Corporate tax reform should lower the corporate tax rate, not address all USA’s fiscal woes

Corporate loopholes not only cost taxpayers millions, but they also hurt our overall economy, which has led citizens and politicians alike to agree that cutting corporate favoritism is a necessary reform.  In fact, cutting corporate favoritism has been backed with bi-partisan support from Democrats including Nancy Pelosi and Edward Kennedy to Republicans including Patrick Toomey and John McCain.  Thus, it is largely corporate lobbyists and certain vested interest politicians that favor sustaining corporate favoritism.   While Robert S. McIntyre’s “Opposing view: Close loopholes, fix problems” (USA Today, 9/17/07) makes some good points, the money saved from cutting corporate favoritism shouldn’t be filtered into other areas such as healthcare, retirement, and road construction.  It’s not that these social services should be neglected or receive less funding, but these savings should accumulate toward lowering the overall effective corporate tax rate for three primary reasons: 1.  Small to medium-sized businesses are being shut out of business opportunities.  In particular, businesses that do not generate $1M in revenue but pay the 34-39% corporate tax rate cannot compete with larger corporation that benefit from a lower tax burden.  Why should small to medium-sized businesses be forced to pay a larger tax bill and essentially leak profit?  Many mid-sized businesses fail each year because of the undue tax burdens they face.     2.  Lowering the overall corporate tax rate would finally eliminate the incestuous relationships between certain politicians and corporate lobbyists in Washington, D.C.  Large corporations would then be free to focus more of their energy on profit-generating, rather than on politics.   3.      Cutting corporate favoritism enjoys bi-partisan support.  Political expediency will demand that savings derived from cutting corporate favoritism should be shared with all companies by reducing the corporate tax rate.  If we try to steer the savings toward other areas of reform, the issue—and consequently, the money—will get lost in the shuffle. 

                                                                                                                   — Courtney Haynes | Hope Street Group Fellow

                                                                                                 

With Teachers, You Get What You Pay For

There are few professions that carry more economic and social importance for this nation than teaching.  No Child Left Behind has ignited vital debates surrounding our current educational system, but if it wants to impact some of this nation’s most fundamental challenges, revisions to this law must address teacher’s pay and incentive structures. As Superintendent of Prince George’s County Public Schools, John Deasy, points out in Michael Alison Chandler’s “Support Grows for Teacher Bonuses,” (Washington Times, 9/18/07) “we need to pay our best and brightest more, particularly in places where it’s most difficult to work.”  Naturally, identifying and retaining the best and the brightest teachers remains at the heart of this debate.  Some school districts are using test scores as benchmarks, while others are adopting other performance pay plans based on teacher evaluations, national board certification, or portfolio submissions demonstrating leadership and parent outreach.   

Despite attempts in some states to set higher standards for teacher certification, new teachers nationwide continue to come primarily from among the bottom of the graduating college classes.  Moreover, there remains a major gap in the number of teachers needed to fill vacancies.  Given these trends, national marketing campaigns and outreaches coupled with effective financial incentives can prove to be key factors in attracting a pipeline of qualified teachers from a pool of the top-third of college graduates.  – Arian Hassani | Program Associate

Is “Health IT” an Opportunity for Consensus?

In John Castellani’s “We must reform health care” (The Washington Times, 9/18/07), it appears that “Health IT” could be a jumping point for re-examining the nation’s health care system.  Only last week, Phillip Longman’s “Vista” plan, laid out in “Best Care Everywhere” (Washington Monthly, 9/11/07) proposed a health care system in which new funding would be provided to health care servers of last resort, in exchange for a VA-like, full-scale modernization of medical databases.  If The Washington Times and The Washington Post can see eye-to-eye, is it possible that our nation’s political, business, and civic leaders can too?  – Lonny Stern | Communications Director