America officially has the highest taxes in the World...

Discussion in 'Budget & Taxes' started by onalandline, Apr 11, 2012.

  1. onalandline

    onalandline New Member Past Donor

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    Morning Bell: The Highest Taxes in the World:

    There aren’t many American-owned companies more iconic than Anheuser-Busch, the famous producer of Budweiser beer based in St. Louis, Missouri. That was true up until 2008, when the Brazilian-Belgian company InBev executed a hostile takeover of the historic brewer, leading to layoffs of more than 1,800 workers. Unfortunately, conditions in the United States are growing ripe for even more takeovers like these to occur, especially now that the nation’s corporate tax rate is officially the highest in the world.

    As of yesterday, the U.S. corporate tax rate of 39.2 percent claimed the world’s top spot, edging out Japan which recently lowered its rate from 39.5 percent to 36.8 percent. (The U.S. rate includes the 35 percent federal rate plus the average rate the states add on.) That’s well above the 25 percent average of other developed nations. Heritage’s Curtis Dubay explains the impact on companies based in the United States:

    This gaping disparity means every other country that we compete with for new investment is better situated to land that new investment and the jobs that come with it, because the after-tax return from that investment promises to be higher in those lower-taxed nations.

    Our high rate also makes our businesses prime targets for takeovers by businesses headquartered in foreign countries, because their worldwide profits are no longer subject to the highest-in-the-world U.S. corporate tax rate. Until Congress cuts the rate, more and more iconic U.S. businesses such as Anheuser-Busch will be bought by their foreign competitors.


    Unfortunately, in the face of this tax rate, the Obama Administration is proposing measures that will make matters even worse for U.S. companies. Last week, Vice President Joe Biden proposed a “global minimum tax” in a wrongheaded effort to encourage companies to invest in the United States instead of overseas. Just like the rest of President Obama’s corporate tax policy, it will just make matters worse — punishing firms that seek new opportunities in growing markets by taxing their earnings in those developing markets even more heavily than they’re already taxed. The net result will be to make it even more likely that the companies’ assets would go up for sale to overseas firms in order to escape the Obama tax penalty. Unfortunately, America’s workers pay the price for this destructive tax policy. Heritage’s J.D. Foster explains why:

    Economists and policymakers increasingly understand that while the tax is paid almost exclusively out of profits that would otherwise go to the shareholders, the true economic burden falls primarily on workers.

    The reason is simply that the higher the effective corporate tax burden, the higher the hurdle rate on corporate investment. (The hurdle rate is the minimum rate a business must earn on investment to make the investment.) The higher the hurdle rate, the less investment takes place. The less investment takes place, the slower labor productivity grows, and the slower labor productivity grows, the slower wages grow.


    Congress should act now to help make America more competitive on the global stage, and it can do so by reducing the corporate tax rate to match or preferably fall below the international average. The U.S. economy is struggling to recover from the global recession, and by lifting the burden of record-high corporate tax rates, Congress can give American companies incentive to grow and expand here at home. If not, the American people can expect to see more companies like Anheuser-Busch bought up by international competitors — and the jobs will go right along with them.

    Source
     
  2. Reiver

    Reiver Well-Known Member

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    This is a standard example of misinformation. The US does not have the highest corporate tax rate. To make such a comparison we'd have to refer to effective rates, something deliberately avoided by those making these unsupported claims
     
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  3. onalandline

    onalandline New Member Past Donor

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    Well then, refer us to effective tax rates.

    Nonetheless, the U.S. has the highest corporate tax rate.
     
  4. Reiver

    Reiver Well-Known Member

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    You won't find one source that shows the US has the highest effective rate (the only rate that really matters). I'm sorry to say but you've been manipulated by a clear falsehood
     
  5. onalandline

    onalandline New Member Past Donor

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    It doesn't matter. The U.S. has the highest corporate rates, effective or otherwise.
     
  6. Reiver

    Reiver Well-Known Member

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    It doesn't have the highest effective rate. You've confused yourself. Not all your fault mind you. You've been fed misinformation
     
  7. onalandline

    onalandline New Member Past Donor

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    Then you are even moreso misinformed. You spew nonsense with absolutely no evidence of what you say.
     
