Traverse City Record-Eagle

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August 21, 2012

Forum: Close loopholes first

Former Michigan Gov. John Engler authored an Aug. 3 op-ed urging us to support lower corporate tax rates and reduce those on the huge profits earned by the wealthiest Americans on overseas investments. In exchange, he promises more revenue and jobs as these untaxed profits are poured back into the U.S. economy. Sound familiar? It should. This is an unvarnished re-hashing of the supply-side, trickle-down nonsense that left Michigan in an economic shambles.

You'll remember John Engler as the Michigan governor who failed to foresee the looming devastation of globalization on Michigan's manufacturing-dependent economy.

Instead of making preparations like investment in education and infrastructure, he cut taxes for his rich friends and hung the middle class out to dry. He either failed to recognize the coming economic storm or simply ignored it.

In either event, he's hardly the person we should be looking to now for economic advice.

Setting aside for a moment Mr. Engler's dismal track record, let's look at his claims. First he repeats the hackneyed and universally denounced claim that the United States has the highest corporate tax rate in the world. In fact the effective corporate tax in this country is among the lowest on the planet at just under 12 percent.

American corporations pay significantly less in taxes than those in the countries Mr. Engler cites as current economic successes: China, India and Brazil.

In fact, due to a web of lucrative exceptions and loopholes, many of America's largest companies — General Electric, Dupont, and Honeywell for example — pay no corporate tax at all.

Also interesting is the fact that the Business Roundtable Engler now represents is made up of the CEOs of these mega-corporations.

The Roundtable has a long history of opposing efforts to enhance shareholder rights, regulate corporate misbehavior and fighting to limit the right of American workers' to collective bargaining.

Apparently Mr. Engler believes we learned nothing from the "make the rich richer" economic policies he championed for 12 years as governor in Lansing, and that we didn't notice that all the favors he did for his corporate buddies resulted in the disappearance of Michigan's middle class.

I'm sure these tired old ideas play well with his cronies at the Business Roundtable but we've wised up.

Instead of more lucrative breaks for the wealthy, how about we insist on a tax system in which everyone pays a fair share. Instead of encouraging the wealthy to bring their foreign income home by lowering taxes, let's eliminate the incentive to leave it abroad by taxing it regardless of where it's parked.

How about we make it simple: Americans should pay taxes on their income no matter where they earn it, and let's close the loopholes that let the richest corporations in the country to pay less in taxes than the average school teacher.

About the author: Dan O'Neil is a partner in Thompson O'Neil PC, a Traverse City law firm; is on the executive board of the Michigan Association for Justice; is a board member of the Legislative Committee, a member of the member American Constitution Society and a board bember of the Justice Caucus of the Michigan Democratic Party.

About the forum: The forum is a periodic column of opinion written by Record-Eagle readers in their areas of interest or expertise. Submissions of 500 words or less may be made by e-mailing letters@record-eagle.com. Please include biographical information and a photo.

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