That's the cry of anti-business progressives, and you know what? They're right. Do it.
It's also the view of President Barack Obama's National Commission on Fiscal Policy and Reform. You've got to dig deep into the recently issued 66-page report, and if I read it correctly, the report, called "The Moment of Truth," would dump all business "tax expenditures."
Tax expenditures are what economists call the tax "loopholes" that bestow favorable treatment on select companies and industries: tax credits, tax deductions, tax deferrals, special tax rates and too many other legal evasions to list here.
As such, it's not like the government is writing a check -- with your money -- to give directly to "deserving" companies. They're more like backdoor subsidies that'll reduce a company's tax bill. Which, of course, increases our tax bills.
The "oil depletion allowance" may be the most familiar of these giveaways, although they ended for larger producers and were trimmed for smaller ones in the 1970s. You can ge
t a feel for what tax expenditures are by checking out a House and Senate Joint Committee report, "Estimates of Federal Tax Expenditures for Fiscal Years 2007-2011."
They are accounting breaks involving inventories and depreciation; exclusion of investment income on life insurance and annuities; expensing of oil and gas exploration costs and development; cost depletions, special rules for mining reclamation reserves; expensing of timber-growing costs, credits for low-income housing. And so forth.
Only the Lord and K Street lobbyists can explain it all. Billions and billions; so many that the list doesn't bother to enumerate what it calls "small amounts," meaning anything less than $50 million annually. This truly is a case where a billion here and a billion there adds up to real money. No joke intended.
The deficit reduction commission would eliminate the more than 75 tax expenditures for business ... all of them. Dumping these "special subsidies," the commission concluded, would help reduce the deficit and the corporate tax rate. The commission would establish a single rate -- between 23 percent and 29 percent -- that would replace the multiple brackets that run up to 35 percent.
The commission calls the current corporate tax structure a "patchwork of overly complex and inefficient provisions that creates perverse incentives for investment. Corporations engage in self-help to decrease their tax liability and improve their bottom line. Moreover, corporations are able to minimize tax through various tax expenditures inserted into the tax code as a result of successful lobbying.
"Without reform, it is likely that U.S. competitiveness will continue to suffer. The results of inaction are undesirable: the loss of American jobs, the movement of business operations overseas, reduced investment by foreign businesses in the U.S., reduced innovation and creation of intellectual property in the U.S., the sale of U.S. companies to foreign multinationals, and a general erosion of the corporate tax base."
Cognizant of the political hurricane that would blow through Congress, the commission recommends the enactment of "fail-safe" legislation that would automatically trigger painful changes if lawmakers don't pass a bill by 2013 meeting specific revenue targets that the reforms would produce.
The 18-member bipartisan commission approved the report 11 to 7.
On the commission were two Illinois Democrats; Sen. Dick Durbin voted with the majority and Rep. Jan Schakowsky against. Congress isn't required to turn the recommendations into legislation, so supporters of the recommendations will have to be strong, to stand up to the special interests that run from the ethanol lobby to affordable-housing advocates, from Big Oil to renewable energy enthusiasts, from small refiners to businesses that don't fire victims of natural disasters such as Hurricane Katrina. Which giveaways are loathsome and which are praiseworthy depends on your politics perspective. Care to bet on how many people would be ready to sacrifice their own tax breaks for the sake of eliminating them all?
This sounds like a lot of businesses with their hands in the till, but it's practically nothing compared with how well individual Americans benefit from the tax breaks they get. Big Oil can't come close to some of them, such as the $100 billion in mortgage deductions. The commission would kill those individual breaks too.
So, if slicing into corporate tax expenditures would be cutthroat, image the legislative bloodbath over cutting those individual expenditures.
But that's another story.