“Let’s scrub the corporate tax system of loopholes. And by the way, ‘manufacturing’ gets a 3% discount on rates. The end-state outcome doesn’t matter: watch the bouncing ball, media!”
I completely understand why this strikes a sympathetic chord with everyone who’s envisioning some fantastical 1950’s-esque manufacturing economy. But this is why we don’t compete internationally in terms of tax compliance.There is 0 difference between this, farm subsidies, loss carry-forwards, capital gains rates, or the handouts we provide to energy companies. It’s just an interest group that would cause Liberals to question a tax cut less openly, and put Republicans in the unwelcome position of having to fight a deficit-increasing tax maneuver baked into a broader revenue-raising initiative.
That’s how we do it in America: wag the dog. These “loopholes” almost certainly involve a net-net increase in “effective” tax rates for corporations, but the conversation will center almost completely on the manufacturing provision. Because gee, this means our crack media team can break out the Detroit ruin porn and the stock photographs of guys standing next to steel-printing machines!
So let me join everyone in song and dance:
It’s like God’s policy vis a vis doors when we talk about modern tax law and loopholes: Obama shuts a door and opens a window. How is an exemption for “manufacturing” not a loophole, exactly, and why is it being provided? And what exactly qualifies as “manufacturing”, anyway? If I own a financial services firm and I purchase an operating steel mill, am I a manufacturer? What percentage of my operations has to be manufacturing vs. design? After all, General Electric can’t just make a jet engine: they need a team of engineers. Are those guys manufacturing or designing or engineering and ugh. UGH.
I’ve got another word for a 3% manufacturing benefit: earmark. We’re paying 3% in lost tax revenues to manufacturers, whoever the hell they are exactly, and for what? Jobs? Every economist, including Krugman, will tell you that manufacturing is a dead end that primarily extracts productivity out of a dwindling labor base via some combination of automation and foreign slave (sorry, itinerant factory-dwelling subsistence wage recipient) labor. And oh by the way, most of the manufacturing we actually do is for chemical and defense, so. Cheaper bombs and environment-destroying polymers belched from unregulated smokestacks, hooray! Sign me up.
The worst part is the predictable, slavish way the media and myself will approach this latest budget sideshow horseshit by talking about Flint, Michigan over the next few days instead of polluted rivers on fire in the 60’s. About how the death of manufacturing in America was originally instigated by some very, very basic restrictions designed to prevent the rain from literally burning our skin, staining our garments, and killing vegetation. Our beloved manufacturers packed their motherfucking bags the moment they couldn’t just dump toxic waste all over the commons; remember, in 1970 when globalization began China was a basket case. The labor went to other developed nations with weak environmental and labor policies first!
Anyway, Rick Santorum thinks Barack Obama is a radical environmentalist and honestly? We get what we deserve, America. Hallelujah.
