The Mystery of Obama's Minimum Corporate Tax Proposal

There are times when it is impossible for me to explain a politician’s action. It happened today, for example, when President Obama’s White House announced that he wants a minimum corporate income tax. My reaction was astonishment.

1.      At a time when America is falling behind in the global competition race,

2.    At a time when unemployment, which is always cured by corporations large and small, is the number one issue for American voters,

3.     At a time when everyone, even President Obama, is calling for a major overhaul of the America tax code to eliminate “loopholes” and create a fairer system for all American taxpayers, corporations included,

4.     At a time when the President is being heavily criticized in the polls, by Republican and independent voters, and by commentators and business people,

The last thing we would have expected is the announcement that a minimum corporate tax is on the President’s agenda.

Why?

Well, I suppose the easy answer is to say that it plays to the left wing of his Democratic Party constituency, that it will make minority group Americans low on the economic ladder feel that he is trying to do something to alleviate their positions, and that it fits nicely in President Obama’s perception that a level playing field requires that corporations and wealthy Americans pay up.

All that equates with being re-elected. If Obama’s goal is re-election, he needs every vote he can get and swinging a broad bat at corporations, perceived by many Americans to be greedy and unworthy of government support, could garner a lot of votes, but probably not enough to give him the win in November. And, it will certainly galvanize every small business in the country - small businesses that create more than 50% of all jobs in America and that represent a middle class America already sufficiently fed up with the President to have formed the Tea Party movement. So, if votes were the goal, the President probably chose to go with the smaller voting block, and Barak Obama is too smart not to know that.

To take another tack, perhaps Obama was trying to do what he could to revise the tax code before the election so that he can say when the campaign gets underway full-time that it is he and not the GOP House of Representatives that is on the side of tax reform. The problem with this analysis is that nobody will believe that it is not just another political shenanigan.

Then again, he may have realized that the idea he has floated for more than a year now of sur-taxing the top 1% of Americans is simply never going to get the traction it needs to become law. Even waitresses in Omaha do not want it.

I think the real motive for the President’s minimum corporate tax proposal is that he really believes that this is the right thing to do to flatten the playing field for all Americans. And, the President’s problem here is that the more he tries to defend a minimum corporate tax, the more he will alienate himself from the American mainstream that understands that corporate capitalism is what made America great, that corporations need all the resources they can hold on to if America is to compete globally, and that they oppose higher taxes because they believe that the problem is not to collect more taxes but to reduce the expenditures of the government that is collecting the taxes.

The minimum corporate tax seems to be just one more sign that President Obama is far out of step with the real America and has no clue about how to get back into the fold.