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By Ben Cohen

Matt Taibbi on Obama's Flopped Tax Reform Pledge:

For those who don’t know how this works, the corporate tax system
has been insane for more than a generation. Companies can move their
profits offshore and defer any taxes on foreign profits until that
money is repatriated. Even better, under the current system, companies
can claim immediate deductions on their deferred-taxable income.
Imagine if you could defer your federal taxes every year but claim your
deductions nonetheless; you might end up paying a zero tax rate, or
having the government actually owe you money. That is the situation
with corporate taxes; although the official tax rate in this country is
high enough, around 35 percent, in reality the effective tax rate for
most years is far below that. In 2004, a tax amnesty year, the
effective corporate tax rate was just 2.3%.

Obama’s plan didn’t end the deferrals (although he sort of promised
to do that), but did end the immediate deduction system — except for a
loophole exempting deductions for “research and development.” That last
loophole was a blatant giveaway to the pharmaceutical industry, which
was very generous in its support of Obama in the election, but
whatever. The point is that the deferral system will remain in place,
thanks in large part to intense lobbying from the usual suspects (the
Chamber of Commerce, the Business Roundtable, etc)