« ...and it's more than just LeBron | Main | Evil From Within »
December 10, 2004
Abolish the Corporate Income Tax?
Richard Rahn says yes:
Good economists have long known the corporate income tax causes more problems than it solves. Many countries, seeking higher economic growth and employment, have sharply cut their tax rates. Ireland cut its corporate tax rate from 43 percent to only 12 1/2 percent, attracting investment from around the world and, in turn, becoming not only one of the fastest-growing but one of the wealthiest economies in Europe.
The new market economies of Eastern Europe seeking high growth and rapid job creation have also been cutting their corporate tax rates. Slovakia, Lithuania and Poland have a 19 percent corporate rate; Hungary 16 percent; Slovenia and Latvia 15 percent; and Bulgaria just announced it will move to a 15 percent rate next year. Montenegro, not to be outdone, announced it will go to a 9 percent rate. Estonia has become the champion by going to a zero rate on reinvested profits.
As a result of this competition, even France (34 percent) and Germany (38 percent) have been forced into modest corporate tax reductions, giving them lower rates than corporations face in the United States. American companies now have an average 40 percent rate (including state corporate taxes), and only very poorly performing Japan with its 42 percent rate is higher.
Looking at these numbers, it is easy to understand why corporations doing business around the world elect not to have the United States as their legal home, because it makes them noncompetitive.
Posted by Peter Mork at December 10, 2004 1:11 PM
Trackback Pings
TrackBack URL for this entry:
http://www.economicswithaface.com/mt/mt-tb.cgi/76/[What is Peter Mork's first name?]
(Please add the answer to the question to the end of the link in order to trackback this entry.)
Comments
Email Comments Here