Liberals’ agreement on the need to cut corporate taxes represents a major conservative victory. They are finally confessing to the negative impact of taxes. The need to create new jobs in this country is actually taking precedent over their age-old ideology. Even more importantly, it will be hard for the Left to get their ideology back on its feet again for the next tax fight.
The Left’s rehabilitation of corporations is entirely new. For decades, corporations were the Left’s ultimate villains. Just as corporations are constructs of the legal code, so they became fantasy constructs of liberals.
Corporations served the Left’s goal of putting an evil face on American capitalism. That’s a tough task in America, where virtually everyone is a capitalist. Farmers, small businessmen and women, the middle class, even the working class — Marxists’ beloved “proletariat” — in America are all imbued with the capitalist spirit. Those who aren’t rich want to get rich — and what’s worse, they have the audacity to believe they can.
So rather than find an icon they could hallow, the Left found one they could hate. The Corporation fit the bill. In the liberal caricature, The Corporation took America into wars — profiting on the conflict and then redoubling it in the aftermath. The Corporation was apolitical and “anational,” with no loyalty except to profit. It was pure evil.
It was also pure fiction. But it was the Left’s reality and, like anyone’s reality, it was real to them. So altering it now — even if to merely rejoin everyone else’s — is still a dramatic change.
What happened? Most importantly, the Great Recession. Just as the 1970s’ stagflation destroyed Keynesianism, today’s slow and jobless growth has necessitated liberals’ return to non-ideological basics. For the Left, necessity is not only the mother of invention, but of revision as well.
Most of our competitors have lower corporate tax rates and greater economic growth, so America’s leading growth export — jobs — was bound to attract attention. If U.S. jobs were going to be retained, much less increased, the Left had no choice but to begrudgingly confess that America had to compete. Even if that meant accepting a lower corporate tax rate.
Today, no one is talking about raising corporate taxes. Even those who abhor what they see as “tax flight” abroad, recognize that a lower domestic rate is needed to reduce the incentive to leave. This is especially true when virtually every other nation’s tax rate makes them look like a tax haven in comparison to the U.S.
It is an axiomatic truth: the surest way to get less of something is to tax it. While liberals may not have gone so far as to embrace the obvious, at least they have had to admit the reverse: if you want more of something, reduce the taxes on it.
So now liberals have finally admitted that heavily taxing corporations bears negative economic consequences. Where do they go from here? How do they engage in their next tax fight. They will still have to push for tax hikes to bankroll their spending, but now they will be pushing from a compromised position.
They can seek to play the “good cop” — saying that they do not really want higher taxes, but that necessity demands them.
Or they can argue that higher taxes are a necessary means to an end — that they are needed to reduce income inequality. But that means implicitly admitting that having fewer wealthy people around would be a good thing, and the Left — let’s face it — needs as many rich people as possible to bankroll its spending.
Liberals will have to devise some explanation. Because taxes can’t be a negative on business and a positive somewhere else.
In boxing vernacular, the Left finds the ring being “cut down” — they have less room to run. And to paraphrase the great Joe Louis, increasingly they are discovering that they can’t hide either. As much as they deplore it, they are coming close to acknowledging that reducing spending is the only viable strategy for fiscal success.
Until liberals actually agree to cut those taxes, conservatives’ and America’s victory is only a moral one. But in today’s Washington, you take what you can get.