Around the world in many countries there has been a definite trend in lower corporate tax rates. Before the capital mobility of today, governments could tax corporations high rates and corporations were helpless. As recently as 1980 the average corporate tax rate in industrialized nations was fifty percent. As rates lowered, tax competition among nations issued a boom and growth in corporations. Even European welfare states saw the importance in lowering rate’s to facilitate a more competitive environment for corporations to thrive. All the nations that have lowered their corporate tax have seen boost in their GDP and their governments have seen more revenue as a result.
As the rest of world is acting on lowering the corporate tax, America is still stubbornly holding on to high corporate tax rates. The rest of world is reaping economic growth and higher production levels, while America is lagging behind and falling in more debt. Corporate America is not stupid either, more and more business and jobs are being sent overseas. In essence we are merely giving away capital to the rest of world by acting foolishly in our tax policies. American needs to follow the rest of world in the trend to lower corporate tax rates. Lower rates boost growth and also improve tax compliance, which generates more revenue for the state in the long run. We must liberate our nation’s corporations from these tax burdens, to allow them to expand and create more jobs. It is time for America to get on the same page as the rest of the world.
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I find your comments about how America's high corporate tax rate is causing our economy to not flourish to it's full potential quite intriguing. My question for you is how will our government make up for the amount of money generated through corporate taxes if there are no corporate taxes? The government's current taxation system already run's deficits yearly and without a corporate tax wouldn't this deficit be higher? Also, one cannot argue that our country has a massive amount of debt. Is there any solution other than taxes that can fix this problem and help our government out of the hole we've put ourselves in?
ReplyDeleteLowerer rates ensure more tax comliance, in other words companies do not try to avoid paying taxes through various loopolls. Lower rates attracts more bussiness and growth which makes up for the losses from cutting the tax rate. Statitics show that high rates do not neccesairly generate more tax revunue. In my last post I Mention how the World Bank issued statements that countries with lower corporate rates have seen an increase in the total tax revune generated from corporate tax.
ReplyDeleteIf more companies are investing in America means more companies to tax from. With the high rates as it is currently companies will simply go elsewhere to run their companies.