All In   |  July 30, 2013

Can the GOP take 'yes' for an answer?

As President Obama proposes a corporate tax cut that the GOP would normally favor, some Republicans are still seriously threatening to shut down the government over Obamacare. Republican Congressman Jason Chaffetz joins Chris Hayes to talk about what the two sides can agree on; then economist Davis Cay Johnston tells the truth about corporate taxes in America.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> good evening, from new york. i'm chris hayes . tonight on "all in" a verdict in a trial the likes of which this country has not seen in 150 years. literally. why it matters to every american what wikileaker bradley manning was charged with and what he was convicted of today.

>>> also tonight religious scholar raza aslan, being the subject of the most embarrassing interview fox news has ever done.

>>> plus, shocking video of white youths rye rotting and running rampant through the streets of huntington beach , california. do we need to have a national dialogue about the violent destructive white youth culture in this country? i think we do, and it's a conversation you won't want to miss.

>>> we begin tonight with president obama who took his campaign-style jobs push to chattanooga, tennessee, today, where he presented himself as a principled idealistic fighter for the middle class who maybe also happens to have the most remarkably poor short-term memory in all of washington. the president using today's barnstorming speech to extend his hand to republicans to offer them a deal even as it's a remote possibility.

>> i'm willing to work with republicans on reforming our corporate tax code as long as we use the money from transitioning to a simpler tax system for a significant investment in creating middle class jobs. that's the deal. and, wroyou know, i'm just going to keep on throwing ideas out there to see if something takes.

>> that last ad lib line from the president, of course, reflective of the ongoing tension with the republican party opposed to almost everything that has the president's name attached to it.

>> sometimes there were ideas that historically had republican support and for some reason suddenly republicans didn't want to support them anymore. there are a growing number of republican senators who are trying to work with democrats to get some stuff done. that's good news. the bad news is that rather than keep our focus on what should be our priority, which is growing our economy and creating good middle class jobs, we've seen a certain faction of republicans in congress hurt a fragile recovery by saying they wouldn't pay the very bill that congress racked up in the first place, threatening to shut down the people's government if they can't get rid of obama care.

>> not to disappoint, republican senator ted cruz today openly advocated for a government shutdown in a speech for theerer t heritage foundation . he said the 1995 government shutdown when bill clinton was president and newt gingrich speaker of the house , the one that has never been repeated because it thoroughly backfired on republicans , that one, cruz said that one was not a bad idea.

>> i think the received wisdom that '95 was a disaster i think is completely wrong. i think it was important that republicans stood for principle and it actually led to some serious solutions to the fiscal and economic challenges facing this country.

>> meanwhile, house speaker john boehner 's reaction to the president's proposal to cut corporate taxes was an odd one. boehner's spokesman saying, "the president has always supported corporate tax reform. republicans wan to help families and small businesses , too. this proposal allows president obama to support president obama 's position on taxes and president obama 's position on spending while leaving small businesses and american families behind." that statement exactly articulates the problem. to republicans it's about whose idea it is and not the idea, itself. it doesn't matter if republicans like the idea. if the president likes it, too, they're not having it. if republicans want lower corporate tax rates and the president wants lower corporate tax rates, why doesn't that open the door to at least a negotiation over the thing both sides agree on? joining me now is congressman jason chaffetz , republican from utah. congressman, last week we had harry belafonte on the program who squashed his beef with jay z on our program. i'm hoping to go two for two here. i'm going to ask you if you're interested in taking the president up on his offer in the cut in the corporate tax rate, some near term spending on job creation in exchange for the cut on the corporate rate.

>> hey, look, if the president has an idea in the economy, of course we're going to be an come dating and listening to him. not going to blow it out of the water because he said it. we want to broaden the base, lower the rates and keep it revenue neutral. what the president is advocating is he wants to increase revenues and that's where it becomes inpalatable. i want to talk more about the economy.

>> the revenue increase would be a very short-term spike in the revenue that would be based on how the base was broadened. it would be revenue neutral, my understanding, in terms of the way details are worked out. it would be revenue neutral over the life of the reform. would you be interested in something like that?

>> i get very concerned about a tax increase. that's the way i perceive it. now, even gene sperling , head of the white house national economic council said there were no details released in the president's plan today, so i want to see the meat on the bones. democrats are very quick to criticize paul ryan and others for not offering details. well, i would lob that same criticism back at the president today. let's hear some details on this, but do we need tax reform ? of course, we're going to engage in that. probably going to happen in the fall. but i think the direction of the president, at least as he initially laid it out, i disagree with the policy, not the fact that the president offered it.

>> congressman, hooere's what i have to say about this. i have a tremendous amount of admiration for the discipline of the tea party caucus in the house, as a kind of ideologue, myself. i have to say, the way i read the situation is i am so thankful for people like yours a yourself and other principled conservative republicans in the house for saying no to grand bargain deal after grand bargain deal after grand bargain deal because what it's meant is things the president has wanted to do that would really anger folks on myself on the left like changing the way social security benefits are calculated or low lowering the corporate tax rate, none of that gets done. in some ways you're the best ally i have in the u.s. government to make sure these deals don't get struck.

>> that scares the living daylights out of me.

>> that's my point, though. my point is if you take yes for an answer, you're going to get policy that's closer to the things congressman chaffetz like than the things chris hayes likes, yet the republican party seems incapable of saying yes.

