Billionaire Warren Buffett famously believes rich Americans should pay more taxes.
But his giant railroad, BNSF Corp. (Burlington Northern-Santa Fe), through its lobbying group, the Association of American Railroads, backs a new business coalition that wants Congress to cut the top U.S. corporate income tax rate, from 39.2 percent to about 25 percent.
The railroads have joined AT&T, Boeing, FedEx, Lockheed Martin, UPS, Verizon, and Walt Disney in pushing for the change. Nike, Time Warner Cable, and the National Retail Federation (Sears and other stores) have also joined the tax-cut group, which calls itself RATE ("Reducing America's Taxes Equitably").
Why 25 percent? Because that's all multinational companies typically pay in China, South Korea, Britain, the Netherlands, and other competing countries, according to an Ernst & Young study for the group.
Lower taxes would make big companies more likely to build factories and offices here, Jim Pinkerton, an officer at RATE who was an aide to President Ronald Reagan, told me Wednesday. This was after a meeting with antitax activist Grover Norquist and some of his congressional allies.
Why now, when so many big American corporations report high and rising profits, and American individual taxpayers face falling wages and scarce jobs?
Because Congress is finally paying attention to federal income and spending, which means tax reform, Pinkerton told me. "It's the same opportunity we saw with corporate tax reform in 1985 and '86," when the tax code went through its last major simplification, Pinkerton told me. He says he told Norquist, "Let's do it again!"
The group's cochair, Elaine Kamarck, who worked in the administration of President Bill Clinton, is lobbying Democrats, while Pinkerton works Republicans.
The Federal Reserve's 9-3 vote Wednesday to sell short-term Treasury notes and buy long-term securities is designed to drive mortgage rates down. Chairman Ben S. Bernanke and his majority say profitable companies are buying plenty of business equipment and software, but construction is still "depressed," and consumer spending is weak.
So they're trying to help, over objections from a minority that includes Philadelphia Fed chief Charles Plosser, who thinks that the economy is fixing itself and that the Fed shouldn't try too hard to jump-start it because that tends not to work. A balanced federal budget could help, though.
The Fed's new move isn't meant to restart business spending: "Businesses are flush with cash already, and it isn't rates that are stopping them from hiring or investing more. Companies are just uncertain about the direction of the economy, and demand is not growing fast enough to require greater job growth," writes Joel Naroff of Naroff Economics, of Holland, Bucks County.
Rather, the idea is to get homeowners to refinance their mortgages again, cutting payments and giving them a little extra cash to spend, while the economy slowly recovers, he concludes.
Just when we've gotten used to paying for dollar hamburgers, supermarket DVDs, and coffee with Visa and MasterCard debit cards, the card networks are preparing to nearly triple their fees, "killing" prospects for expanded debit-card use in stores and online, Janney Capital Markets analysts Thomas McCrohan and Leonard A. DeProspo say they are hearing - citing unnamed industry sources in a report to clients.
"Today, a merchant pays about 8 cents to the card networks for a $2 cup of coffee purchased with a debit card. Increasing this to 23 cents will kill the economics" behind letting customers use plastic to spend their own money, McCrohan writes. The change will cause shoppers to use their credit cards instead, he predicts.
Sounds like bad news for CoinStar's RedBox, McDonald's, Starbucks, and other high-volume, small-purchase merchants. McCrohan suspects Visa and MasterCard want "to help banks recoup lost fee income," after Congress cut credit-card fees.
"Brace yourself" for higher fees, warned Trish Wexler, spokeswoman for the Electronic Payments Association, which includes MasterCard. She declined to confirm details of pending fee increases but said merchants should expect them. Visa wouldn't comment.