Our corporate tax rates are far too high. The rate kills investment and job creation and it makes us less competitive with other nations who have had the good sense to lower their tax rates. Germany has cut its rates almost in half in the last 25 years. Socialist Sweden has cut its by more than one half. And Ireland has cut its rates by almost 75%. We, on the other hand, have raised our corporate tax rates over that time period — leaving us with the highest rates in the industrialized world.
It is no coincidence that our unemployment rate is historically high and our labor participation rate is historically low. It is also no coincidence that our economic growth rate is painfully slow and far too low.
We realize that there will not be any meaningful tax reform or lowering of the tax rates this year. But the idea that the Senate Finance Committee might consider extending some legitimate tax deductions for manufacturing that actually make profits and employ people, but killing others means that the Senate plans to raise taxes on some american corporations at a time when the economy is weak, employment numbers are bad and taxes are already too high. This is bad policy!
The goal of any sensible tax reform has to be to lower tax burdens on businesses, and families and individuals, for that matter, so that the economy can finally start growing again and so that jobs can be created and incomes start rising again. The government’s revenues will increase because the economy is growing again, not because it is taking more and more money from taxpayers — claiming that it can spend the money better than american businesses and families.
It was very disturbing to read news reports that the Senate Finance committee might agree to selectively approve “extenders” for some while not extending them for others. Since tax reform and reduction will not happen this year, now is the time to hold the tax burden steady at the very least. But effectively raising taxes on american businesses will only kill more jobs. It doesn’t matter if it is the film industry or auto-racing. It is stupid to increase taxes in a weak economy.
We have said many times, and continue to believe, that the only tax breaks that should be allowed to lapse are those given to companies whose entire business model is based on government largess — obtaining taxpayer provided or guaranteed loans, subsidies, huge tax credits to stay in business, special requirements that overpriced products must be purchased regardless of their desirability, etc — such as many of the “green” energy companies, like Solyndra. If the business model is such that the business cannot survive without government handouts, we are wasting the taxpayer’s money. But when the businesses have a viable business model, invest money, hire employees, have willing consumers wanting their product, can make a profit without government effectively funding their business model, we should not be raising their taxes — particularly in a time when the economy is struggling.