BEDFORD, N.H. — Jeb Bush pledges to change our tax code away from its current arrangement of “the highest tax rates in the industrial world. Eliminate deductions and carveouts and special deals,” as he put it at a house party Wednesday night. His specific critique of the current tax code was interesting.
“The incumbents like that,” he said of the tax code. “Companies of scale like all of the carveouts because it gives them special treatment and they have the scale for the lobbyists, accountants, and compliance officers to be able to get through the maze.”
This is an important argument against tax complexity and high rates — an argument that also applies to regulations. The line has a slight populist hint to it: Big Government is bad in part because it props up Big Business. Jeb put an even finer point on it when he explained the virtue of a simplified tax code.
“You would shift from a financial-management kind of economy to promoting the real economy. The real economy is where higher-wage jobs take place.”
Is Jeb against finance?
Bush aide Tim Miller fleshed it out a bit: Bush’s tax plan would target the “perverse incentives in the tax code that favor the financial econmy over the real economy.”
Bush is correct, it seems. The current tax code favors big businesses and it makes finance a bigger deal.
Remember the story from a few years back about GE paying near-zero federal corporate income taxes. The New York Times piece on it had this paragraph:
Minimizing taxes is so important at G.E. that Mr. Samuels has placed tax strategists in decision-making positions in many major manufacturing facilities and businesses around the globe. Mr. Samuels, a graduate of Vanderbilt University and the University of Chicago Law School, declined to be interviewed for this article. Company officials acknowledged that the tax department had expanded since he joined the company in 1988, and said it now had 975 employees.
Think about that. Think of the dead-weight loss of GE paying nearly 1,000 people to produce nothing of value, but merely to comply with and game tax law. Worse, think of how GE changes its business practices to provide not what is in demand, but what can minimize taxes. This is bad for the economy. You can’t blame GE for playing this game, but you can see how this game is bad for the economy while being good for the biggest businesses — the ones who can afford a 975-head tax division.
Jeb is not thought of as a candidate antipathetic to Wall Street and big business. If he’s talking this way, it suggests the ground is shifting in the GOP.
Timothy P. Carney, the Washington Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Tuesday and Thursday nights on washingtonexaminer.com.
