Inversion

I don't go to the White House website as often as I probably should, but seeing the front page today (30 July 2014) showed me exactly why I voted for President Obama. The front page talks about eliminating loopholes in our tax code that makes it so large corporations are able to avoid paying taxes. This is one major step to fixing our tax code in the short-run which will help balance the budget (which we will need to do when our economy recovers). This is as the President said, a fairness issue because the loopholes that wealthy corporations use are not available to new businesses who are the major source of new jobs in the economy. NBER This is frequently interpreted as being small companies because when companies start out they are naturally quite small, but new corporations naturally tend to be smaller than established companies because they haven't had the time to grow.

This is, of course, only a first step. Our income tax code has far too many loopholes, the vast majority go to those who already make millions of dollars. They love to claim how the home mortgage interest deduction goes to the middle class while the benefits go to those who are able to buy the biggest houses, as in those who already have a lot, meaning that it is an extremely regressive tax cut. Giving capital gains a flat rate increases taxes on seniors who have invested beyond a specified retirement plan (unless if you withdraw over $230,000 from your stock fund) and decreases taxes owed by those who have millions of dollars in income per year. A flat tax is by definition a regressive tax and since people with lower incomes spend a larger percent of their income they are bad for the economy.

Hopefully with a President pushing for such actions there can be real change which will balance the budget which will increase funding for education and health care without cutting necessary services.