A Simple Economics Lesson
Since he’s almost a lock to be president soon, let’s look at one aspect of Obama’s corporate tax policy.
Obama proposes funding the tax cuts by closing corporate loopholes, cracking down on international tax havens and increasing the dividend-and-capital-gains tax for the wealthy, he said.
He called his proposal a “fair” alternative to the present tax code and said it was necessary because hard times on Main Street translate to hard times on Wall Street.
“When the changes in our economy are leaving too many people behind, the competitiveness of our country risks falling behind,” he said. “When that dream of opportunity is denied to too many Americans, then ultimately that pain has a way of trickling up.”
Sounds great, right? Let’s close all the loopholes those greedy corporate bloodsucking fat cats are stealing so they can light cigars with $100 bills! The problem is, the more you raise the cost of doing business in the US, the more you are going to pay for products, and the more likely that the corporation in question will seek to do business outside the US, and they’ll take their jobs with them.
As an American who is living in China, opening a subsidiary for a US corporation, which came here in part to escape America’s astonishingly high corporate income tax rate, you might want to think about this. Note that this isn’t specifically about Obama, the Congress hasn’t done jack shit about this issue for years, then everyone pisses and moans that their jobs are going overseas. Well, if we don’t cut corporate tax rates that’s only going to get worse, and there will be people like me who are more than willing to move to countries like China and profit from it.
If the decision were up to me I’d abolish corporate income tax entirely. There is no such thing as a corporate income tax, really, since the corporations just pass those costs on to the consumer in the form of higher prices. To put it in simple terms, if you levy a $1 per unit charge on widgets, the price of widgets will go up by $1. All you’re doing is taxing yourself.
