Here’s a little “what if?” thought experiment for you as we head into the election cycle with its endless coverage about Taxmageddon, green subsidy fails, the exploding deficit, and on and on.
First a few facts:
Corporate tax receipts to the federal government over the last ten years have averaged $228 billion annually. If you take out the $342 billion average for the three years (2006-2008) at the peak of the bubble with its artificially inflated profits, you have a more normal average of just under $180 billion a year. Let’s use $200 billion.
Federal spending for the Bush years 2004-2008 averaged $2.7 trillion a year. Yes, he started the $800 billion “stimulus,” but spending under Obama, including projections through the end of the 2012 fiscal year now averages $3.5 trillion a year. So, despite all of the rhetoric about “emergency” and one-time jump starts, that $800 billion is now locked in and the feds have spent nearly $3.5 trillion more than they would’ve if they hadn’t heeded the opportunity to “never let a serious crisis go to waste.” And here we are.
Now for the thought experiment.
Let’s say that upon the 2008 onset of the beginning of the end of this final bubble, George Bush, instead of listening to his Treasury Secretary Hank Paulson (former Goldman Sachs chairman and vested Wall Street shill) and deciding to “abandon free market principles to save the free market system,” had instead decided to embrace free market principles to save the free market system.
Besides no bailouts and no propping up zombie companies and insolvent states, what if he’d also said “and to get America back on track, we’re going to abolish the corporate income tax for ten years.”
No one can say it would be too expensive. We could’ve covered that and still had an extra $1.5 trillion just on what we wouldn’t have spent over the last four years. The real power, however, is what it would’ve done by removing the distortions that the byzantine tax code wreaks on the economy.
Try to imagine how much creativity would’ve been unleashed, how many jobs and “corporate offices” would’ve shifted away from Washington, D.C. and into productive activity. Think of how the landscape would change as efficiency (profits) wasn’t penalized and stupidity wasn’t subsidized. How much money would’ve moved from “tax shelters” and into profit seeking investments.
Think of how much more competitive U.S. companies would be around the world. Contemplate how much the small business “growth engine” would’ve fired up after the disappearance of all of the myriad special breaks and loopholes that the big corporate players with their departments of tax lawyers and lobbying staffs exploit.
Finally, think of an America where people didn’t think everything they wanted was supposed to be given to them by the government.
Of course that would never happen. Not on purpose.
Just something to keep in mind for after the bubble.