Newsflash: the United States has the highest corporate taxes in the world, even when you include loopholes. Now many companies are planning to “move” abroad to avoid paying those taxes. How do they do it?
They buy a business in foreign country with lower corporate taxes (most likely in Europe), et voila! They now have a new “headquarters,” US taxes be damned. According to CNBC, these tax evasions equate to a loss of 2.1 trillion dollars to the US government. I say: good riddance. Let this be a lesson to you, government. There comes a point where people (and their assets) leave.
But the government isn’t having it. A top Obama official is now calling for “economic patriotism,” urging businesses to stay in the United States. President Obama has started to work with the Treasury Department to find legislation to stop companies from shipping overseas–though what that legislation would be remains amorphous. Democratic Senators, on the other hand, have called for “executive action.” The GOP has largely remained silent or have—without much success—called for cutting taxes.
I say: let the incentives speak for themselves.
The way I see it, these corporations are either going to pay fewer taxes in the US or they’re going to pay fewer taxes abroad; none of them intend on paying the full sticker-price value. And that makes sense; they’re companies after all. Corporations and patriotism don’t mix well—their first goal should be to make money and please their shareholders, not to serve their country. That’s what the public sector is supposedly for. And if the government wants to be able to levy more taxes from these businesses, their best chance is to make America a more attractive place to run a business.
Yes, that means lowering the corporate tax rate.
This should be an attractive option to socially responsible liberals. It’s an easy way to stimulate the economy and create jobs. According to a report from the Congressional Budget Office, workers bear 70% of the corporate tax burden. Vox reports that when corporate taxes are higher, worker’s take-home pay tend to be lower. They also add, “Business doesn’t pay business taxes: Shareholders, workers, or consumers do.” And the OECD found that corporate taxes are “the most harmful for growth.”
In other words, substantially reducing the tax burden on these corporations would substantially help the economy recover for the everyday person—beyond just the one percent. It’s the compassionate thing to do for the US and its citizens.
I’m appalled that the US government is trying to legislate its way into blocking US companies from moving abroad. Let’s make America a great place to do business again. Lower the federal corporate tax rate and incentivize US companies to stay US companies before it’s too late.