Michele Bachmann is by far my favorite House Representative. In a post dated 2/17/2009, she draws attention to the little-known fact that the combined corporate tax rate of the United States is the fourth highest in the world. This is important because the higher to corporate tax rate, the more likely it is that a corporation will move overseas and lay off all of its American workers. Also, a lower corporate tax rate attracts the best and brightest from abroad to move here to start their businesses, powered by American workers.
This might come as a surprise to you, but the United States is near the top of the list of industrialized countries with the highest corporate tax rates.
You may be asking yourself “so what,” or “who cares,” but it’s important to recognize that lower corporate tax rates result in attracting more investment capital. A reduction of the federal corporate tax rate would increase firms’ productivity and investment incentives, and ultimately stimulate our nation’s long-term competitiveness by enhancing economic freedom. The end result would be a boon to your family budget.
The problem gets even worse when you realize that many eastern European nations are slashing their corporate tax rates and even imposing flat taxes, leading to astonishing economic growth. This growth attracts foreign investments away from the USA, because investors can get a better return wherever there are lower corporate tax rates.
Bachmann post cites a study from KPMG showing just how bad the USA is compared to other nations.
“U.S. corporate income tax rate is higher than all other global regions—14 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations. Of the 106 countries surveyed, only the United Arab Emirates, Kuwait, and Japan impose a higher corporate tax rate than the combined rate of 40 percent. The United Arab Emirates and Kuwait each have a staggering tax rate of 55 percent; Japan’s rate is 40.69 percent.”
She also cites alarming figures from Heritage Foundation.
“Even Europe’s old welfare states have joined the aggressive tax cut parade: Sweden has cut its corporate tax rate to 28 percent from 60 percent; Norway’s rate has dropped over 50 percent to 28 percent; and Denmark’s corporate tax rate is now 25 percent.”
Is it any wonder that American firms are laying off workers and shipping jobs overseas? Cutting corporate tax rates creates jobs, increases economic growth and, eventually, increases consumer spending. If you don’t believe me, believe the 69-page research paper published by the Congressional Budget Office. The Tax Foundation summarizes their findings here.
A new study from three prominent economists finds that employees suffer most when their corporate employers must pay high corporate taxes. That contradicts the theory that has prevailed for decades — that corporate taxes mainly hurt investors — but it supports a recent CBO study by Randolph that found workers bearing 70 percent of the burden of corporate income taxes.
They find that the workers’ share of the corporate tax burden ranges from 45 to 75 percent.
On a positive note, I find it charming and delightful when women speak passionately about how fiscal conservatism supports marriage, family and charity. Bachmann and her husband Markus run their own business. She’s worked as a tax lawyer and an elected legislator, but she still found time for a period of home-schooling. And not only did she raise her own 5 children, but also 23 foster children.
As Republicans, we recognize that service is an innately personal characteristic. It is best achieved by individuals and community groups, faith-based organizations and charities. And, service thrives best in an environment of freedom. Government fosters service best when government binds it least.
As Republicans, we recognize that when you keep more of your hard-earned dollars, you are free to spend it as you choose on the charities that touch your heart and make a difference in your community.
Bachmann believes in marriage, family and charity. My favorite quote from her is from her profile in World Magazine.
Bachmann says for her one thread ties all the day’s obligations together: “radical abandonment to God’s call.”
For more on big-government socialism and its conflict with marriage, family and charity, see this video lecture, by the eminent economist Jennifer Roback Morse.