Rep. Michelle Bachman (R-MN) has a brief article on her Townhall blog today that makes a very good point: if the administration and Congress really wanted effective stimulus for the economy (instead of a pork fiesta meant to pay off Democratic backers and buy reelection), the quickest way to do it would be to lower the corporate tax rate, currently among the highest in the world:
The trend for countries around the world is to slash corporate tax rates to spur economic growth, yet Washington has yet to come to grips with this financial reality.
Currently, America’s combined corporate tax rate sits at 40%, and it has been there since 1994. Last year alone, 23 counties slashed their corporate rates, including Canada, China, Columbia, the Czech Republic, Denmark, Germany, Hong Kong, Israel, Italy, Malaysia, New Zealand, Singapore, South Africa, Spain, Switzerland, and the United Kingdom.
According to a new study release by the accounting firm KPMG:
- “U.S. corporate income tax rate is higher than all other global regions—14 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations. Of the 106 countries surveyed, only the United Arab Emirates, Kuwait, and Japan impose a higher corporate tax rate than the combined rate of 40 percent. The United Arab Emirates and Kuwait each have a staggering tax rate of 55 percent; Japan’s rate is 40.69 percent.”
The Heritage foundation reports that:
- "Even Europe’s old welfare states have joined the aggressive tax cut parade: Sweden has cut its corporate tax rate to 28 percent from 60 percent; Norway’s rate has dropped over 50 percent to 28 percent; and Denmark’s corporate tax rate is now 25 percent."
Businesses that want to survive are rational concerns: they want to minimize expenses and maximize profit. (Detroit excepted.) If country A offers comparable services and a far lower tax rate than country B, the choice of where to locate the business is simple. Budweiser merged with a Belgian brewer and relocated their corporate headquarters to Europe because the taxes are cheaper there. That Europe is a tax haven compared to the United States says a lot about the business environment here, and none of it good.
If Obama, Reid, Pelosi, and the rest of the progressive-dominated congress really wanted to jump-start the economy, cutting taxes and freeing up the funds for investment in growth and new jobs would be a great start. It would certainly have a much faster effect than the trillion-dollar
National Penury Act stimulus bill, much of which won’t even start being spent until 2011. And, if combined with federal spending cuts, it wouldn’t increase the deficit or the national debt.
But that assumes the President and his allies in Congress are interested in anything other than growing the reach of the federal government and creating a long-term Democratic majority through voters hooked on federal largesse.