Just in time for April Fools, on April 1, the United States became the country with the highest corporate tax rate in the world. This was triggered by Japan reducing their rate. As cited by The Daily Caller, “Our top corporate tax rate has hovered at 35 percent for years. Meanwhile, other countries have gotten the message that lowering corporate taxes encourages growth. Canada has engaged in a series of cuts, ultimately reducing its corporate rate to 15 percent. Great Britain recently announced it will drop its corporate tax to 24 percent next month and then 22 percent by 2014.”
I know some of you are going to say, well what about all those big companies that pay no taxes? Well you are right. The effective tax rate for the large companies drops us to about sixth highest in the world, according to some economic pundits. The problem is that most companies are not operating like those big guys and it is the small and medium size businesses that are really the economic engine of our country. When you figure that most small business are filing as S corps, then I have heard that the effective tax rate could be as high as 50 percent.
In my state it is even worse since California is broke. There is no plan in sight to create any sort of economic development. Instead we pass the most stringent environmental laws IN THE WORLD that cost billions to California based businesses. Now we have two proposals to increase income taxes, once again, a direct hit to all those small businesses that file as S corps.
For those of you who complain about U.S. jobs moving off-shore, this tax burden is a huge part of that equation, along with the fact that US companies carry about a 20 percent regulatory cost burden above any other country in the world.
Personally, I would love to see the tax loop holes closed up and a movement toward a flatter tax rate. There is definitely a problem when I am in a meeting to discuss tax issues for small business and the two IRS representatives can’t even agree on what the tax law is or how it should be applied.
I know this is a hot topic right now, so share your creative ideas on how you would solve our country’s tax code problems and once again make us competitive with the rest of the world.
I agree the US needs a flat tax.
ReplyDeleteWe also need to cancel one way "free trade" agreements like NAFTA and the one we just signed.
Jon Banquer
San Diego, CA
Jon,
ReplyDeleteGlad to see I have another flat tax person on my side. Now if we could just find some politicians with the backbone to change the tax code.
On the free trade agreements I think that they can be positive for US business, but they need to be truly "free" in both directions - imports as well as exports.
I am all for a flat tax rate!
ReplyDelete"Now if we could just find some politicians with the backbone to change the tax code."
ReplyDeleteSteve Forbes tried. Americans didn't want to listen to what he had to say.
"On the free trade agreements I think that they can be positive for US business, but they need to be truly "free" in both directions - imports as well as exports."
It's undeniable that Perot had it right when it comes to the one way free trade agreements that both Democrats and Republicans love so much and that Americans keep letting both parties slide on:
http://www.youtube.com/watch?v=Rkgx1C_S6ls
Jon Banquer
San Diego, CA
Jon, I think you make a great point. I hear all the time that people want politicians with conviction and backbone. That they want someone to be honest. But then when you follow the actions of the public they don't tend to vote for, re-elect, or support those politicians that have the integrity to do so.
DeleteWell-stated post, Pamela. The combination of business-stifling corporate taxes and anti-business rhetoric is out of control. We need private sector businesses for private sector jobs that contribute real dollars to GDP. So we decided to start talking politics publicly at our company, as well.
ReplyDeleteI'd love your feedback on our ExxonMobil infographic at http://blog.telesian.com
And don't you know you can't use the words backbone and politician in the same sentence?!?!
Shari
Sharilee, thanks for your comments. I agree that the private sector has to stand up and defend its role in the economy.
Deletei love your infographic. What a fabulous way to tell more of the complete story in such a convincing and visual way. People get caught up in the "profit" dollar amounts but they dont see the whole picture. Anyone who can do simple math will see that ExxonMobil is not in a high margin business. In fact many people would not enter into a market space with that kind of margin.
We have just started doing infographics as well. I'd appreciate your feedback on our attempts. http://www.bwc.com/linear-motion-infographics.vp.html?WT.mc_id=Infographics