There he goes again. Huntsman's op-ed ran in the Sept. 6, 2011 Wall St. Journal: Reigniting the Entrepreneurial Spirit.
As though enterpreneurs aren't being entreprenuers right now. HOw about the group that made the news last night--two young men who realized that they could repai iPhones and other electronic gear for half the amount that the manufacturers charge and still make a cool profit (YoubreakIFix)? If you have a good idea and you try to make it work, odds are you can make money off it. That makes you an entrepreneur.
Huntsman seems to think that making the tax code friendly to Google and other Big Corps is the way to encourage entrepreneurialism. That's like saying that taxing the wages of partners in private equity funds at capital gains rates encourages entrepreneurialism--it's a big laugh. Carried interest managers aren't entrepreneurs; they are speculators who buy cheap, breakup, and sell expensive.
Huntsman wants "tax simplification, regulatory reform, and changes in energy and trade policy." That's just more of Reaganomics--tax simplification means tax cuts for business and the 'owner' class, regulatory reform means deregulation, and changes in energy and trade policy mean deregulation and opening up of protected areas for exploitation. None of those things will create jobs, foster entrepreneurialism, or create a sustainable American economy.
Huntsman says he favors a "revenue-neutral tax overhaul modeled after Ronald Reagan's 1986 tax reform package--which will require taking on sacred cows." So he is willing to eliminate a few carveouts and deductions, that's good. But he wants to lower rates even more, that's bad. In fact, he says "flatter" is "fairer"--that's a weird view of fairness in a country that has consistently favored progressive taxation as a way to ensure that the wealthy pay for the many advantages bestowed upon them by government. The 1986 tax cut worked as well as it did (it was no panacea) because rates could be cut in half and still be at 35%. Today's rates are already at tax haven lows and can't really be cut any further without decimating important government programs. Moreover, one of the key 1986 reforms was to eliminate the preferential rate for capital gains and tax the wealthy on their income the same way that the middle class is taxed--all at ordinary income rates. Huntsman wants to couple rate reduction from all time lows with elimination of all taxes on capital gains! He of course calls that 'eliminating the double taxation on investments" but as I've explained several times before, that use of "double taxation' is mostly false, especially in respect to investment in companies' stocks. We already have a special tax code provision that provides for very low taxation on the capital gains an entreprenuer invests in a company directly. But the preferential capital gains rate goes far beyond that and applies to secondary market capital gains. That has nothing to do with direct investment. Moreover, we have accelerated depreciation, bonus depreciation and expensing provisions that essentially make investment in business equipment very close to tax free--there's no 'double taxation' involved.
Huntsman repeats his proposed new rate schedule--8%, 14% and 23%--combined with "eliminating deductions and credits". That means that the poor and middle class would bear an unconsciounable tax burden, while the wealthy would pay even less than most of them do today. He says he'll "make business tax rates globally competitive"--that should mean RAISING rates, since the US business tax rates is already at tax haven status among the 40 OECD countries. But of course, he actually intends to lower business taxes even further, for the benefit of wealthy managers and owners.
Huntsman's objections to regulations are equally misleading. Regulations are the way that government acts to prevent business from passing along costs to taxpayers as 'externalities'--costs that they don't have to take into account to make a profit, but that create real harms for others, such as air pollution, long term ecological destruction, ruination of mountains (strip mining), ruination of streams (sewage discharge), etc. Huntsman has already reached judgement on the NLRB's consideration of Boeing's plant relocation to a right-to-work (union destroying) state. He similarly has decided that the Dodd-Frank financial system overhaul represents "another regulatory sin" because it creates "massive compliance costs." It appears he'd rather that the too big to fail banks continue to speculate freely in interconnected ways that end up creating a financial crisis like 2007-2008. After all, the banksters will enjoy that, and the politicians will benefit from the big campaign contributions. But the rest--ordinary Americans that make up the vast majority of living, breathing 'beneficiariies' of the kind of unsteady, speculative, volatile financial system created by deregulated banks--will suffer. Huntsman understands taht the regulations that protect ordinary bank customers may face the big banks to "choose between downsizing or facing much higher capital ratios." He casts this as a parade of horribles resulting from Dodd Frank. Oddly, because that's actually a desirable result of banking legislation--if only that were a real possibility, it would help to end the 'too big to fail' problem!
Huntsman as president also would favor Reagan's mantra of privatization--he would 'privatize' Fannie and Freddie and "let the housing market clear". In other words, he would let private companies now garner all the benefit of the federal taxpayer dollars in vested in Fannie and Freddie (he posed no conditions about returning all the benefits of the long-term federal guarantee) and he wouldn't give a damn about ordinary Americans who have underwater mortgages. There's nothing in his proposal for clawbacks on mortgages in bankruptcy or otherwise.
Huntsman's warmed-over reaganomics proposals for favoring big business over ordinary Americans through a deregulatory regulatory policy, tax cut tax policy, and privatization don't address the right issues, don't promote entrepreneurialism, and are not fair.