Well Done, Welspun (Editorial)

Forgive the rhyme. It tends to burst forth on hearing good news, and Arkansas had some last week. The pipe manufacturer Welspun, based in India, announced it was adding 200 jobs and investing $100 million in its Little Rock plant. The news coincided with other favorable economic indicators on the national level – and beautiful if unseasonable weather – to provoke something like spring in our hearts.

Cutting Corporate Taxes

Both President Obama and would-be Republican challenger Mitt Romney last week proposed cutting taxes and simplifying the notoriously complex U.S. tax code.
Obama’s plan is aimed at corporate taxes, nominally higher in the U.S. than in most countries. It would eliminate loopholes and subsidies, which, he said, would reduce the top corporate rate from 35 percent to 28 percent. It would, however, create new breaks for manufacturers in an effort to reverse decades-long decline in the U.S.; the breaks would mean a maximum effective tax rate for manufacturers of 25 percent.

Romney had already proposed cutting corporate rates to 25 percent. His proposal last week expanded on that by calling for a 20 percent reduction in the marginal tax rate on all taxpayers and limiting deductions and exemptions, "particularly for high-income folks," he said. The 20 percent cut would result in a top income tax rate of no higher than 28 percent, compared with the current 35 percent on the highest earners.

Tax reform is a noble if illusive goal. Achieving simplicity will, perversely, be a complex task. And achieving simplicity without adding to the budget deficit will be even more difficult.

We commend the concept of tax reform, knowing that everything rests on the details, and those were scarce last week. We also know that true reform is unlikely to be enacted in an election year. Finally, reform will require compromise in Congress. That hasn’t been in evidence in a long time. Maybe next year.