No one was surprised that Cavanaugh didn’t like what McClintock said at McClintock’s recent town hall meeting - (Peter’s “Blind faith” opinion column of Oct. 26). Some things don’t change. But his last three points were such a mishmash of emotion, misinformation, and rant that a response is needed. He trashed the GOP budget and tax plan. Some basic principles and facts:
The major change in the GOP tax plan relates to corporate tax rates. The GOP and President Trump propose to lower the basic corporate tax rate from 35% to 20%. This change would make US corporations competitive internationally since the average corporate tax rate in the developed world is about 23%--some considerably less. So currently our corporations are at a disadvantage: less profit to invest in R&D, new plants, more workers.
And for American companies that do business only in America, the proposed change would allow American companies to keep more profits for the same purposes. Simple question: would we all rather work for companies with large profits or small profits? Who wants to worry about being laid off? Which companies provide more promotions, better 401(k) s, more generous health benefits?
There is something else and it is big. If you were a multinational would you rather expand in a country with a 20% tax rate or a 35% tax rate? You might even move your home offices to 20% tax rate countries and take jobs out of our country. This is “inversion” and it has been happening. The result is fewer jobs in America.
The other effect is that when American multinationals make profits abroad and pay the lesser foreign tax they logically keep those extra profits abroad because they would have to pay the extra US tax to bring the money home. Estimates range up to 2.5 trillion dollars or more. The GOP tax plan allows that money to come back without the tax penalty. Corporations would bring the money back to invest and build plants and bring back jobs.
Who wouldn’t want another 2.5 trillion dollars back in this country? There is another piece to this. Most small businesses do not pay the corporate tax but the individual tax. So a successful and growing small business pays the individual tax which jumps to 39.6% at over a million in profit. That isn’t fair and the GOP tax plan handles this by lowering this small business tax to be in line with the new corporate tax.
Here is what a candidate for president said in 2012: “Our current corporate tax system is outdated, unfair, and inefficient. It provides tax breaks for moving jobs and profits overseas and hits companies that choose to stay in America with one of the highest tax rates in the world.” That was actually not Mitt Romney. That was Barack Obama. So you have to wonder why the Democrats didn’t do something about this when they could have and are so against the GOP plan.
The GOP and President Trump understand what it takes to make our businesses profitable. Profitable businesses lead to prosperity that is not only good for all workers but for those that need special help, for our entitlements, for our institutions and to fund our great country. You can’t be a really great country without prosperity.
There are many aspects to the GOP tax plan. Lowering the corporate tax plan is one and it has enormous benefits to our country. I really prefer a well thought-out plan to a rant.