Welcome to TP Ideas‘ weekly roundup of the best conservative writing! Every Friday, we take a look at three pieces by right-leaning writers that constructively articulate core elements of their worldview. The goal isn’t to find conservatives telling us how right liberals are, but rather to pick out writing that helps liberals understand where their ideological foes are coming from.
So let’s get started.
1. “We Don’t Need a Corporate Income Tax” — Megan McArdle, Bloomberg View
This isn’t the first time Megan McArdle has used her perch at Bloomberg View to throw unusually substantive buckets of cold water on cherished liberal notions. She’s gone after single payer before, and this week she’s back with an argument that taxing corporate profits is a bad idea and we should stop.
“Job creators” rhetoric is no where to be found here, however. McArdle’s central thesis is that, just as with personal income taxes, before you can decide how much to tax a corporation, you have to define its profits. And as complicated as this can be for personal taxes, McArdle argues it’s even more devilishly complex for corporate cash flows. And depending on how you define “profits,” you can wind up “giving the tech firms a hell of a deal or handing low-margin businesses such as grocery stores a tax bill for 800 percent of their profits.” As a result, most of the loopholes that animate the debate over corporate taxation are really just honest disagreements over definitions, which all involve trade-offs and that have no inherent right answer:
Take two of the “loopholes” most frequently cited by the Obama administration: the carried-interest deduction and the depreciation of corporate jets. Most people believe that these are special deals inserted into the law at the behest of nefarious lobbyists. In fact, “carried interest” is a long-standing feature of partnership taxation, and it wasn’t designed to let hedge-fund managers have a special, low rate of tax; it was designed to equalize the treatment of partners who contribute equity and partners who contribute labor. You can argue that it’s not worth the cost, and maybe I’d agree (though the cost is really trivial, on the scale of federal taxation). But if you change the law, you will also be privileging partners with money to invest over partners with ideas to invest, which benefits the relatively wealthy. These sorts of trade-offs are exactly why tax policy is hard.
Depreciation of corporate jets, meanwhile, is not some special loophole. All assets depreciate, which is to say they become less valuable over time as they become outdated and suffer wear and tear. Both financial accounting and the tax code recognize this. Depreciation is how the tax code handles investment expenses; if you disallow this, you would be essentially levying extra-heavy taxes on capital-intensive businesses… [The Obama Administration] wasn’t saying that the jets shouldn’t be depreciated; it just wanted to lengthen the time period over which companies took the depreciation allowance, meaning they’d take a smaller deduction for more years. Ultimately, the net effect on tax collections is negligible: You get more now, less later. Which is not to say that the administration is wrong; I have no opinion at all about the proper schedule for depreciating an aircraft. But these are not the easy questions that the administration made them out to be — and they are not special favors to businesses that own jets.
The ultimate conclusion is tat both our tax code and our politics would probably be healthier if we just scrapped the corporate tax entirely. And to McArdle’s credit, this isn’t simply a “small government” argument either: since the costs of the tax are ultimately passed on to different portions of the corporations — be it CEOS or shareholders or workers — she recommends making up the lost revenue by hiking income taxes on the wealthy and treating capital gains like ordinary income.
2. “Jerry Brown Provides Powerful Argument For California Separation” — Ian Adams, R Street
Recently, a venture capitalist named Timothy Draper cooked up a plan to break California up into six smaller states, arguing each new state government would be more responsive to its citizens than California’s current and admittedly unwieldy regime. Draper now claims he’s got enough signatures to put the idea up for a state-wide vote in 2016, so the critical back-and-forth over the plan is approaching the foreground of the public discourse.
So the conservative think tank R Street and author Ian Adams came to the plan’s defense this week, pointing to California’s socioeconomic diversity and some conceptual arguments that California Governor Jerry Brown himself inadvertently opened the door to rhetorically:
The subsidiarity angle, though, is well-known as a favorite of California’s current governor, Jerry Brown. Gov. Brown is a former Jesuit novice fond of Catholic social philosophy. During both the 2013 and 2014 State of the State addresses he referenced the notion of “subsidiarity.” The idea behind subsidiarity is that matters should be handled by the least centralized and smallest competent authority possible.
