Another British Invasion

By James Schaefer.

“[If] you have to have to gripe,” says Jim Ratcliffe of Great Britain, “[it is that America] has the highest corporate taxes in the world.  They’re too high in my view, [at] nearly 40%.  And that’s a pity because in most other parts of the world corporate tax rates are about 25%.  I think they should be down to about 30% or so.  Then they’d be unbeatable.  For investment, they’d be unbeatable, the United States.”

So reports the Wall Street Journal in a recent article, “Why This European is Bullish on America” (Opinion page, January 11-12, 2014).

You often hear about corporations, like General Electric, that pay very little income tax.  Value line says that in 2012 GE’s taxes were just 14.4%, and last year Google paid at just a 19% rate.  But Exxon—surprise—pays 43% of its profits to tax, and we have many corporations that pay at rates that are the highest in the developed world.  It’s all very capricious and unfair, and the biggest losers are small companies that don’t have ways to get around paying the top rates.  They pay big taxes, and when the remaining earnings are paid out to the owners as dividends they get whacked with taxes again.  Double taxation!

The key, as so many politicians from both sides of the aisle have acknowledged, is for government to set policy that fosters economic growth.  When taxes are too high, policy backfires;  and less tax revenue is collected.  Jobs are lost.







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