"Recovery Summer"

[detbuch]

Originally Posted by spence

I've never said we can justify having the highest taxes, but that we can justify having higher taxes as the US is a desirable place to do business for many industries. Certainly taxes are a factor (one factor of many) in where companies operate, but right now the effective corporate rate in the US is just over 25%, putting us lower than many industrialized nations including Canada, India, China, Brazil, Japan, Italy and Germany.

Source: http://www.pwc.com/gx/en/paying-taxe...taxes_2009.pdf

Clinton is throwing the GOP a bone in an attempt to be a deal maker and at the same time take away a key Republican talking point. Lowering the Tax rate from 35% to 25% while removing deductions will produce nearly the same tax revenue according to the GAO.

If it will even out how taxes are collected it's probably a good thing to do. These stories of corporations paying little or 1/2 the statutory rate is silly.

-spence

The source that you linked is lengthy with not a lot of reference to U.S. stats. Admittedly, I read speadily, missing a lot, but found some interesting bits.:

"Where taxes are high and commensurate gains seem low, many businesses simply choose to stay informal. A recent study found that higher tax rates are associated with less private investment, fewer formal businesses per capita and lower rates of business entry. The analysis suggests for example, that a 10% increase in the effective corporate tax rate reduces the investment-to-GDP ratio by 2 percentage points."

"36 economies made it easier to pay taxes in 2007/2008. As in previous years, the most popular reform feature was reducing the profit tax rate which happened in no fewer than 21 economies."

Eastern Europe and Central Asia had most reforms in 2007/2008--nine reformed; four reduced profit tax to 10%, one from 20% to 15% and abolished the social tax, Czech Republic reduced it to 21%.

Five OECD high-income economies reduced Corporate income tax rates. Canada is gradually reducing the corp. income tax to 15% by 2012 and will abolish the 1.12% surtax and introduce accelerated depreciation for buildings. Canada already had reduced, in 2007/2008 its corp. tax rate to 19.5%. Also reducing the corp. tax rate were Denmark 28% to 25%, and Germany 25% to 15%.

"Countries can increase revenue by lowering rates and persuading more businesses to comply with more favorable rules."

The top 5 reform features in this study were:
1--REDUCED profit tax (71%)
2--Simplified process of paying taxes (22%)
3. Revised tax code (19%)
4. ELIMINATED taxes (17%)
5. Reduced labour taxes or contributions (14%)

In the United States "taxes on profit as a share of profits before total taxes rank in the 72nd percentile (23.5%) and thus quite high by global standards. Other taxes as a share of profits before tax also are quite high in the United States primarily due to property taxes."

"In 2008, the combined U.S. Federal and average State/local corporate income tax rate is 39.3%, 50% higher than the 26.2% average for the other 29 OECD countries." This is slightly offset by the DPAD . . . reducing the effective federal corp. tax rate on qualified income to 32.9%.

Beyond the comparisons, for me, it begs the question "What's it for?" Granted that taxes are necessary to run necessary and Constitutionally granted power. But if higher taxes simply are dumped into programs that are bloated, less effective than needed and are not even Constitutionally blessed, thus distancing us even further from our foundation toward uncharted, undefined whims to garner votes, are they good?

[spence]

Originally Posted by detbuch

Beyond the comparisons, for me, it begs the question "What's it for?" Granted that taxes are necessary to run necessary and Constitutionally granted power. But if higher taxes simply are dumped into programs that are bloated, less effective than needed and are not even Constitutionally blessed, thus distancing us even further from our foundation toward uncharted, undefined whims to garner votes, are they good?

I just linked to the doc I saw the stats referenced from...I didn't read the entire thing.

It's perfectly fair to ask how tax revenue is being used. I think we'd all agree that if Congress was more careful with our money they'd need less of it.

But the point of it all is that the US doesn't seem to be that out of line when it comes to corporate taxes when compared to our peers.

-spence

[detbuch]

Originally Posted by spence

I just linked to the doc I saw the stats referenced from...I didn't read the entire thing.

It's perfectly fair to ask how tax revenue is being used. I think we'd all agree that if Congress was more careful with our money they'd need less of it.

But the point of it all is that the US doesn't seem to be that out of line when it comes to corporate taxes when compared to our peers.

-spence

For the most part, the doc you linked trends to a more Reaganesc approach to taxation--lower taxes and easier methods of compliance, the combination leading to greater government revenue.

The study has little or nothing to do with U.S. economic problems or the loss of jobs to other countries. The cost of labor probably has more to do with "shipping jobs overseas" than corporate tax burdens. Most of those jobs did not go to our high income "peers," but to where the cost of doing business was sufficiently lower to make expensive moves feasible. The total tax rate borne by business is part of its cost and is passed on to the consumer in the price of the product. So U.S. business taxes, to a point, affect the American consumer more than the seller. Taxes raised beyond a point, as the study states, have a negative impact on investment and growth.

Taxes are necessary to fund the existence of government and are good so long as the government is unobtrusive to the growth and function of an economy and to the liberty of the individual. When taxes are collected to fund government expansion into what should be private sector responsibilities, the government power grows and the citizen's power shrinks. This is contrary to the intent of this country's founding.