Through the lens of subsidiarity, California’s government is something of a failure. Can it really be said that 38 million Californians are represented in Sacramento by the smallest competent authority possible? Consider that a California state senator represents 931,000 people, compared to a California member of Congress who represents 704,000 people. This ratio of population-to-legislator is by far the highest in the United States. […]
For example, those areas of California that are dependent upon cultivation of agricultural development, and those that are dependent upon the use of natural resources, chafe under the political weight of parts of the state capable of supporting themselves through other means. By use of the governor’s subsidiarity concept and dividing California, new states would be able to establish regulatory environments reflective of not only their own political will, but also the economic assets of their region. Doing so, residents of the new states would have their will better reflected by a state government in closer proximity to their concerns –- a total win for subsidiarity.
There are some obvious problems with this, beginning with the fact that the economic disparities between the six new states would be enormous. It’s also not clear if the new smaller governments would really be more responsive to the people, or just more responsive to new and more local populations of elites.
However, as Adams shows, Draper’s scheme is so out-there it at least has value as an intellectual exercise, blowing up the preset ideological divides and forcing us all to think hard once again about some of our more foundational and usually-unexamined assumptions.
3. “Rand Paul And Rick Perry Are Having The Most Important Debate Of The 2016 Election” — Michael Brendan Dougherty, The Week
Like Ross Douthat, Michael Brendan Dougherty is fast becoming one of this feature’s MVPs. This week he’s back at, well, The Week, now with an argument that the brewing spat between Sen. Rand Paul (R-KY) and Gov. Rick Perry (R-TX) over foreign policy is going to be the most important debate of the 2016 election.
Dougherty’s argument is that — thanks to a confluence of historical, political, and policy factors — presidents have more room to unilaterally shape foreign policy than in any other realm of governance. So the dispute between Paul and Perry, the former pushing ferociously against military interventionism abroad and the latter arguing for a much more robust use of American military power, carries far more practical consequence for the country’s future than, say, fights between Democrats and Republicans over the design of the social safety net.
Remember the big debate in 2011 about using the U.S. military to bomb Libya and help rebels effect regime change there? Of course you don’t. There wasn’t one. Operation Odyssey Dawn was something that Barack Obama just did. It proceeded with all the public deliberation you might take for calling in sick on a Friday and driving to a lake house: none. And the results have been less impressive than he hoped.
In the 1990s, President Clinton began bombing Serbia hours after the Senate passed a non-binding authorization of force endorsing the idea. The House would take several votes on the conflict almost a month later, with lawmakers still undecided on whether to authorize more force, to go along with the Senate, or to pull out altogether. The bombs kept falling anyway. Clinton also lobbed a few missiles into Sudan without consulting Congress.
After 9/11, Congress basically handed the Bush administration a blank check to use force anywhere against anyone who could plausibly be put in a terrorist database. Our drone program has expanded beyond Afghanistan and Iraq to include Pakistan, Yemen, and Somalia, so far.
All this is to say that it’s an eminently good thing that at least seven Republicans have come out to argue with Rand Paul about foreign policy. Custom, history, and the remains of the Constitution have arranged the American polity in such a way that it is on this issues of diplomacy and war that presidents make a real difference.
Now, while presidents certainly lack the freedom to get pro-active in the realm of economic policy, they still retain the veto, which requires a two-thirds legislative majority to overcome. Such supermajorities are impossible in this day and age, meaning a presidential candidate’s views on economics are still germane. While the GOP is unlikely to present a candidate — be it Rand Paul, Rick Perry, or anyone else — who isn’t a disaster on that subject from a liberal standpoint, the willingness to compromise can be a factor in and of itself. And Paul in particular seems unlikely to bend.
That said, it is a brute fact that, on foreign policy, the Democrats have nothing equivalent to the broad range of views currently being aired by major GOP presidential contenders.