Obama's Cynical Tax Reform Ploy

Taxes: President Obama is dressing up his corporate tax reform plan as a way to boost economic growth. But you don't have to look hard to see this for what it is: a brazenly cynical attempt to boost his re-election chances.

In announcing Obama's tax reform "framework" - which would lower the corporate rate to 28% and close loopholes - Treasury Secretary Timothy Geithner tried to depict it as a genuine effort to improve the economy.

"We think there's a compelling economic case" for corporate tax reform, he told Congress last week.

On Wednesday, he added the current system is "bad for economic growth and job creation" and that reform would "make us more competitive and create jobs here at home" and "boost growth."

There's no question we desperately need corporate tax reform. The current code trades a too-high rate of 35% - the OECD average rate is 25% and falling - for a myriad of loopholes that distort business decisions and dampen growth. The resulting tax law is so monstrously complex that businesses spend up to $85 billion a year just to figure out what they owe.

Obama's own recovery board, his debt commission and his jobs council all called for him to fix these problems as a way to boost economic growth.

Obama himself mentioned the need for tax reform "to help our companies compete" in his January 2011 State of the Union speech.

But the half-baked proposal he finally offered this week is nothing more than a political ploy designed to inoculate him against charges of being anti-business.

After all, if Obama truly believed in the "compelling" case for tax reform, why did he wait three years into his term to suddenly make it a priority? Particularly when he knows full well that the chances of a major tax code overhaul eight months before a presidential election are virtually nil.

And if he was serious about reform, Obama would have come up with a better plan than the dog Geithner outlined Wednesday. Among its glaring problems:

• It doesn't lower the rate enough to do any good. Even with a federal rate of 28%, corporate taxes would still exceed most OECD countries when you add in state taxes. That's hardly enough to justify killing off loopholes and raising the overall corporate tax burden on U.S. companies.

• It continues to play favorites. Geithner complains in one breath that the current code is "fundamentally unfair" because "subsidies flow to certain industries and not others." But in the very next breath he says Obama's plan would favor manufacturers with a special low rate, "advanced manufacturing" with a still lower one, and "green" energy companies with special tax credits.

• It would penalize multinationals that keep profits overseas by imposing a new "minimum tax" on foreign earnings, giving U.S. firms a strong incentive to move their operations to more welcoming climes.

Obama is constantly bemoaning cynicism in politics. But his phony tax reform plan shows he's the worst offender.