>> i disagree with that. i sponsored a bill that said people who are a plying for and trying to get federal grants , if they haven't paid their federal taxes then they shouldn't be able to get those grants. guess what? that was then- senator obama 's idea. i took that bill, i sponsored it. i passed it in the house of representatives . it's sitting there in the united states senate . i can point only to the democrats for holding this up, but there's an idea that was originally barack obama 's idea. i love it. how come the white house isn't helping me pass something that was the president's idea? and if there's a criticism of house republicans for being obstructioni obstructionists, what is it president obama believes in that the republicans have suggested? certainly there's got to be something.

>> lowering the corporate tax rate. he wants it bring it down. i don't want to lower the corporate tax rate. lefties don't want to lower the corporate tax rate. republicans want to lower the corporate tax rate. that's exactly the kind of thing there's common ground on.

>> it depends what you're going to do with it. he wants to broaden the base by letting go of loopholes, then he wants to raise revenue. we don't want to raise taxes. the president wants to raise taxes. that's the difference.

>> the concern about raising taxes is an ideological opposition to raising taxes in any way, shape or form?

>> no, look, we just fundamentally do not believe that we're one tax increase away from prosperity in this country. and there are lots of things we can do to move the economy forward. look, i am not one. i can't speak for everybody, but i am not one who's going to simply dismiss it because the president offered it. he's the president of the united states . of course i'm going to listen to his ideas. i want him to listen to our ideas as well. it won't be a one-way street.

>> the idea is he keeps hearing from the house of representatives as 40 votes to repeal obama care and i feel that maybe has a little bit of an effect on how seriously, how much the white house thinks they're getting a good give and take here. congressman jason chaffetz , i appreciate you coming on today. i'd love to have you back any time you want to come.

>>> joining me now, david kay johnson , a columnist for taxanalyst.com. david kaye johnson , this is what you hear in the argument about corporate tax rate. both from kind of center left economist, establishment types, republicans . they say, look, we have the highest corporate tax rate in the world. it's making us competitive. everybody believes we should bring it down. everybody believes in tax reform . are they right?

>> well, we do live in a competitive world, chris, and other countries have lower rates. just lowering the rates doesn't solve anything. there's a proposal here in the president's speech today which had basically nothing new in it for a minimum tax on foreign earnings. trust me, it will take somewhere between two and five years for the tax engineers to figure out how to turn that into the maximum tax.

>> right.

>> and pay less --

>> that's an iron law of tax policy . the minimum becomes the maximum.

>> that's exactly right.

>> so my question to you -- here's the problem i have with the way we talk about tax reform . people talk about tax reform like there's going to be some process in which a bunch of martians come down and make a tax reform system that is completely unencumbered by all of the industry capture and all of the corruption of washington that's produced the already existing tax code that everybody claims to hate.

>> right. this is not about tax reform . this is about the president trying to maneuver a position where the republicans lose control of the house in 2014 . he can't have any legacy of the kind he wants if the democrats don't get back the house. and this idea that this is tax reform , they're going to talk about in the fall, it's not tax reform . it's tax overhaul and tax giveaways. it is not reform. it's overhaul.

>> okay. what do you mean by that? what's the distinction between those two things?

>> well, this is really about the 2,700 companies that own 80% of the business assets that get something like 93% of all foreign tax credits that defer paying their taxes into the future and then loan the government the money to collect interest on the taxes they didn't pay so we end up as losers --

>> wait, is that a real thing? is that a real thing?

>> oh, yeah. oh, yeah. they actually profit off their taxes. i wrote a column for "national memo" and for tax analysts detailing how this happens. how you make money off the tax system . so here's a suggestion, chris. if you want to get a real debate about taxes, let's eliminate the corporate income tax and talk about how to make up the revenue somewhere else . in theory, that would lead to a huge inflow of capital into this country and a flourishing of jobs. by the way, i don't think that's what it would lead to. it would take the issue away from the republicans if the president would get out there and say, let's debate getting rid of the corporate income tax .

>> i've heard liberals who say this. this is an insufficient way. we have this statistic here which i think at some point came from a david cay johnson article i read about the gap between the actual rate, 35%, and the effective rate , what corporations pay, 12.6 %. when they trod out the 35%, that's smoke and mirrors . are you in that camp of, like, hey, let's go -- let's do it, let's get rid of this thing that no one's collecting anyway and talk about how we get the revenue out of the folks that are wealthy.

>> well, sadly you can't do it all by itself. you would have to do other things that i suspect the very wealthy would not like. remember, it's the top tenth of 1% that own all the means of production in the country. and they're certainly going to be against any higher taxes, even if it means lower corporate taxes because those big companies aren't paying that much now to begin with. why would they want to give up that sweet deal?

>> right.

>> here's the issue that obama can take, however. there's significant amount of evidence that the cost, or what economists call the incidence of the corporate income tax , who bears it, it's not passed forward to customers. it used to be by owners. there's a lot of ef evidence now it's being born by workers through lower wages.

>> fascinating.

>> we're not seeing wage growth. if that's the case, then, yeah, the democrats should change the ball game by bringing up a new argument.

>> david cay johnston , thinking outside the box . using the term, means of production . getting through the segment. pulitzer price winning journalist david cay johnston . thank you very much.