CRP Blog

Saturday, September 20, 2008

America’s High Corporate Taxes Weaken Us in the Global Economy

Senator McCain's pledge to improve America's competitiveness in the global economy by cutting, among other things, our high corporate tax rates is exactly the right policy, and a new study from our friends at the Heritage Foundation further makes the point.

Corporate tax rates have been coming down all over the world, even in the high tax welfare states of Europe. Sweden slashed its rate from 60 percent to 28 percent, while Norway's is down to 28 percent from 50 percent. In a world where capital is extremely mobile, investment flows to where it will produce the highest return, and in too many cases that means investment flowing away from the United States.

President Bush and the Republican Congress succeeded in cutting taxes on personal income, investment income, and the dreaded death tax. Yet corporate tax rates have remained high, creating an incentive for companies to locate outside of the United States and merely export goods here to avoid the tax.

California’s high taxes put our state at a further disadvantage, making McCain’s tax cutting plans even more important for Golden State residents.

Barack Obama is, of course, totally out to lunch when it comes to tax policy. He's advocated raising investment taxes even if it produces less revenue for the government by doing so. In justifying this Bizarro-world type position, Obama invokes some weird "fairness" justification. Like the rest of his tax policy, it doesn't make any sense.

McCain is exactly right - we have to make America the best place in the world to do business so we can create the jobs that flow from that business.

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