The End of American Economic Prominence

by Sal on May 12, 2009

in Economy,Politics

With the Obama administration, we are likely reaching the end of our economic financial prominence.  Obama’s proposals create an anti-competitive environment, and put us at a disadvantage with the rest of the world.  Take the Corporate Income Tax.  The U.S. Corporate Income Tax is currently set at 35%.  However, companies who do international business, and who make profits overseas, are taxed in whatever country the profits are made and only taxed in the U.S. if they “repatriate” the profits; that is, bring them back into the United States.

Obama’s tax proposal would end that practice and charge companies the 35% rate on ALL profits (minus a deduction for the other nations).  So, for example, the Corporate Income Tax in Ireland is 12.5%.  Any profits from goods sold in Ireland would be taxed in Ireland at 12.5% rate, and then at a 22.5% rate in the U.S., even if the funds never entered the United States.

This may seem like getting America its fair share, but it really is not.  America has the second highest Corporate Income Tax in the world.  By creating this new requirement, Companies will have no incentive for being U.S. based, as the United States cannot tax a company based in another country.  Companies will start to uproot and move their base of operations to more business-friendly countries so fast that it will make the current off shoring trend seem miniscule.  The answer for the current off shoring trend is not to institute this sort of tax, but to reduce the current corporate income tax and the general tax burden on companies to make it more competitive.  In fact, eliminating the corporate income tax would make the U.S. very competitive throughout the world, force prices down for the average consumer, and promote hiring and investment by businesses into other areas.  The one outgrowth of the eliminating the corporate income tax, however, is that it would force a decrease in the size of government, and since the Left lives to serve the government and not the people, that will not happen, at least in this administration.

H/T: American Thinker

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The American Financial Collapse | Axis of Right
May 13, 2009 at 1:10 pm

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