January 3, 2009

We need to squeeze more money out of the greedy corporations...

Steve Forbes, Ireland Gets It :

If the incoming Obama Administration is serious about squeezing more money from businesses, it should follow the example of Ireland and slash corporate tax rates. The U.S. has one of the highest profits levies in the developed world: 35% at the federal level, with another average of 5% from state and local taxes. Only Japan has worse. In contrast, Ireland's rate is a mere 12.5%. Imagine the howls from congressional Democrats if Barack Obama were to suggest enacting such a low corporate tax rate in the U.S.

But the accompanying table tells an eye-opening tale: Ireland's corporate tax take as a portion of its economy is higher than that of the U.S. High rates breed pressure for ever more complicated exemptions and ever more ingenious ways to avoid Uncle Sam's tax bite. But an Irish-like rate leaves companies to focus brainpower on growing their businesses instead of on jousting with tax collectors. A general flat tax, such as Yours Truly has been advocating for decades, would give just such a benefit to both individuals and businesses. Alas, misbegotten populist ideology still trumps fairness and common sense.

The Obama White House is pushing a massive stimulus plan that will do little to reinvigorate the recessed economy. Government spending does not create prosperity. If it did, the Soviet Union would have won the Cold War. Low tax rates positively change incentives: Entrepreneurs, venture capitalists and investors are induced to take more risks; businesses become more expansion-minded; and individuals positively adjust their own behavior, knowing that they can keep more of what they earn and that success will not be punished....(Thanks to Orrin Judd)

The phenomon of people paying more taxes after their rates are lowered is a common one. The question that nags me is whether our "liberals" are psychologically incapable of seeing this, or whether they are just liars.

For instance, after both the Reagan and Bush tax-cuts, the percentage of income tax paid by the wealthy increased. I've never heard of a case where pointing this out to a leftist made the slightest difference. Have you? The mantra remains that Bush gave "tax cuts for the rich."

Posted by John Weidner at January 3, 2009 9:00 AM
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