Get Rid of Corporate Taxes

James | Jun 18, 2009 | Comments 4

The U.S. has the second highest corporate tax rate in the world, even after you factor in various corporate deductions and tax loopholes. We should lower our corporate tax rates to make the U.S. more competitive and in line with the international market. It’s really very simple common sense: You don’t raise prices in a tough environment as some in Obama’s Administration propose. Raising corporate tax rates will only serve to choke off business and discourage growth and production. Consider this IRS experiment conducted in 2005. Overseas foreign earnings have been taxed at 35%. In 2005, the IRS cut the corporate tax rate on foreign earnings to 5% for one year. Result: The IRS brought back $386 billion in new money and generated $18 billion in new tax revenues. The year before — with 35% rates in force — almost nothing was brought in. This really is not a left/right issue. Rather, it’s simply a fundamental competitive issue. Lesson learned: The U.S. is better off luring capital back home than forcing it. Recent coverage of the G-20 going after tax havens and pressure to increase U.S. corporate tax rates are yet more examples of how current populist backlash is mutating tax policy in bad directions.

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