Number 32. That’s our global rank for business taxes. Yep. The largest economy in the world comes in at an unspectacular number 32 when it comes to how we tax our businesses. But it’s far worse than it sounds. There were only 34 countries (all the industrialized countries) in the study. Ouch:
The index takes into account more than 40 tax policy variables. And the inaugural ranking puts the U.S. at 32nd out of 34 industrialized countries in the Organization for Economic Co-operation and Development (OECD).
With the developed world’s highest corporate tax rate at over 39% including state levies, plus a rare demand that money earned overseas should be taxed as if it were earned domestically, the U.S. is almost in a class by itself. It ranks just behind Spain and Italy, of all economic humiliations. America did beat Portugal and France, which is currently run by an avowed socialist.
And now, the Obama administration is working to make business taxes even more complex and burdensome. You would think someone in the White House would have told Obama that raising the rate and tightening the structure of business taxes will not bring in more tax revenue. It just drives businesses overseas. Perhaps Obama knows this. Which is why he has been so upset over “tax inversions”: when American companies move their headquarters overseas to avoid taxes.
But what does Obama want to do? Cage businesses on American soil, then force them to give up nearly half their profits? Yes. Actually, that’s exactly what he wants.
But what exactly would that accomplish. There have been other countries to attempt such a strategy (the Soviet Union comes to mind), but it by necessity erodes business profitability. And no matter haow high you raise business taxes, they are only profitable for the government to the extent that businesses are actually profitable.
There’s an easy solution to that, though. Just make the taxes here competitive and neutral. If you did that, you wouldn’t have to raise the rate. If you have steady economic growth and a growing diversity of business investment, you get more money even if your percentage is lower. That’s just simple mathematics. Not that the civil government has ever shown much aptitude there.