James Pethokoukis

Politics and policy from inside Washington

Kudlow: Time for a tax cut

July 6, 2010

Larry Kudlow thinks it’s time for Team Obama to consider a different path:

Fred Smith, the CEO of FedEx, does not have a Nobel Prize in economics. But he founded from scratch a gigantic global transportation and delivery company that has employed tens and tens of thousands of workers, something the Nobelists have never done. And Smith argues that the best job-creating measure would be a significant reduction in the corporate tax rate and a move to full expensing for business-investment tax write-offs. He’s exactly right.

Japan intends to cut its corporate tax rate. So does Great Britain. But the U.S. corporate tax rate of 35 percent, or 40 percent when states are included, is not even remotely competitive anymore. So why aren’t people talking about the economic benefits of unleashing business power? The rapidly growing Asian economies treat capital and business better than they’re treated in the United States. Same for Europe. What are we waiting for?

Me:  Even Krugman-ite Democrats — folks more worried about jobs than deficits — should support this. Lowering taxes is the one form of  ”stimulus” that might get GOP support.  Might this mean a bigger deficit in the short run? Perhaps, but I see little evidence that markets are too concerned right now about red ink.

Comments

Not for nothing is Larry Kudlow known as the great one! A corporate tax cut is a great idea. Here in Canada business tax rates are tumbling.

Nonetheless, given the dismal electoral prospects faced by Team Obama as outlined in your later article above, it’s quite doubtful Mr. Obama will do anything smacking of doing a favour for American business in the near term. Quite the contrary; this fall election will likely see the Democrats bashing big business, big oil, big banks &c in a last-ditch attempt to shore up their electoral base. With luck, Mr. Obama will lose his super-majority in congress and then, and only then, after being sharply upbraided by the voters, will he look at something like a corporate tax cut. The unemployed will have to wait some while longer, sadly.

Posted by Gotthardbahn | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •