Tag Archives: Corporate Tax

News

Boeing builds new 787 plant in South Carolina to escape Washington Democrats

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You can’t pass regulations and taxes on corporations and then expect them to supply residents of your state with jobs. They will move to another state, and eventually, to another country.

Consider this commentary from Illiquid Assets. (H/T ECM)

Excerpt:

Two stories jumped out at me this morning the first was Boeing backing up its warning to Washington State politicians that they needed to reform the business environment and taxation model or lose future business investment and jobs. The response from the State was a whole new plan with localized Cap and Trade via the Western Climate Initiative, no reform of labor laws that allowed a protracted Union strike that shut down Boeing just as the world was starting its slip into recession combined with and other Green initiatives sure to drive up operating and labor costs. So Boeing has decided to open the second assembly line for the 787, not in Washington State, but in South Carolina and the politicians in Olympia claim they did not see it coming. South Carolina has a lower tax rate and a “Right to Work” law that means you do not have to join a union to work at a union business.

A right-to-work law means that the corporation does not have to be shackled by the demands of corrupt leftist unions, who are largely responsible for driving the American auto industry into the ground, in my opinion.

And now, consider this statement from Republican State Rep. Dan Christiansen. (H/T Sound Politics via iPandora)

Excerpt:

It’s extremely disappointing that Boeing has chosen South Carolina over Washington, but not surprising at all. Boeing has been very critical of our state’s difficult regulatory atmosphere. At the end of the day, it has to be able to compete successfully on an international scale, especially against Airbus. Instead of providing a level playing field, Washington has consistently put up barriers that make it difficult not only for Boeing to compete, but also for other employers throughout our state.

It’s been no secret that other states have been courting Boeing for years. Boeing has tried to make it work here. However, it has gotten to a point with unemployment insurance issues, regulatory burdens, business and occupation taxes, and recently, the governor being willing to consider tax increases, that Washington is no longer a place where Boeing can be competitive.

In South Carolina, it took only days for Boeing to get the permits it needs to move forward with the second 787 plant. In Washington, it would take years. That’s one of many examples in which our state has not been helpful and has stood in the way of the ability for Boeing to successfully compete here.

When Boeing decided several years ago to move its headquarters from Seattle to Chicago, many of my House Republican colleagues and I warned that unless the Legislature was willing to make reforms to improve the state’s business climate, we may see further departures. The governor and the majority party have been in denial about concerns of job providers and now our predictions are unfortunately coming true.

We must also remember this is not just about Boeing. Many other employers rely on Boeing and its workforce to support their companies. Hundreds of thousands of jobs in Washington are indirectly related to Boeing and are affected. I’ve been very critical not only about how our state has treated Boeing, but all employers in Washington. Even when the Legislature made concessions to Boeing in 2003 to secure the Dreamliner in our state, I also said we should extend those tax relief benefits to all businesses. Unfortunately, very little has been done in the Legislature to make Washington attractive for business.

Today’s announcement needs to be a wake-up call to our political leaders in Washington to create a more competitive business climate before we lose more employers to other states.

(Click through to the article for another view)

Eventually, maybe the American people will realize that they can’t attack “big corporations” without facing the consequences. Until then, Democrats will keep raising taxes and adding regulations that causes business to shift jobs to low-tax states, and eventually, overseas. Outsourcing is caused by Democrats who are hostile to businesses. Unemployment is caused by Democrats who are hostile to businesses.

Commentary

Missouri legislators consider Fair Tax policy

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UPDATE: Welcome visitors from The Maritime Sentry!

I discovered this story at the Tax Foundation blog.

Excerpt:

Missouri lawmakers are considering a drastic change to their tax system. A bill recently passed by the state’s House of Representatives would allow residents to vote on a Constitutional amendment that would eliminate corporate and individual income taxes in the state and replace them with a broad based sales tax. The plan is essentially a state version of the national FairTax proposal popular with some grassroots groups that would replace the federal income tax with a national sales tax. If the Senate passes the bill Missouri residents would be voting on the amendment in November of 2010.

Missouri currently has a sales tax, a corporate income tax, and a personal income tax. The sales tax rate is 4.225%, and the top corporate and personal tax rates are 6.25% and 6%, respectively. The plan put forth would replace all those taxes with a single sales tax levied at a rate of 5.11%. Accompanying the sales tax rate hike would be a substantially broadened sales tax base that would include all purchases. Currently most services are tax exempt and certain goods, most notably groceries, are taxed at a reduced rate of 1.225%. These exemptions would not exist under the new tax structure.

