Mimsy Were the Borogoves

Editorials: Where I rant to the wall about politics. And sometimes the wall rants back.

Sarah Palin’s Gordian Knot: Slicing crony capitalism

Jerry Stratton, September 3, 2011

Sarah Palin wants to cut the knot tying big businesses to big government. The way she wants to do this: remove, not reduce, the corporate income tax. To hear this from a potentially major candidate is huge, especially in the context in which it’s most important, which is crony capitalism. The corporate income tax is probably the Gordian knot of crony capitalism. Federal officials use it to extort support, and major corporations use the lobbyists that they must hire to deal with the tax, to lobby for other federal givebacks in exchange for even more support for politicians. It’s a huge vicious circle that benefits larger businesses over smaller businesses who can’t afford teams of federal lobbyists.

There’s a huge difference between lowering the corporate income tax and getting rid of it entirely: as long as it still exists, businesses have to hire experts in government bureaucracy in order to deal with it; they have to hire experts in government lobbying in order to make sure the onus of the tax applies to their competitors rather than them. They have to maintain a line to federal politicians. Take the tax away entirely, and they no longer have to do any of that.

That line goes two ways. Through manipulation of the corporate tax code, politicians can convince businesses to do things the business would never consider doing without the tax break—all without the politician passing any controversial anti-privacy law. Take away the tax, and congress can no longer offer a tax break for supporting more surreptitious surveillance or instituting drug testing on employees.

A lowered tax still allows politicians to benefit from crony capitalism. We can’t end corporate welfare without ending the incentive for big businesses to lobby for it.

Another fundamental she mentions is that government cannot create jobs. Only the private sector can. Every job “created” by the government needs to be paid for by taxes on private sector employees.

“We need sudden and relentless reform… this requires deeds, not just words. The way forward is no more politics as usual… Right now, we have the highest federal corporate tax rate in the industrialized world… this doesn’t generate as much money as you would think, though, because many big corporations, they skirt federal taxes, because they have the friends in DC who write the rules for the rest of us. This makes us less competitive and restrains the engine of prosperity. Heck, some businesses, they spend more time trying to figure out how to hide their profits than they do in generating more profits so that they can expand and hire more of us.

So to make America the most attractive and competitive place to do business, to set up shop here, and hire people here, to attract capital from all over the globe that will lead to an explosion of growth, instead of chasing industry off-shore, I propose to eliminate all federal corporate income tax. And hear me out on this. This is how we create millions of high-paying jobs. This is how we increase opportunity and prosperity for all. But here’s the best part: to balance out the loss of any federal revenue from this tax cut, we eliminate corporate welfare and all the loopholes. We eliminate bailouts.

This is how we break the back of crony capitalism, because it feeds off corporate welfare, which is just socialism for the very rich. We can change all that. The message, then, to job-creating corporations is, yeah, we’ll unshackle you from the world’s highest federal taxes, but you will stand, or fall, on your own. Just like all the rest of us out on Main Street.

See, when we empower the job creators our economy will soar. Americans will get back to work. This plan is a first step in a long march toward fundamental restoration of a strong and free-market economy, and it represents the kind of real reform that we need. And folks, it must come from you. It must come from the American people. Real hope is in you.

Real hope isn’t in an individual. It’s not in a politician, certainly… don’t wait for the permanent political class to reform anything for you. They won’t. They can’t. They can’t even take responsibility for their own actions.

That’s from about 30:00 in the video, but you should watch the whole thing. This is the voice of a true reformer.

Update: added a link to a transcript of the speech and to John Nolte’s commentary.

In response to What is the purpose of a politician?: Is the purpose of a politician to hold political office? Or is the purpose of a politician to do right by their constituents?

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