.S. taxes on their offshore profits.

Camp said today during an interview that “the rest of the world has gone to a lower corporate rate and a territorial system of taxation. So our employers are really at a competitive disadvantage when they try to do business around the world.” However, governments with territorial systems are “having tremendous problems enforcing their existing international corporate tax rules, particularly the transfer pricing rules.” It’s such a problem, in fact, that “the European Union is considering moving away from the territorial system for determining how corporate profits are allocated among its member states.”

Camp has already proven that he is not concerned with actually having corporations pay taxes, saying that corporate tax dodging is all the more reason to cut the corporate tax rate. But U.S. corporations already pay the second-lowest taxes in the developed world and are sitting on record amounts of cash, so there’s little reason to slash their taxes any further.

A leading Republican Senate candidate broke with her party on the issue of labor rights at a GOP conference late last week. Former Hawaii Gov. Linda Lingle (R), running for Senate in 2012, told ThinkProgress in an interview that she opposes her party’s support for right to work laws, particularly the proposal from leading presidential candidates Mitt Romney and Rick Perry to enact national right to work legislation:

KEYES: There’s been a push, particularly among the leading presidential contenders of the Republican Party, in favor of a national right to work law. [...] Where do you come down on the issue?

LINGLE: I think I’d put that in the category that it’s up to the individual state. It’s not something I supported at home and wouldn’t feel as important part of a platform for a candidate such as myself.

Listen to it:

Lingle is right to oppose right to work laws, both at the national level and for states as well. Studies have shown that while right to work laws provide no discernible boost to economic growth, they do act as a punitive measure towards unions. Also known as “right to work for less,” such laws would drive down wages, union membership, and erode health and safety regulations.

Lingle’s bid to become just the second Republican senator from Hawaii (and first since 1977) will no doubt continue to be complicated by the Republican Party’s hard right shift over the past few years. Though Lingle distanced herself from GOP support for right to work laws, she embraced her party’s orthodoxy on protecting the wealthy, telling ThinkProgress that she could “never” support a tax on millionaires.

Our guest blogger is Elon Green, a freelance writer living in Brooklyn.

This week, in an attempt to boost the economy without having to deal with Congress, the Obama administration announced an overhaul of its mortgage refinancing program known as HARP. The changes will allow more people to take advantage of low interest rates, freeing up more money for them to spend elsewhere.

As we noted yesterday, this idea is supported by 2012 GOP presidential hopeful Mitt Romney’s top economic adviser, Columbia University’s Glenn Hubbard. Hubbard called Obama’s refinancing plan “a big deal.” “It looks like a good plan; I’m glad they’re doing it,” he said. And as it turns out, Romney himself supported a refinancing plan when President Bush announced one in 2007.

In late August 2007, as the subprime mortgage crisis built up, Bush introduced an initiative overseen by the Federal Housing Authority to “help struggling homeowners find a way to refinance” and stem foreclosures. According to Bush, while it was “not the government’s job to bail out speculators,” there were a lot of homeowners “who could get through this difficult time with a little flexibility from their lenders or a little help from their government.”

A week later, during an interview with Hugh Hewitt, Romney professed no concerns about the program:

Well, the President has taken action that should calm a good portion of the market, which is he said look, these people who borrowed money from the sub-prime world with these reset provisions, where the payments go up in later months, and they were told by their mortgage banker in many cases don’t worry about that, we’ll refinance it when that time comes, well, now the mortgage banker’s gone, they can’t refinance it. And so he’s saying, the President’s saying let’s have the FHA refinance these mortgages. It’s not a bailout, but it is a setting which gives people stability, and will calm the markets to a certain degree.

In an interview last week with the Las Vegas Review Journal, Mitt Romney opined that the Obama administration has no right to provide assistance to homeowners facing foreclosure, saying that the foreclosure process ought to “run its course and hit the bottom.

However, he did add, “I think the idea of helping people refinance homes to stay in them is one that’s worth further consideration.” So given his prior support for the idea, is Romney on board with the administration’s effort?

Republican lawmakers have been raking President Obama over the coals due to what they call a “tsunami” of new government regulations. “Business owners are reluctant to create jobs today if they’re going to need to pay more tomorrow to comply with onerous new regulations,” said Sen. Susan Collins (R-ME). Obama’s “excessive regulations that unnecessarily increase costs” just “make it harder for our economy to create jobs,” said House Speaker John Boehner (R-OH).

As with most GOP talking points, the facts tell a different story. A Bloomberg analysis of regulations reveals that Obama has approved fewer regulations than President George W. Bush “at this same point in their tenures, and the estimated costs of those rules haven’t reached the annual peak set in fiscal 1992 under Bush’s father.” Indeed, the record for the most expensive regulations still belongs to the GOP:

Obama’s White House approved 613 federal rules during the first 33 months of his term, 4.7 percent fewer than the 643 cleared by President George W. Bush’s administration in the same time frame, according to an Office of Management and Budget statistical database reviewed by Bloomberg. [...]

In the last 12 months through the end of September, the cost range of new regulations is estimated to be $8 billion to $9 billion, a decrease from 2010, according to non-partisan Government Accountability Office reports analyzed by Bloomberg…The record [cost of regulations] came in 1992 under George H.W. Bush when that total hit $20.9 billion in current dollars. In the last year of Ronald Reagan’s term it was $16 billion in today’s dollars.

We certainly don’t remember Republicans crying about the “excessive” Bush regulations.