The overhaul of the tax system is meant to be revenue neutral. In other words, the revenue from the sales tax increase and broadening of the tax base is meant to exactly offset the elimination of income taxes. In 2008 Missouri’s sales tax brought in $3.2 billion while the state’s corporate and individual income taxes brought in $5.5 billion. In order to achieve revenue neutrality, at a rate of 5.11% the base would have to increase by 124%, or a little more than double. This may sound like a huge increase, but it is very possible.

This would be a useful test case to see if a national fair tax is feasible. I am all for consumption taxes. Leave a comment if you prefer the fair tax to the flat tax. I’m leaning towards the flat tax, and I love the way that it’s been implemented in those Baltic states, like Estonia. Estonia is such a courageous country!

News

Obama raises taxes on oil and gas to stop global warming

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UPDATE: Welcome, visitors from the Cato Institute! Thanks for your link from here. New visitors, interested in economics make want to check out my posts on card check, the deficit, Stephen Harper, tax hikes for the rich, cap and trade, porkulus 1, porkulus 2, conscience rights,  school choice and the subprime crisis.

This Reuters article explains how Obama is going to attack energy producing oil and natural gas companies in order to save the planet from global warming. Here is the exact quotation from Reuters:

U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.

In the same article, Senator John Cornyn explains the consequences of this policy:

Senator John Cornyn of Texas criticized the tax increases, saying they would hurt independent energy companies that provide a large share of U.S. oil and gas supplies.

“My view is that higher taxes on small and independent producers here in America will make us more dependent on imported oil and gas while we transition to cleaner energy alternatives, a goal we all share,” said Cornyn. “And it will also hurt job retention and job creation in the energy sector, which provides an awful lot of jobs in this country.”

Let me also note that consumers are going to pay the price for raising taxes, because energy producing companies are just going to raise their prices to pay for the tax increase. And if Obama either fixes prices or nationalizes the energy industries, (like he’s nationalized health care), then you can expect energy supply shortages.

When you raise taxes on the producers of a commodity, you get less of that commodity. When supply decreases and demand stays the same, you get a shortage. The price of that scarce commodity rises. If you respond to the rising prices by fixing the prices lower, you get line-ups outside of gas stations. This is what we saw in 1973 with price controls on gas.

Jerry Taylor of the Cato Institute explains why price controls on oil and gas didn’t work in 1973:

Let’s begin with a review of what happened the last time Congress tried to protect consumers from “Big Oil.” When Richard Nixon enacted his strict retail price-control regime in 1971, service stations ran out of gas and motorists were forced to wait in staggeringly long lines to get what fuel remained. Burned by the fiasco, Congress adopted the Emergency Petroleum Allocation Act of 1973 (EPAA), which essentially removed price controls from the pump and instead applied them upstream into the wholesale domestic oil market.

Indeed the gasoline lines and physical shortages disappeared, but the cap on profits from domestic oil production discouraged investment in new domestic supply, increased reliance on imported oil, and increased the upward pressure on world crude prices. The Energy Policy and Conservation Act of 1975 (EPCA) tightened the wholesale oil price controls established in the EPAA and exacerbated the economic dislocations associated with it.

Read the whole article. As Santayana urged, we need to learn from history and from the mistakes of other socialist countries, so that we do not repeat their mistakes.

Now on to the secular religion of global warming. Gateway Pundit completely destroys the idea that the earth is even warming:

Arctic sea ice growth finished the year in 2008 at the same level as 1979.
The oceans have been cooling since 2003.
Sea ice is growing at the fastest pace on record.
Greenland’s glaciers are stabilizing.
There are growing fears of a coming freeze worse than the ice age.
Alaskan Sea Glaciers are advancing for the first time in 250 years.
And, for the second straight year the Earth is, in fact, cooling… not warming.

I stole this graphic from his post as well:

US Climate Map October 2007-November 2008

Warning! Now is a good time to stop reading, as I am about to become mean and snarky.

<snarky>So what we have here is a faith-based initiative introduced by Obama in order to appease his favored secular special interests groups, who  substitute recycling for the rigorous demands of traditional, reality-based religion and morality. Do we really need a religious nut in the White House catering to this crowd of anti-science fanatics? Should these dogmatic eco-fascist fundamentalists be influencing the policy of the most powerful nation on earth with their anti-reality delusions? Should we really be acting on the religious doctrines of non-scientists like Al Gore and his Big-Environmentalism-backed propaganda films, which are even now shown to our children in public schools as fact, fact, fact? What happened to the separation of church and state?</snarky>

For my Christian readers, Jay Richards of the Acton Institute did a great lecture on basic economics for Christians and another great lecture on what Christians should think about global warming.