More slices from a smaller pie: it has become quite apparent that the Obama Administration's major objective is a complete redistribution of the nation's wealth through a series of severe regulatory programs and onerous tax-and-spend initiatives.

• Author: Weidenbaum, Murray
• Position: National Affairs

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OVER THE COURSE of U.S. history, important shifts have occurred in the nation concerning the balance of power between the public and the private sectors and, especially, between the Federal government and business. Another such major shift now is taking place.

Public attention has been focused on a variety of governmental efforts to assist or "bail out" strategic sectors of the private enterprise economy, which especially have been hard hit by the combination of credit crisis and macroeconomic decline. New government activities have ranged from fundamental expansions in the role of the Federal Reserve System to a temporary program of cash for clunkers. Specific proposals for additional government action include a second round of economic stimulus and an ambitious reform of health care and its financing.

Yet, we need to go beyond the urgent, but ephemeral, issues of the day to focus on the underlying, but perhaps more durable, trend of economic policy that is developing: the cumulative impact of new and proposed Federal expenditure, tax, credit, and regulatory policies on the ability of the private enterprise system to perform its traditional function of producing goods and services for the American people.

Tax policy. The general approach being taken by the Obama Administration can be gleaned from the 131 pages it takes the Treasury to present the highlights of its new revenue proposals. For the period 2009-10, the largest Administration tax initiative affecting business is to expand the net operating loss carryback. This technical provision has the short-term merit of reducing the tax liability of business taxpayers by more than $60,000,000,000 in 2009 and 2010 without the likelihood of arousing widespread opposition. Over the longer term, however, the consequences are in the opposite direction--to increase overall business tax liabilities through 2019.

The Obama Administration also has developed a great variety of proposals to increase the tax burdens on American companies operating overseas. Many of the provisions are detailed and some quite obscure. Here are a few: increase reporting penalties on foreign trusts; require more information reporting on offshore entities and the transfer of assets to foreign financial accounts; establish a negative presumption regarding failure to file a report for accounts with nonqualified intermediaries; extend the statute of limitations for reportable cross-border transactions; and establish a negative presumption regarding withholding on determinable or fixed gains, profits, or income to nonresident aliens and foreign entities.

The Treasury estimates that enacting these and other similar changes will increase taxation of international business by about $210,000,0000,000 over the next decade.

A variety of other changes in the Internal Revenue Code will increase the domestic paperwork burden on businesses. The penalties for fairing to file information returns (such as Form 1099) promptly and accurately are raised in a very complicated fashion involving three tiers of penalties. In total, the various "tax informational reporting" changes are expected to increase business taxation by more than $10,000,000,000 from 2010-19.

Buried in the fine print of the Treasury's tax proposals is the reinstatement of the corporate environment taxes that were eliminated at the end of 1995. The justification for reviving these special taxes is "the continuing need for funds to remedy damages caused by releases of hazardous substances." However, these taxes were eliminated because no connection has been shown between the environmental tax liability imposed on any company and its release of hazardous substances.

Numerous other Treasury proposals share a common...