Bush's Top Economist Criticized for Patenting Ways to Cut Corporate Taxes

On Thursday, Tax Analysts of Falls Church, Virginia, issued a statement that Edward Lazear, Chair of President Bush's Council of Economic Advisors, is attempting to patent a way for corporations to minimize their tax bills, and that this effort is undermining the tax system.

A patent application filed with the United States Patent and Trademark office in October of 2006 lists Lazear and Swiss economist Alexandre Ziegler as inventors of the tax-minimization method. At the time, Lazear had been the President's CEA Chairman for seven months.

According to the non-profit Tax Analysts, the patent application flies in the face of warnings from the Treasury Department, IRS, Congress, and the Oval Office that such patents are causing damage to the tax system of the United States.

However, last month the President announced that he is considering a new plan to cut tax rates for United States corporations in order to try to make them more competitive in the global marketplace. His speculation has fed the flames of the fire battle with the Democratic-dominated Congress concerning issues of federal spending and taxes.

The Democrats are in favor of increasing taxes on individuals, business, and corporations to what would be a historically record level.
Bush's economic advisor have brought him a series of ideas to restructure corporate taxes, some of which get rid of narrowly targeted tax exceptions and instead pay for a broader, comprehensive rate cut. Bush has said that he feels like sending a corporate tax package to Congress, but he does not know how it will be met from a political angle.

Cato Institute senior fellow Daniel Mitchell has written: "Unfortunately, America is falling far behind in the global trend of reducing corporate tax rates. The U.S. corporate tax system is an anachronism that discourages growth and undermines job creation. High tax rates are driving jobs and investment abroad. The longer that policymakers wait to cut the corporate tax rate, the greater the likelihood that the geese that lay the golden eggs will fly across the border."

Lazear has been criticized, especially by those who favor maintaining or increasing federal government programs to aid the poor, including raising the capital gains tax from its current 15% level to nearly 35% if need be to fund such programs, for stating that he does not like the term "income inequality" because, in his view, this phrase misleads people into believing that the wealthy are getting their money as ill-gotten gains which they steal or unjustly squeeze out of the poor.

Sources:
Tax Analysts (PR Newswire), "Guess What President Bush's Top Economist is Doing in His Spare Time?"
Cato Insitute, "Corporate Taxes: American is Falling Behind"