The big lie of this campaign has emerged and it’s this: “The American corporate tax rate is the highest in the world.” This has been a central talking point of GOP presidential candidates since 2008 but now, in Mitt Romney’s hands it’s become the only talking point. Forget that it’s not true: it’s effective, much as JFK’s lie that the US was facing a “missile gap” with the Soviet Union was hard to beat in 1960. Lying in political circles only works when people already feel fear. (FDR’s famous line: “The only thing we have to fear is fear itself.” was an appeal to voters to resist the fear mongering of Wall Street and people shouldn’t forget it.) In a weak economy people certainly feel afraid. The corporate tax rate lie is this year’s missile gap.
Back in 2008 Igor Greenwald published an excellent article in SmartMoney entitled: “High Corporate Tax Rate is Misleading” and since nothing about corporate taxes has changed under Obama, it’s worth quoting from. Among other things Greenwald points out:
If you say something long enough and loud enough, there's every chance people will come to believe it's true, especially if your opponents tire of rebuttals.
This time-honored political strategy has been working overtime of late, as Republican presidential hopefuls romance the richer Florida retirees with appeals for cuts in corporate taxes.
You may have heard: U.S. corporations face one of the highest income tax rates in the world, though the mention of "rate" is often enough excised, so that what comes through is the assertion that corporations pay too much in taxes. This is simply untrue if your basis for comparison is the developed world. The truth is that while the 35% corporate income tax rate is high indeed, the creativity and global reach of U.S. corporations make them among the most lightly levied.
Between 2000 and 2005, U.S. corporate taxes amounted to 2.2% of the GDP. The average for the 30 mostly rich member countries of the Organization for Economic Cooperation and Development was 3.4%.
Why the disparity given the high federal rate, which rises to 39% counting state taxes? Part of the answer is that big U.S. companies have become expert at hiding profits in tax havens overseas. And many of the smaller ones simply pass through their income to owners who then report it on their personal returns.
That Mitt Romney knows this is indisputable. That he’s willing to mislead voters is also clear. Romney after all has a brilliant strategy. And just like Nixon, who couldn’t argue with Kennedy about the missile gap without sounding like a wonky technocrat, Obama will find it hard to fashion a snappy comeback for the corporate tax lie. There are essentially three reasons for this: the very word “taxes” is loathsome to every citizen, “corporate” has only a foggy meaning, (Romney: “Corporations are people too, my friend.”) and finally, even though all serious economists discredited the idea long ago, the notion of “trickle down” profits still resonates with alliterate voters (Fox newsies, etc.)
President Obama has already demonstrated that the corporate tax attack is indeed his missile gap. His fumbled line about the healthy nature of the private sector is an indication that he’s on his heels. He needs to get off his heels right away.
One way to do this is to avoid the spurious argument about the evident corporate tax rate (the old “no they’re not, yes they are” fight will only help Romney) and instead campaign vigorously on closing international corporate loopholes. That’s a position that will resonate with voters and expose Romney’s lie.
I have a small blog, one that’s mostly about disabilities, sometimes about poetry and nonfiction. But I have a dog in this hunt. The Romney economic plan calls for the entire gutting of medicare, make no mistake about it. That’s also the Ryan plan. First the plan calls for taking money off the top of existing medicare and social security, then it calls for passing the federal money back to the states. In turn the states can use it anyway they want. You see, Romney’s lie at the top, the corporate tax rate lie, is the glittering and dangled pocket watch designed to mesmerize voters, especially middle class voters to vote against their own interests. Hell, it’s worked before.