Introduction
Administrative systems must control taxation strategies and processes to ensure effective taxation that matches the administration’s objectives to promote a secure and attractive investment environment. Under President Obama’s administration, there were substantial changes in taxation and income wages to promote fair tax for all Americans. The former president fought to create a more equitable taxation system to help middle and low-class families improve their paychecks while preventing taxation breaks and loopholes among wealthy Americans. This essay discusses the taxation policies proposed during the Obamas administration, their implementation, and an evaluation of the policies’ achievements to date.
Background
America’s corporate taxation is relatively narrow to other countries’ corporate taxation systems. The taxation system contains many tax breaks, loopholes, expenditures, and taxation plans which reduce the tax base (Porch, 2017). As a result, corporate businesses and policymakers cannot decide on investments, financial aid, and modes of business interactions to use. The tax base also limits job creation while allowing big corporate enterprises to invest in global markets, which reduces tax liability by shifting profits overseas (Porch, 2017). Additionally, the taxation system burdens middle and low-class individuals and families by imposing heavy taxes while the rich invest in foreign investments that are not taxed.
Implemented Policies
In August 2011, Obama signed a bipartisan agreement that ensures fairness in taxation. In the agreement, the former president set priorities to ensure that the government does not default in reducing expenditure across all sectors and covering tax revenue from tax relief for middle and low-class individuals. Obama’s economic stimulus package, which aims at tax reduction for middle and low-class families, was approved by Congress in February 2009 (House of Representatives, 2017). The package includes tax reduction for middle and low-income earners, which involved a budget cut of $288 billion in taxes, individual tax reduction by $400, and family taxes by $800 (House of Representatives, 2017). In 2010, Obama extended the Bush tax cuts act, including creating jobs and increasing tax relief and reconciliation.
Evaluation
To achieve the above tax policies, Obama proposed eliminating tax loopholes and reducing corporate tax rates. Loopholes and high corporate tax rates distort and hurt economic growth and productivity, particularly in middle-class families. The proposal suggests a reduction in unnecessary government expenditure where the reduced spending will cover the reduction in corporate tax rates, which will reduce from 35% to 28% (Porch, 2017). The reduction will also offset income tax relief from middle and low-class earners, improving their paychecks and promoting taxation fairness. Additionally, Obama proposed the annulment of the right of large corporates to invest in overseas profits and strengthen the international taxation system. Obama suggested establishing a minimum tax rate of 19% on foreign earnings, accumulating income for America (CNN, 2021). As a result, more multinational businesses will return to the United States to promote industrial growth, enhance technologies and pay dividends that will profit America.
Future Of the Policies
Since Obama’s taxation policies were enacted, the American economy has continued to grow despite predictions that the policies would weaken the economy. Although reducing the tax rates lowers tax revenues over the years, it may have long-term effects on tax rates, leading to more considerable loopholes (Calio, 2017). Re-implementation of the Bush tax cuts ensures fairness because the wealthy also shoulder the burden of taxation while the middle and low-class have tax relief. Ferrara (2018) states that cutting taxes will reduce the tax debt by $800 billion or more. The policies have also helped cover education and childcare costs by providing additional tax relief to middle and low-class families over the years, promoting fairness.
Conclusion
Obama’s taxation policies reduce unnecessary government expenditures in security and non-security government sectors and create fair taxation for middle and low-class earners. The United States corporate tax rates are very high, making unhealthy economic competitiveness in a global economy. Therefore, reducing corporate tax rates will attract more local and foreign investors to build facilities and industrial plants in America, encouraging economic growth and global economic competitiveness.
References
Calio, V. (2017). Winners and losers of tax reform. Njbiz.
CNN, 2021. Grover Norquist on President Obama’s rhetoric.
Ferrara, P. J. (2018). How President Trump can engineer a soft landing from president Obamas policies. Investor’s Business Daily.
House of Representatives. (2017). The 2017 joint economic report (pp. 1-167). Washington D.C: U.S Government publishing office.
Porch, S. (2017). Tallying the facts of Obama’s economic legacy. TCA Regional News.