This is a buddy's blog

Date:   3/1/2006 9:30:21 AM ( 18 y ago)

According to OECD, which country -- of the largest 15 -- has the highest ratio of overall taxes to GDP? And the answer is --
Sweden.
See, that was easy.
And which country has the highest marginal personal income tax rates?
And the answer is Germany. Also not too difficult to guess.
One more question. And which country has the highest corporate income tax rates?
And the answer is.
The United States.

That sounds like a pretty bassackwards tax policy to me.

Given that no one really likes to pay taxes, and that no politician likes to vote for higher taxes -- but also given that taxes are the cost of a modern society -- the general idea is to impose taxes that are difficult to evade. As I mentioned a few days ago, 99% of all taxes on wages and salaries are paid, because it's very difficult to weasel out of them without getting caught. At the other extreme, for example, you wouldn't want to tax beer bottles but not beer cans, since the manufacturers and users would quickly switch completely to cans, and the tax on bottles would collect virtually no revenue.

That's a pretty basic principle in public finance, and you might have thought that economists in both political parties could understand it. Yet here we have the highest corporate income tax rate of any major country. That's an open invitiation for U.S. corporations to move their operations to foreign countries, not that they need any great incentive these days anyhow.

For the past decade, corporate income taxes have averaged about 10% of total Federal government receipts. They're not the heavy hitters; that role falls to personal income taxes and social security taxes. Last year the figure was somewhat higher because of the change in accelerated deprecation rules, but usually it is about $200 billion. Recall my earlier article pointing out that tax evasion cost the Federal government $345 billion back in 2001, and almost certainly more than $400 billion last year. So if half of those funds were collected, the government could completely disband the corporate income tax and still come out the same on a static basis -- and actually well ahead because of the stimulus to the economy. And one of the principal sources of job destruction because firms move overseas would be removed.

Well, anyhow, it's a thought. Is anyone in Washington listening?


 

Popularity:   message viewed 2931 times
URL:   http://www.curezone.org/blogs/fm.asp?i=976106

<< Return to the standard message view