More of Obama’s regulations may cost more than $100 million as compared to previous administrations. But many of them help prevent outcomes that would cost exponentially more. For instance, the Department of Interior’s new controls on deep-water oil drilling may cost the industry $180 million, but one oil spill like that caused by Deepwater Horizon could cost the industry $16.3 billion. Some of the administration’s rules, like those governing coal ash, will actually help create thousands of jobs.

The impact of these regulations on small businesses is incredibly minimal. In fact, of the 10,361 mass layoffs last year, only 61 were attributed to regulations. When McClatchy asked small business owners why they have been hesitant to hire, “none of the business owners complained about regulation in their particular industries, and most seemed to welcome it.”

A new report from the Congressional Budget Office released Tuesday added to the evidence that the income gap between the top American income earners and the middle- and lower-classes continues to grow, as the top one percent saw its average after-tax income grow by 275 percent between 1979 and 2007. During the same time period, it grew just 18 percent for the bottom 20 percent, resulting in a “substantially more unequal” distribution of wealth than there was three decades ago.

That feeds the core message of inequality that has driven the 99 Percent Movement protests, now in their second month in New York City and gaining steam in cities across the country. And while Republicans continue to either dismiss or pay lip service to the protests and the changes they seek, a new poll from the New York Times and CBS has found that Americans not only view the protests positively but also support a more equal distribution of wealth and higher taxes on top earners while opposing corporate tax breaks that have been protected by the GOP:

Almost half of the public thinks the sentiment at the root of the Occupy movement generally reflects the views of most Americans.

With nearly all Americans remaining fearful that the economy is stagnating or deteriorating further, two-thirds of the public said that wealth should be distributed more evenly in the country. Seven in 10 Americans think the policies of Congressional Republicans favor the rich. Two-thirds object to tax cuts for corporations and a similar number prefer increasing income taxes on millionaires.

It’s no wonder 70 percent of Americans think Congressional Republicans favor the rich, as the GOP continues to either ignore the problems of the middle- and lower-classes or directly assault the programs that help them most. Even though the top income earners have seen their tax rates halved over the last decade, Republicans continue to oppose efforts to raise their taxes. Meanwhile, they have taken an axe to the federal budget, proposing to cut programs like Pell Grants, assistance for women and children, and foreclosure prevention, while preserving the very corporate tax breaks the NYT/CBS poll shows two-thirds of Americans oppose.

The same poll found that Congressional approval has slipped to another new all-time low, with just 9 percent of voters approving of the job Congress is doing. That should be a clear message to Republicans who continue to gut vital programs and block proposals that have popular support, but judging by their response to previous polls showing similar results, it won’t be.

Our guest blogger is Michael Linden, director of tax and budget policy at the Center for American Progress Action Fund.

Yesterday, 2012 GOP presidential candidate Rick Perry released an outline of his tax and budget proposals. In brief, Perry would allow people to opt in to a 20 percent tax rate, with no deductions except for mortgage interest, charitable donations, state, and local taxes and a standard exemption. Perry’s alternative tax would also entirely exempt capital gains and dividends from taxation.

Perry is touting this as a simple, flat, and fiscally responsible tax system. But none of those things are true. What Perry is actually proposing is a separate tax system for rich people, but absolutely no reforms for anyone else. Here are the three things you need to know about Perry’s tax and budget plan.

1. It’s not simple: Perry complains loudly that the current tax code is too complicated. He points out that the code contains over 3 million words! So how many of those words would Perry’s reforms eliminate? Not a one. That’s because, for all the talk of simplification, Perry’s plan doesn’t reform the tax code, it just adds a second layer on top of the existing system. Under the Perry tax code, most Americans will actually have to do their taxes twice: first under the old system, and then again under Perry’s, then they’ll pay under whichever one results in a lower tax bill. That means no one will get a tax increase, but it also means that Perry’s claim of radical simplification is complete nonsense.

2. It wouldn’t come close to balancing the budget: Perry calls for a balanced budget amendment to the U.S. constitution, but doesn’t appear to have done the math on his own plan to see if what he’s proposed would fit the bill. On the spending side, Perry says that he’d cap all federal spending at 18 percent of GDP, a level of spending the U.S. hasn’t had since 1960. Just as a point of comparison, the House Republican budget — the one that slashes Medicaid, abolishes Medicare as we know it, guts food stamps and child care, and dramatically curtails investments in education, transportation, scientific research — doesn’t even get spending down close to 18 percent of GDP until 2040. And, of course, Perry doesn’t say what he’d cut to get there.

But even if he did, it still wouldn’t be enough. That’s because his tax plan is sure to raise far less than 18 percent of GDP, and you don’t even need a complicated tax model to understand why. Perry’s plan is to let people choose between the current tax code and Perry’s new 20 percent rate. Of course, people will choose the one that produces the lower tax bill. Under normal economic conditions, the current tax code only generates about 18 percent of GDP in revenue. So unless Perry’s alternative 20 percent rate wouldn’t give anyone a tax cut, then his plan will lose revenue.

3. It would deliver a huge tax cut to the very wealthy: Perry’s plan to exempt capital gains and dividends from any taxation means that most extremely wealthy people — who get most of their income from those sources — will be able to get away with extremely low tax rates. In 2007, for example, nearly 75 percent of the income among the wealthiest 400 taxpayers came from capital gains and dividends. Even if they paid Perry’s 20 percent rate on every penny of the rest of their income, they’d still end up with an overall effective tax rate of just 5 percent — lower than what someone making between $50,000 and $75,000 currently pays. For the average taxpayer in this illustrious group, that would amount to a tax cut of about $40 million. Of course, the rest of American households, the ones without massive investment income, won’t benefit at all from Perry’s new alternative tax code for rich people.