South By North Strategies, Ltd.

The Economist is not hopeful about the prospects of corporate tax reform.

Eric Toder of the Urban Institute says “the ten most costly provisions benefiting business investment account for about 92 percent” of revenue losses over the next five years. First on his list is the deferral of foreign-source income of American multinational firms. This is what allows a company like GE to pay an extremely low rate. And it just so happens that GE’s CEO is now the chairman of Mr Obama’s Council on Jobs and Competitiveness. As Mr Toder states, “the corporate leaders now advising the president are likely pushing him to move in the opposite direction, following our major trading partners, who exempt foreign-source income.” Go down the rest of Mr Toder’s list and you’ll find more cause for pessimism. The expenditure accounting for the second largest loss of revenue—the accelerated depreciation of machinery and equipment—has just been increased. The credit for research and development is unlikely to be cut, as are credits for low-income housing. The one area Mr Obama has specifically targeted—tax breaks for fossil fuels—is relatively small (and unpopular).
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In some cases the existing credits are worthwhile. And taxing multinational corporations in a way that keeps them competitive and benefiting America is difficult, to say the least. But if the administration wants to substantially lower the corporate-tax rate, then it must take on its most expensive provisions. And if it wants to achieve reform, it must take on all those who benefit from the current system….