HOUSTON, August 3, 2013 ― President Obama is a corporatist who is beholden to special interests ― Big Business and Big Labor ― and this past week he did two things that provided even further evidence of this. First, he put forth a proposal to lower the corporate tax rate for big businesses, but excluded tax cuts for small businesses and individuals.
Second, he unilaterally and unconstitutionally decided to delay the implementation of the employer mandate, but not the individual mandate, in Obamacare. Proposals like these, that are designed to help big business at the expense of individuals and small businesses, have been a staple of the Obama administration’s policies.
Retired Rep. Ron Paul defines corporatism as “a system where businesses are nominally in private hands, but are in fact controlled by the government … government officials often act in collusion with their favored business interests to design policies that give those interests a monopoly position, to the detriment of both competitors and consumers.”
On Tuesday, in a speech at an Amazon.com facility in Tennessee, Obama outlined his latest tax proposal, to drop the corporate tax rate from 35 percent, the highest in the civilized world, down to 28 percent (25 percent for manufacturers) in exchange for using the savings created by the tax cut on more infrastructure spending ― that is, giving more government work to his union cronies.
The corporate tax is levied on profits of almost all large businesses. That income is taxed again after it is distributed in the form of dividends to the shareholders, creating a form of double taxation. To avoid the double taxation and other governmental intrusions, many small businesses file as individuals. In fact, according to the National Federation of Independent Businesses, “at least 75 percent of small businesses file as individuals.”
In contrast, President Obama recently allowed the Bush tax cuts for those individuals making more than $250,000 annually to expire. When Obama was continuously advocating for raising taxes on those “millionaires and billionaires,” he conveniently failed to mention that many of the taxpayers filing as upper income earners are really small business owners.
Therefore, the only tax Obama is in favor of lowering will not apply to small businesses and individuals but only big business like Amazon.
The employer mandate in Obamacare requires firms with over 50 employees to provide government approved health insurance to all employees who work more than 30 hours per week, or face a fine. Due to issues with implementing the law and concerns about big business spending lots of money campaigning against Democrats and Obamacare in the 2014 midterm elections, Obama unilaterally decreed that only the employer mandate, and not the individual mandate, will be delayed until after the 2014 midterm elections. This way, he shows big business that if they collude with him on Obamacare, he will do all he can to help give them an advantage in their industries.
The employers, the people with money and political influence, ought to be very happy. Individual citizens, on the other hand, will still have to provide proof to the IRS of enrollment in a government approved health care policy or face a fine.
Big business continues to support policies that would seemingly be detrimental to them in order to both avoid the wrath of becoming an enemy of this administration and because of the competitive disadvantage that will be suffered by their smaller competitors.
Obamacare is a perfect example of Obama’s corporatism. According to the New York Times, President Obama and Senate Democrats negotiated behind closed doors with insurance companies and pharmaceutical companies for months in order to sweeten the deal so that they would all support the bill.
Once insurance companies got the guarantee that there would not be a government run insurance program that would compete with the private insurers, and pharmaceutical companies got the guarantee that Medicare and Medicaid could not negotiate the prices of drugs, the pot was sweetened enough. Pharmaceutical and insurance companies sat quiet as Obama continued to demonize them, and actually spent millions of dollars in support of Obamacare.
The Marketplace Fairness Act is another example. It is designed to collect state sales taxes on online sales, in order to “level the playing field for brick-and-mortar stores” in states that are required to collect sales tax. It will require any online sales business to comply with all 46 states’ income tax policies, and the hundreds of municipal income tax policies. Amazon and other big businesses support it because, as the online market continues to grow, it will impose enormous administrative costs on new companies.
A final example is the Dodd-Frank banking reform bill, a 1,500 page disaster that was designed to regulate banks and Wall Street in order to avoid another episode like the 2008 housing crash. Surprisingly, a bill meant to impose many new costly regulations on big banks, was supported by most big banks, including JPMorganChase and Bank of America. This is because these regulations do not break up those banks that are “too big to fail,” but the bill does prevent medium-sized banks from merging and becoming too big to fail, solidifying the big banks’ competitive advantage.
Corporatism is the most manipulative form of collectivism yet created. It allows the rulers to effectively make business and market decisions without owning the means of production directly. Therefore, whenever the regulations and restrictions imposed by the collectivist government negatively affect the economy, the government can claim that it is the evil “fat cats” and capitalists who are responsible. The business owners stay quiet, because they know it is all lip service and they will get their handouts for being good lap dogs, or face the wrath of big government.
It is very true that Obama is not the first corporatist president, but he promised to be different, and this week’s proposals emphasize that, unfortunately, the new boss is the same as the old boss.
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