I told you on the radio last week about Bill Clinton’s sudden see-the-light experience with respect to inversions and corporate taxes, an event Rob shared in detail that same day. Essentially, while other Democrats are carping about corporations who look to avoid U.S. taxes by establishing overseas headquarters, Clinton has publicly acknowledged that the problem is the U.S. tax code.
And yes it certainly is. Clinton points to two key problems. First, the 35 percent tax rate is much higher than any other major industrial nation, which means it’s no surprise companies would be interested in a way to pay foreign tax rates instead of U.S. rates. Second, the U.S. taxes repatriated profits, which means that when a U.S. company earns a profit overseas (and pays taxes on those profits overseas), it cannot bring the after-tax earnings back into the United States without then having to pay U.S. taxes on what’s left.
That’s simply insane. I’ve been saying since well before my presidential campaign that repealing the tax on repatriated profits would bring a massive wave of capital into the U.S. from overseas. Clinton estimates there may be as much as $2 trillion sitting out there that companies refuse to bring back just because of this tax. I think that might be low, but let’s go with $2 trillion as the number. The entire U.S. economy generates about $15 trillion a year in goods and services. What do you think a sudden infusion of $2 trillion in cash would do for our economy? It would be what my friend Steve Moore said in the Wall Street Journal that my 9-9-9 plan would have been – rocket fuel for the economy.
Now whenever Bill Clinton says something, we’ve been trained well to question what he’s up to. Clinton always has an angle. In this case, I suspect he’s trying to appeal on Hillary’s behalf to those in the business community who are open to supporting a Democrat for president but want one that’s business-friendly, if you can imagine such a thing. While the rest of the Democrat Party wants to beat up corporations over inversions, and further complicate their lives in the process, here’s Bill/Hillary talking about cutting corporate taxes and eliminating the tax on repatriated profits.
Could Bill and Hillary really be that calculating and insincere?
OK, now that you’ve stopped laughing, we’re left with this fact: He’s still right. So how does a conservative respond? Certainly not by electing Hillary Clinton, an absolute big-government collectivist who cannot be described as business-friendly just because she knows how to shake corporations down for money, nor because her husband knows how to speak the language of tax reform.
No, what we need to do is up the ante. Conservatives have to be pushing to completely replace the tax code. Let’s rip the whole thing out from its roots and construct a new, simple one. That was the idea behind 9-9-9. A lot of people got upset about the idea of losing certain deductions, but the idea was that the basic tax structure would be simple and non-oppressive and you wouldn’t need them. That is still the approach we need.
Give Bill Clinton credit here. He did a good job of identifying barriers to business prosperity in this country. Now, if he expects us to trust his wife to solve the problem, well let’s just say I was born on a day, but it wasn’t yesterday!
