Several of the 2012 GOP presidential hopefuls have laid out economic platforms that would include huge cuts in the corporate tax rate. Former Massachusetts Gov. Mitt Romney (R) called for lowering the corporate tax rate from 35 percent to 25 percent, while former Minnesota Gov. Tim Pawlenty (R) went a step further, calling for a cut to 15 percent.
In an interview published today by the Wall Street Journal, Rep. Michele Bachmann (R-MN) — who is toying with a presidential run herself — decided to one-up both Romney and Pawlenty, calling for a reduction in the corporate tax rate to 9 percent. Adding insult to injury, Bachmann wants to pair that huge tax cut with giant tax reductions for the rich, as well as a tax increase on the working poor:
“In my perfect world,” she explains, “we’d take the 35% corporate tax rate down to nine so that we’re the most competitive in the industrialized world. Zero out capital gains. Zero out the alternative minimum tax. Zero out the death tax.” […]
Her main goal is to get tax rates down with a broad-based income tax that everyone pays and that “gets rid of all the deductions.” A system in which 47% of Americans don’t pay any tax is ruinous for a democracy, she says, “because there is no tie to the government benefits that people demand. I think everyone should have to pay something.”
Let’s take these one at a time. First, cutting the corporate tax rate to 9 percent — a reduction about two and a half times larger than that called for in the radical House Republican budget — would cost more than $2 trillion over ten years. (The Tax Policy Center estimated that a 10 point reduction in the corporate tax rate would cost about $915 billion.)
Second, zeroing out the capital gains tax and the estate tax would overwhelmingly benefit the wealthy, as about 68 percent of capital gains taxes are paid by the richest one percent of the country, and fewer than the richest one quarter of one percent pay the estate tax.
Finally, Bachmann implies that she would raise taxes on those Americans who earn too little to have any income tax liability. (It’s simply not true that they pay nothing, as Bachmann seems to believe, since those who have no income tax liability still pay payroll taxes and any state and local taxes.)
The reason so much of the income tax liability has become concentrated at the top of the income scale is because over the last few decades income inequality has skyrocketed. The richest one percent of the country currently earn nearly one quarter of the income, and therefore pay the lion’s share of the income tax. Bachmann would raise taxes on those who have seen their incomes stagnate or even drop over the last ten years, even as she cuts taxes on the ultra-wealthy.