Barack Hussein Obama should be reading The Wall Street Journal Op-Ed page on a daily basis. Maybe he could learn something about economics since both he and his advisers are just stupid when it comes to promoting growth in America. Barack Hussein Obama, being a libtard thinks a nation can actually tax its way to prosperity. The first article, seen here talks about the uncompetitiveness of America’s corporate tax rate.
For those who still claim that tax rates don’t matter to economic decisions or U.S. competitiveness, we present Exhibit A: the 2004 American Jobs Creation Act.
This law gave American companies a one-year window in 2005 to repatriate earnings from foreign subsidiaries to the United States at a 5.25% tax rate. Normally companies must pay the 35% U.S. corporate tax rate, minus a credit for whatever foreign taxes they paid on those earnings.
The IRS examined the results from this tax cutting experiment and found that the money came back in a flood. More than 800 U.S. corporations repatriated $362 billion from foreign operations. Congress’s Joint Committee on Taxation had predicted closer to $200 billion. These dollars are now being invested in the U.S., rather than remaining in Europe or China. This capital infusion may be one reason that U.S. business investment rose 9.6% in 2005 – the highest rate in more than a decade.
Many Democrats, liberal groups and even some economists in the Bush Treasury opposed the measure four years ago, predicting it would lose revenue and merely be a tax holiday for profitable corporations. The Joint Tax Committee estimators also blundered again by predicting a mere $2.8 billion in revenue gains in the first year and then big losses after 2005. As always, they underestimated how tax reductions change behavior. The tax incentive raised $18 billion in 2005, and revenues have continued to exceed estimates. Instead of getting 35% of nothing, as U.S. companies kept their cash abroad, the Treasury took in 5.25% of the hundreds of billions the companies brought home.
Gee, imagine that!! When government “permits” the private sector to keep what they earn (and therefore have money available for reinvestment and more job creation) they will pay taxes. But who the hell wants to pay taxes at 35%? Well, not the corporations, they pass that cost along to the consumers i.e. you and me. The WSJ goes on: (Any emphasis mine.)
One lesson here is how hypersensitive the trillions of dollars of annual global capital flows are to tax rates. It also underscores how damaging the U.S. corporate income tax is to American firms. Over the past decade the U.S. has gone from a below-the-average corporate tax nation to the second highest rate in the industrial world. (See table.) Many countries have slashed their corporate rates to as low as 10%. The economic impact is even worse because the U.S. is one of the few countries that taxes foreign subsidiary income when it is repatriated.
Most countries let their companies pay taxes in the country where the income is earned, and the few countries that do tax repatriated income are changing their models. Japan is the only developed nation with a higher corporate tax rate than the U.S., but the Japan Times reports that the government wants to change its tax laws to stop taxing repatriated capital.
America’s tax laws are repelling capital at the same time the rest of the world is inviting these dollars and the jobs and growth that inevitably follow. House Ways and Means Chairman Charlie Rangel wants to dig the ditch deeper by taxing American companies on their foreign earnings whether or not they bring the money back to the U.S. He thinks this will raise money for the Treasury, but the likelier effect is that more American multinationals will relocate abroad.
Senator John Ensign of Nevada, the author of the 2005 holiday bill, is proposing to do the same again for one year to stimulate the economy. As a rule, we don’t like temporary tax cuts because they don’t provide permanent incentives. But the 2005 holiday was an exception that proved the folly of current policy.
The best response going forward would be for Congress and the next Administration to reduce sharply the corporate tax rate so it is competitive with falling rates around the world. John McCain is proposing to cut it to 25%. If Barack Obama really wanted to “run to the center,” he’d see that and cut it even further. As the 2005 results show, he’d then have more tax revenue to spend on his many social programs.
The above is wishful thinking by the WSJ. McCain should propose cuts to the corporate rate to about 15% which would make it competitve with Asia and below the average global rate of about 27%. It won’t happen, of course. McCain doesn’t have the stones to propose it and Barack Hussein Obama thinks the way to prospertity is to tax everyone to death. Yes, he is that stupid.
To see the consequences of this type of tax burden, the WSJ comes through again in another fine article which you can see here.
And speaking of tax rates (see here), celebrity chef Alain Ducasse changed his citizenship this month from high-tax France to no-income-tax Monaco. He says it wasn’t a financial decision but an “affair of the heart.” Of course. Nonetheless, plenty of other Frenchmen have moved abroad to escape their country’s confiscatory taxes.
Americans should be so lucky: Ours is the only industrialized country that taxes its citizens even if they live overseas. That hasn’t been a big problem as long as U.S. tax rates have been relatively low. But with Barack Obama promising to raise rates to French-like levels, this taxman-cometh policy could turn Americans into the world’s foremost fiscal prisoners.
And make no mistake, taxes under a President Obama would be à la française. The top marginal tax rate on income – including federal, state and local income and payroll levies – could reach 60% for many self-employed New Yorkers and Californians. Not even France’s taxes are that high now that President Nicolas Sarkozy has capped the total that high-earning Frenchmen like Mr. Ducasse can pay in income, social and wealth taxes at 50% of earnings.
Mr. Sarkozy set this “fiscal shield” because he knows that tax rates affect behavior. When he visited London this year, he observed that the British capital is now home to so many French bankers and other professionals seeking tax relief that it’s the seventh-largest French city. Those expatriates choose not to use their creativity and investment capital to benefit France and its economy.
Senator Obama’s plans to raise income, Social Security and capital-gains taxes amount to a belief that people don’t react to punitive tax rates. If so, he needn’t worry about people leaving the country and could let them pay taxes in whichever part of the globe they choose to live in. Once Americans are paying French-style tax rates, they ought to have the same freedom to move as Alain Ducasse.
Here’s a question I’d like to see the drive-bys ask Barack Hussein Obama (who may become known as “Pol Pot” Obama since his tax policies will depopulate the U.S.) “Senator, can you name one nation or civilization that taxed its way to prosperity?”
They won’t, of course. The main stream media types are too busy dreaming of wiping Barack Hussein Obama’s reproductive fluid from their chin.
