Obama's State of the Union tax proposals show how a complicated system benefits lobbyists and big corporations.
The American tax law system in heinously complex. And as United Republic ally Lawrence Lessig points out in his book, Republic Lost, it’s designed to be that way. Members of Congress receive campaign funds from people who profit off different breaks and exceptions in the tax code.
But after President Obama’s most recent State of the Union address, tax reform is all the rage. Yesterday in the Washington Post, columnist Robert J. Samuelson takes Obama’s proposals to task, coming to some of the same conclusions as Lessig on “tax favors”:
[Obama’s] recommendations include: a new corporate tax credit to subsidize moving jobs from abroad back to the United States; a tax credit for companies locating in communities that were “hit hard when a factory left town”; extension of “temporary” tax credits to promote U.S.-produced windmills and solar panels.
These are precisely the special breaks that complicate the tax code and push up top rates. Manipulating taxes to favor or disfavor particular industries, groups or regions is a source of power that Democrats and Republicans alike are loath to surrender. That’s why major tax reform fails, despite routine endorsements from both parties.
Samuelson writes that Obama’s proposals are both vaguely worded and complex, which invites the corrupting influence of money to dominate policy:
“It just invites lobbying [over detailed language],” says Gary Hufbauer of the Peterson Institute, a tax expert and former top Treasury official. “These proposals are a gift to K Street. They won’t lead to reform.”
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