  8. Reiver

    Reiver Well-Known Member

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    This is a nonsensical response. To make any relevant international comparison of corporate tax rates we have to refer to effective rates. There is no debate in that. You haven't referred to such rates, preferring to stick diligently to a piece of misinformation. You need to put it right. Can you or can't you?
     
  9. IgnoranceisBliss

    IgnoranceisBliss New Member

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    I generally agree that we don't have the highest effective corporate tax rate, but we're pretty close. That said, how many Billions of dollars are wasted every year getting from that highest marginal rate to the lower effective one? There's a hell of a lot of wasted money there.
     
  10. Reiver

    Reiver Well-Known Member

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    We certainly can refer to inefficiencies within the tax codes in general, often encouraged by influence costs on our easily corrupted politicians. Happy to agree to that (just seems to be strange to refer to it in a thread based on misinformation, typically the means to ensure a lack of accountability for those politicians)
     
  11. IgnoranceisBliss

    IgnoranceisBliss New Member

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    I brought it up because the OP's misinformation really highlights the inefficiencies to me. What's the point of having such a high marginal rate when it's so easily chipped away on its way to the effective? And what about those small corporations that don't have the money to hire Big-4 firms to fully exploit the tax code? We obviously have to look to Washington to answer that question. Obama and company seem much more content to play the class warfare game with the new Buffett rule. $47 billion over 10 years is a drop in the bucket compared against public debt.
     
  12. Reiver

    Reiver Well-Known Member

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    It can improve industrial policy. For example, we'd arguably want lower effective rates on certain manufacturing industries and higher rates on finance. We can then have more revenue raising flexibility whilst considering means to increase specific types of investment and capital deepening.
     
  13. onalandline

    onalandline New Member Past Donor

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    The U.S. is most certainly one of the highest. This data is a little old. Japan has lowered its rates recently.

    Check it out: http://businessroundtable.org/uploads/studies-reports/downloads/Effective_Tax_Rate_Study.pdf
     
  14. Reiver

    Reiver Well-Known Member

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  15. onalandline

    onalandline New Member Past Donor

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    I said that the U.S. has the highest corporate tax rate. Still true my friend.
     
  16. IgnoranceisBliss

    IgnoranceisBliss New Member

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    I'm not against all tax exemptions or loopholes, I just think they need to be DRAMATICALLY reduced. Rather than providing thousands of pages of complicated codes, why not have the government specifically target industries or even individual companies? They could have temporary tax breaks that expire over time or under certain conditions. They could establish several "zones" with lower tax rates or tax credits. They could have four or five "zones" with different across the board exemptions. Companies could then be assigned into these zones depending on Congress' desires at the time..i.e. green energy, heavy industry etc. I think this could be more effective than thousands of pages of complicated loopholes that EVERYONE can take advantage of. The Finance types are always going to be a step ahead of other industries in avoiding taxes. Things like executive compensation could also be factored into each zone. It would be difficult to build from scratch, but it'd be easier and more centralized once it was in effect. It wouldn't be every company vs the U.S. government's massive "rule book." There would be lobbying to get into better zones, but there would be more standardization and much less inefficiency.
     
  17. IgnoranceisBliss

    IgnoranceisBliss New Member

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    It has the highest marginal tax rate. That doesn't mean that much when compare to effective rate.
     
  18. onalandline

    onalandline New Member Past Donor

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    We are still high when comparing effective rates, but my OP was not about effective rates. If we add together federal and state taxes, depending on the State, they are even higher.
     
  19. Reiver

    Reiver Well-Known Member

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    The issue is the extent that it distorts markets (in terms of net losses of course). There's certainly a wealth of literature that would suggest more specific policy is superior (i.e. the use of regional policy can enhance productivity and wages, while tax rate differences could actually harm wages by negatively impacting on investment hurdles). However, I wouldn't suggest that its conclusive. We therefore cannot necessarily reject the usefulness of differences in these tax rates to have structural gains for the ecoonomy
     
  20. FrankCapua

    FrankCapua Well-Known Member Past Donor

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