It is somewhat disconcerting that every single European welfare state – even France and Sweden – has a lower corporate tax rate than the United States. But embarrassment is the least of the problems. The real issue is that a high corporate tax rate means it is more likely that jobs will migrate to nations that don’t treat companies as milk cows to nourish big government. As Investor’s Business Daily explains, a high corporate tax rate means less investment:
Four more developed nations have cut their corporate tax rates this year. Yet the U.S. sticks with second-highest corporate rate among OECD nations. This puts us at a competitive disadvantage. Only Japan, at 39.54%, has a higher corporate rate than the U.S., which at 39.1% is a bit lower than last year but still far higher than the average (26.29%) of the 30 Organization for Economic Cooperation and Development nations. That average was brought down from 26.55% after the Czech Republic, Sweden (yes, the country where soft socialism has supposedly been perfected), Canada and South Korea cut their rates. …High corporate rates are unwanted — or should be unwanted — because they put a drag on a nation’s capital stock. An economy needs investment to increase jobs and pump productivity. High corporate tax rates repel rather than attract foreign companies and can even send domestic firms overseas. Capital flows easiest where the resistance is light. This is not our fantasy but an outcome that’s been observed in the real world. In 2003, economists Ruud de Mooij and Sjef Ederveen found that if a country cuts its corporate rates by a single percentage point, it can expect to boost capital investment by about three percentage points.
The Center for Freedom and Prosperity’s first video also addressed these issues. And while the production values and quality leave a bit to be desired, the message is very timely.
[…] None of this should come as a surprise to people who read this primer or watched this video. […]
[…] begin Part III of this series (here’s Part I and Part II), let’s dig into the archives for this video I narrated back in […]
[…] begin Part III of this series (here’s Part I and Part II), let’s dig into the archives for this video I narrated back in […]
[…] begin Part III of this series (here’s Part I and Part II), let’s dig into the archives for this video I narrated back in […]
[…] Part III of this series (here’s Part I and Part II), let’s dig into the archives for this video I narrated back in […]
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[…] For more information, here’s a video from the Center for Freedom and Prosperity that describes some of the warts associated with the […]
[…] Here’s a video from the Center for Freedom and Prosperity that describes some of the warts associated with the […]
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[…] judge Obama’s plan, it is important to have the right benchmark. An ideal corporate tax system obviously should have a low tax rate. And it also should have no double taxation (tax corporate income at the business level or tax it […]
[…] judge Obama’s plan, it is important to have the right benchmark. An ideal corporate tax system obviously should have a low tax rate. And it also should have no double taxation (tax corporate income at the business level or tax it […]
[…] judge Obama’s plan, it is important to have the right benchmark. An ideal corporate tax system obviously should have a low tax rate. And it also should have no double taxation (tax corporate income at the business level or tax it […]
[…] Moreover, in a world where jobs and investment can cross borders looking for better tax policy, a high corporate tax rate is a huge competitive liability for a nation. These are some of the main points in this video on corporate […]
[…] Moreover, in a world where jobs and investment can cross borders looking for better tax policy, a high corporate tax rate is a huge competitive liability for a nation. These are some of the main points in this video on corporate […]