In his National review article, The High Cost of Stupidity, Kevin Williamson makes the case against high corporate taxes by focusing on revenue that might not have been lost, jobs that might have been created, and pension fund investments that might have materialized. He makes a good case.
"What would the U.S. economy look like if there were eleven new companies the size of Pfizer? A little back-of-the-envelope math: If those eleven companies each employed about the same number of people as Pfizer, that would be the better part of 1 million new jobs, which would take care of about 13 percent of those Americans currently jobless — and if they got nice Pfizer wages, too, so much the better. There would be an additional $2.1 trillion in the pension funds and individual retirement accounts invested in those companies’ shares. If those firms paid taxes comparable to Pfizer’s, their annual tax payments would exceed the annual total revenue of the National Football League and would by themselves more than fund the annual budget of the Environmental Protection Agency or the combined budgets of the Small Business Administration and the National Science Foundation. The money their employees paid in individual taxes could fund the entire budget of NASA or the Department of the Interior.But we aren’t getting eleven new Pfizers. In fact, we’re losing the Pfizer we have. Pfizer is merging with a smaller Irish pharmaceutical company, Allergan, and the legal headquarters of the new enterprise will be located in the Republic of Ireland rather than in the United States. The main reason for this is the U.S. corporate tax, which is effectively the highest in the developed world (it is exceeded on paper by the corporate tax of one very poor country, Chad, and one very economically weird country, the United Arab Emirates). Worse, the U.S. corporate tax is an especially cumbrous levy, with Washington seeking to tax companies on their worldwide business activities; the international norm is the territorial tax system, in which a company is taxed by any given country only on the business conducted in that country.
Though Mr. Williamson makes great arguments, I think ideology edges out stupidity when it comes how we got to this sad state with our corporate tax code — and our individual tax code for that matter.
I suppose there's a fair amount of stupidity involved in the creation of such a punitive, inefficient tax structure. Liberal greed probably accounts for a lot of it. The way they see it, higher rates mean more tax revenue which buys a lot of Democrat votes. But they just don't get it, that lower rates on a broader tax base bring in even more revenue in the long run. But there's that ideological perspective, and on the progressive ideological side, there is a different purpose for punitive corporate taxes.
When the USSR collapsed it fell to the might of America's free market economy which had then only recently been unshackled by Reagan administration reforms. Soviet sympathizers and other adherents to the socialist Utopian dream, such as Barack Obama, Hillary Clinton, and Bernie Sanders to name only a very few, recognize this. When the Soviet dream disintegrated, the socialists among us didn't have a come to Jesus moment. They didn't go, "Oh wow!" There was no epiphany, no recognition that capitalism is truly the best hope for the disadvantaged, worldwide. No. As you might expect our progressive elites remain convinced that they, and only they, are the world's best hope.
During World War II America demonstrated its ability to turn the economy on a dime, switching from a peacetime economy to war production, which made it possible to wage and win a massive two-front war. The lesson has not been lost on our progressive heroes from the left.
Since WWII it has been the position on the left that America is morally obligated not to win wars. Winning a war would be neo-colonialist or racist — or something. So Korea and Vietnam were UN sanctioned standoffs, complete with demarcation lines, the 38th Parallel and the De-Militarized Zone, respectively. In both cases American troops were forbidden to cross them, but in both cases our enemies did not consider themselves subject to the same constraints. In spite of the handicaps, Korea was a victory in the sense that South Korea is still a free nation. But it was against the rules for North Korea be defeated, and as a result, communist North Korea remains an absolute hell hole.
South Vietnam might still be a free nation as well, had not been for the actions of our Democrats in congress. Thanks to the super-majority they held in the wake of Watergate, they had the votes to deny aid to South Vietnam, and that's what they did. This after the South had successfully defended itself from a massive conventional attack from the North, relying on American air support but no American ground troops to do it. President Ford vetoed, congressional Democrats overrode, and the bloodbath in South Vietnam ensued.
After that America was sour on war until 9/11. Things changed when the Twin Towers fell. We took down Afghanistan. Then we went into Iraq, which in my view was exactly the right thing to do. We went into it planning to win the war, and we did. There were some missteps, but the Bush administration implemented a counterinsurgency strategy now known as "the surge" and America won out against the insurgents, and won out against the liberal media which had predicted a quagmire and defeat. In fact the surge "succeeded beyond our wildest dreams," according to Democrat candidate Barack Obama. Later on after he became president, he announced the withdrawal of American troops from Iraq. The Iraqis themselves were opposed to it, believing the troop withdrawal was premature. When Obama went ahead with it anyway, he said, "[W]e’re leaving behind a sovereign, stable and self-reliant Iraq, with a representative government that was elected by its people." It was abandonment. Defeat from the jaws of victory. We now have ISIS.
But we also have a majority of Americans who want to decisively defeat ISIS and any other terrorist group that comes along, and they don't care if anybody thinks it will be neo-colonialist or racist to do it. The problem progressives now face is how to prevent an outright American victory over ISIS when public opinion is so strongly in favor of it. Don't get me wrong. It's not as if our progressive friends want to see the death of America. It's more that they would consider a decisive American victory over ISIS a tasteless exercise in cultural imperialism. How dare we Americans suggest that our culture is somehow superior?
So, one progressive solution to the threat posed by such progressive averse public opinion is nearly the same as the original Marxist goal. The communists' goal was the destruction of capitalism. Progressives, on the other hand, work to cripple our capitalist economy and bend it to their own political uses. War against a foreign power would not be one of those uses, and a damaged economic engine could make us less likely to engage in one. There is a significant segment of the American people who have been receptive to the progressive message. Capitalism is evil. America is hopelessly flawed. The message is delivered in schools, newspapers, newscasts, books, movies, TV, and just about anywhere else you'd care to look. There is a counter-message no doubt, but that message is not received or promoted in mainstream media or celebrity circles.
In the 1930s Walter Duranty won a Pulitzer Prize by lying about the Ukrainian famine in order to glorify the Stalinist USSR. By various estimates 1.8 million to 12 million people died of starvation between 1932 and 1933 because of Stalin's nationalization of Ukrainian farms. Stories of oppression, torture, and murder by socialist regimes are legion. The USSR ultimately collapsed of its own weight. Can people really stay stupid for nearly a hundred years? I mean people who matter -- people who aspire to the most powerful positions on earth. I don't think so. Anything that the likes of Barack Obama, Hillary Clinton, or Bernie Sanders do to cripple the economy is not an accident of stupidity. They mean to do it. They have a purpose.