Smoot-Hawley Strikes Back
By Track-A-'Crat on May 6, 2009 at 12:30 PM in Barack Obama, Current Affairs
While many of our elected representatives have the intellectual prowess of Rep. Corrine Brown (that is to say, they’ve barely completed elementary school), many also attended the finest universities in the world.
Where they seemingly learned nothing.
The Wall Street Crash was exacerbated by (Republican) President Herbert Hoover’s enactment of the Smoot-Hawley Tariff Act, thus guaranteeing himself one of the least enviable legacies around. Instituting protectionist policies and clamping down on free trade during an economic downturn is not clever.
And neither is forcing businesses to pay more tax, particularly at a time when they’re struggling to even keep afloat.
President Obama seeks to increase federal revenue by amending a tax system that is “full of corporate loopholes.” Does he not realize why these loopholes exist?
Because corporate tax rates in the US are so high. According to the OECD, the US has a combined marginal corporate rate of nearly 40 per cent (second only to Japan).
Whereas in, say, the Republic of Ireland it is 12.5 per cent.
This is veering between domestic corporate tax and the taxation on foreign profits that American companies are liable to, but President Obama cannot be oblivious to the simple truth that punitive taxation will cause business to flee these shores for fairer climes. So why does he persist?
He either thinks that the fundamentals of economics do not apply to him or he believes that it’s a no-lose situation: business will pay up or, failing that, they will leave, ceding their economic role to the government.
Perhaps President Obama might know better if he had ever poured sweat and blood into creating a business of his own.
UPDATE: I’ve just listened to a statement by the president and Tiny Tim. Aside from the hilarity of hearing Tim Geithner chide business for tax evasion, he let slip the real reason why this policy is being pursued – it’ll result in another 800 government (IRS) jobs.
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Sad post. A simple education in the current economic troubles would show that Ireland is in far greater danger of economic collapse than us. Settle down with the parroting of Rush Limbaugh talking points.
Rob,
You’re conflating two different issues. The Republic of Ireland is indeed in pretty deep economic trouble, along with many other EU member states, but that is not as a result of their tax policies.
As with the US, it’s mostly due to the conjunction of the housing bubble, irresponsible bank loans and personal greed, all then nicely whisked up by the “wizardry” of the financial sector.
So if I’m reading this right small business owners are going to be unfairly taxed so they can create 800 new jobs at the IRS? I’d like to know how these know-nothings got into office. Actually, I do know how it happened. WE THE PEOPLE need to stand up to all of this. It is serious. They are making decisions and passing unconstitutional laws faster than we can take the next breath and most people in the US don’t even know what is going on. BO has no loyalty to this country at all. That is what scared me about him over two years ago. Wake up America and see what is going down!
You probably have a better handle on this than I do, Tracks. So, please correct me if I’m wrong–this latest whiz-bang idea of Obama’s financial team seeks to tax all off-shore businesses across the board, rather than cherry-picking the American businesses who deliberately set up off-shore operations to avoid a fair-share tax. By doing this, the American companies operating legitimately overseas will face a double-tax for doing business– one in the country of operation and a second spike in their US taxes.
What will keep these same American companies from simply pulling up stakes and moving their entire operation overseas? And why would any foreign business ever want to set up here in the US if the tax rate is so prohibitive?
And how many of millions of jobs is the Obama team promising to create [save]?
I guess we’ll all be working for the Government. Oh, happy days!!!
but the government is broke,and in debt,lots of debt.
Your absolutely correct, NN Nancy:
It seems America is WAKING UP!! Over this past week, I came upon a Poll on mcnbc.com that peeked my interest because I noticed that out of over 351,000 folks voting on whether President OBAMA IS A sucess or FAILURE in his first 100 days as POTUS, 53.6% give Obama a D or and F rating. The scoring looks like this:
139, 224 rated PO at F 39.6%
49,173 rated PO at D 14.0%
Total % voting D or F 53.6%
21,496 rated PO at C 6.1%
Total % voting C/D/F 59.7%
112,250 voted A(31.9%) and 29,727 voted B(8.4%)
Total % voting A/B for PBO 40.3%
Just under 60% of those judging PBO’s accomplishments in his first 100 days gave him a C or worse with the majority giving PBO an F.
