Prometheus 6

Treasury officials say their immediate goal is simply to highlight the need for change and set the stage for future debates.

Good thought, setting the stage. Let's start with this:

Multinational corporations are once again resorting to complex strategies to shelter profits in tax havens.

I don't want to hear about the nominal tax rates. I want to talk about effective tax rates. See, all the complexity in the tax code...ALL of it...exists to provide extraordinary deductions and credits to corporate interests.

Paulson Says U.S. Hurt by High Tax Rates
By EDMUND L. ANDREWS

WASHINGTON, July 24 — Treasury Secretary Henry M. Paulson Jr. wants people to know that the corporate tax code is hurting American competitiveness. But corporate lobbyists are not expecting him to do anything about it.

On Thursday, Mr. Paulson will convene a conference to drive home the point that American corporate tax rates are higher and more complex than in Europe, Japan and most industrialized countries.

Participants will include Alan Greenspan, the former chairman of the Federal Reserve; Martin Feldstein, president of the National Bureau of Economic Research; and Frederick W. Smith, chairman of the FedEx Corporation.

In a report prepared for the conference, the Treasury Department said that American companies are hobbled by high tax rates, instances of double taxation and a bewildering patchwork of rules for special interests.

“Our tax system disrupts and distorts a vast array of business and investment decisions,” the Treasury Department said. That, it said, “lowers the productive capacity of the economy and reduces living standards.”

But Treasury officials say they are not planning any legislation. Indeed, tax reform disappeared from President Bush’s agenda almost two years ago, after he became bogged down in a failed campaign to overhaul Social Security.

In October 2005, after months of work, Mr. Bush’s handpicked advisory panel delivered two comprehensive proposals to make the entire tax code simpler, fairer and more efficient. But administration officials immediately buried the recommendations, and Mr. Bush never came out with a plan of his own.

Corporate tax lobbyists say the prospects for action are far lower today, given Mr. Bush’s low popularity, the Democratic majorities in Congress and the fact that none of Mr. Bush’s tax cuts expire until 2010.

“Given the environment we’re operating in, and given the fact that the only real deadline for action on a broad basis is the end of 2009, it’s inconceivable that anything could be enacted between now and the end of the administration,” said Kenneth Kies, a corporate tax lobbyist and former Republican staff director on the House Ways and Means Committee.