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Big business loves big government

December 21, 2012
By U.S. Congressman Raul Labrador

Last week, the Business Roundtable, an association of some of America’s largest multinational corporations, sent a letter to Congress suggesting that tax hikes on individual taxpayers and small businesses should be considered to avert the ‘fiscal cliff.’

Nationally, the ‘fiscal cliff’ talks are seen as a debate between the two parties. But the Business Roundtable letter reveals another battle that is not as apparent to the American people, one between big business and small businesses across the country.

I was more than a little surprised to hear these businesses asking for higher taxes on individual taxpayers and small businesses since I have seen many of these same CEOs parading through Congress over the last two years asking for a significant reduction in the corporate tax rate so they can become more competitive. I actually agree with them that the corporate rate is too high in the United States and it must be reduced so we can be globally competitive again.

So why would these CEOs be asking for tax rate deductions for their companies while begging us to raise tax rates on individuals? How do we explain this apparent contradiction?

It’s simple.

Washington's dirty little secret is that big business loves big government. Big business loves to use its power and influence to exact as many concessions from big government as possible. Because big business can afford accountants, lobbyists and regulators, big business ultimately ends up with a tax code and regulatory environment that benefits them at the expense of their smaller competitors.

In essence, they use big government to decrease or eliminate competition. The more government grows, the more big business benefits because only they can afford the overreach of government.

Let me share with you what some of President Barack Obama’s biggest supporters have done over the last few weeks. Business entities like Costco and the Washington Post Co. have announced that they will pay their shareholders next year’s dividends before the end of this year. Think about that. In order to protect their shareholders from the huge tax rate increases they advocated for by supporting Obama and his policies, they are paying their dividends this calendar year before the new tax rates take effect. Costco even borrowed money—millions of dollars—in order to prepay these dividends.

Don't get me wrong; I know that they are acting on sound financial advice, but it is more than a little hypocritical.

Raising taxes is not a solution to our current fiscal crisis, particularly at a time of such high unemployment. Higher taxes would further damage the economy and hurt individuals, families and the small businesses that employ approximately half of the American workforce. According to the Joint Committee on Taxation, 95 percent of all non-farm small businesses in 2009 filed taxes on the owner’s tax Form 1040, paying income taxes at the individual rate.

Tax increases will take needed resources away from investment and jobs. Uncertainty in the tax code creates significant planning hurdles for businesses, impacting hard-working families for the worse.

What’s more, raising taxes on anyone still fails to address the real issue of runaway government spending. In DC both parties love to spend. Some borrow money today and promise future spending cuts and others increase taxes today and promise spending cuts later. The problem is that the spending cuts never happen.

The ‘fiscal cliff’ won’t be solved by raising tax rates. The problem is bigger than that. Our current tax structure is complex, over-bearing and often unfair. When some large corporations pay little or no taxes, the American people become frustrated with the system. This is why I support tax reform that incentivizes success and treats all Americans fairly and equitably.

I have been hearing from many of you about what needs to be done to get our fiscal house in order. I remain committed to finding a balanced solution to the ‘fiscal cliff’ but any solution must involve savings from serious entitlement reform and higher revenues through pro-growth, comprehensive tax reform.

As a conservative, I believe in small government and in the individual. I did not become a conservative to defend the rich. I became a conservative because I believe that my party has a message that resonates with the American people.

The American economy can grow and thrive if we simply level the playing field and allow businesses to succeed through innovation, competition and customer service instead of through special access to lawmakers and a loophole-filled tax code.
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