The good thing about election campaigns is that they force both parties to do things, or at least to promise to do things they should have done long ago. President Barack Obama is a born-again tax cutter. He wants the top rate of corporate income tax cut from 35 percent to 28 percent, and the maximum rate paid by manufacturers reduced from the current average of 32 percent to 25 percent. He has somewhat harsher treatment in store for everyone earning more than $200,000 per year, with a special assault on “millionaires and billionaires” in order to make up the shortfall of $250 billion over ten years. Nothing new there. But his recognition that the U.S. corporate tax rate is uncompetitively high is new and, if remembered after Election Day, useful.
Not to be outdone, Mitt Romney is calling for a 20 percent reduction in individual tax rates. In the increasingly unlikely event that he wins his party’s nomination and bests Obama in the general election, he would reduce the rate paid by the highest earners from 35 percent to 28 percent, by middle-income earners from 25 percent to 20 percent, and by the lowest group from 10 percent to 8 percent. Romney would leave it to Congress to decide how to make up the revenue loss, a triumph of hope over experience with a Congress that can’t agree on much of anything. His fast-rising rival, Rick Santorum, wants to give tax breaks to “manufacturers,” and lower the top rate for individuals to 28 percent. We are all tax cutters now.