I know the Poll is NOT considered a scientific sampling; however, I believe that this poll is a glimpse into what is happening across the US. People are beginning to wake up and they are starting to to really PAY ATTENTION TO THE DISASTER THAT IS GOING ON IN WASHINGTON!!
You can still vote in this poll, although it is quite hidden (and a bit hard to find on msnbc.com (I wonder why?).
The Poll is actually on “Newsvine” and you can get to the Poll by going to msnbc.com and then clicking on the link to the category “Politics” and then clicking on the category for “Chuck Todd’s name” (Todd wrote the actual Article that contains the Poll). The Article is the first one on Todd’s list and is entitled (something like) “Obama To Be Spectacular Success or Failure.” You then need to scroll half way down the Article and you will see the link to the Poll; the Poll question is:
There are thousands of comments from those giving PBO C’s, D’s and F’s (of course there are comments from those still under the spell of THE ONE but there are MANY MANY more comments from the awakened ones and they are amazing. WE THE PEOPLE are waking up, cast your vote and read what others no longer under the spell are saying (leave your comments too)!!
While I understand your logic, I am sorry to see anyone giving American corporations a free pass. What your story tells us is that if we are going to have a global economy, everyone has to play by the same rules.
Also, for those who would sympathize with corporatists, take a gander at their LONG history of exploiting and abusing labor so they can make higher profits. Maybe if the CEOs would look at their operations in a fair way, they would have much better work forces and wouldn’t be making such lucrative profits that the government has to go after them. John Locke (whose philosophies undergird our Constitution) believed that every man was entitled to the fruits of his labor. American corporatists smashed that truth all to hell. Now the feds are after their unfair portion of our earnings.
Tek, I don’t think there’s any doubt that you’re right about many American corporate interests. They’ve become greedy and bloated and downright UnAmerican. In fact, I think many of the biggies don’t think about the interests or welfare of anyone or anything. Profits, the bigger and fatter, have become all. So, it’s easy to wave an ugly stick at the worst of them.
That being said, the across-the-board, “anti-business” tilt to this administration really worries me. If you take on the big corporations, willy-nilly, then what will prevent the government from hammering the nails into small business, the sort that employs more people in this country than anything else? If you remember the Obama tax plan, claiming he would only raise taxes on those making $250,000+, would effectively tax small businesses and force a lot of them to close shop.
So, if the big corps move out of the country and a good many small businesses close their doors, where, oh where will our jobs come from?
Green technology sounds great, but it’s not here yet. We cannot wish it into existence. What are Americans suppose to do between now and the green revolution? Hold hands and chant?
I personally don’t have warm and fuzzy feelings for the corporate excess we’ve seen over many, many years. But I genuinely worry about where this is all going. For me, Track’s essay expressed that concern.
Raising revenue, particularly on those who have abused the system, is great. I’m all for it. But we have to take the long view. What will serve the public welfare best? Sticking these suckers with a long pole or keeping our heads above water until the tide turns?
That poor woman (Brown). I saw that before and was wondering if she came to the podium in a U. of Florida robe or something!
Oh brother! Who votes for these people that want to talk about a Gator football team instead of the Gators that are loose in DC?!
My My! SO can I ask if that robe she was wearing was proper for the well of the house? She looked like some grand wizard.
Perhaps President Obama might know better if he had ever poured sweat and blood into creating a business of his own.
Better ask Rezco about that one. He taught BO every thing he knows about Bizzzzness.
What`s the big deal? Everyone talks about how wonderful FDR was. FDR did the same thing. Tiny Tim is just 0bama`s Morgenthau. Everything 0bama is doing is right out of the FDR playbook. FDR never worked a day in his life either and he was a fascist who based a lot of what he did on Mussolini`s Italy. FDR lied alot and he just kept keeping Americans in crisis mode. FDR took advantage of each and every crisis and constantly stated that government was the only one who could solve the crisis.
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