President Obama and Governor Romney may have their differences on tax policy, but both candidates agree that the United States needs to cut its corporate tax rate. Including federal, state, and local taxes, corporate profits are currently taxed at 39.1 percent, the highest rate in the industrial world. This high corporate tax rate distorts investment decisions and encourages corporations to relocate overseas.
In the State of the Union, President Obama suggested that the foreign earnings of U.S. corporations should be subject to a “minimum tax” to prevent corporations from shifting earnings to tax havens. The White House has promised to release the detailsabout the level and operation of such a minimum tax in the next few weeks.
Mitt Romney’s candidacy has inspired a great deal of debate about the role of private equity in our economy. Romney’s opponents have openly questioned whether private equity serves a legitimate purpose in a capitalist system. Many claim that private equity merely facilitates a transfer of wealth from employees of a company to the private equity managers that take it over.
Now that Rick Santorum has emerged as the latest candidate to challenge Mitt Romney, we should take a closer look at what he believes about tax policy. To his credit, Santorum’s policy proposals are less radical than those of the previous anti-Romney’s—Perry, Cain, and Gingrich. For the most part, his plan resembles mainstream conservatism. But two policies suggest a role for the government that may prove unacceptably large to conservative voters.
With Newt Gingrich vying for front-runner status in the Republican presidential primaries, his positions on important public policies such as Social Security and income taxes deserve scrutiny. In both cases, Gingrich adopts familiar Republican concepts — but then undermines their key objectives.