How the US Corporate Tax system outsourced your jobs (part II)

[FreakinDJ]

How lowering Corp Taxes is the Hoover Tariff Battle of the New Millennium

Every Wall St talking head exposing an immediate need and compelling reason for lowering America’s Corporate Tax Rate needs a swift kick in the pants and a return to his High School American History class.

Every well written news piece I have seen has never made mention of historical Corporate Tax Rates from various countries around the world. But those same countries who have drastically lowered their Corporate Tax Rates (to the determent of their citizen) will also readily espouse the glut of Corporations clamoring to set up shop in their country. Even when the said Corporation is merely a “shell” creating no new jobs and thanks to “Non-Existent Corp Tax Rates", no new revenues



As you can see the Reagan era Corporate Tax Cuts sparked a sharp decline in Corporate Taxes World Wide. The same effect as raising tariffs during the Hoover reactionary period of the Great Depression.

Please don’t be fooled by the US Corporate Tax Rate of 35%. Corporate Tax Legislation fought for by the Bush Administration have opened up LoopHoles large enough to drive whole factories over to China. Some 43,000 Manufacturing facilities have moved overseas by best estimates in the period of 2000 to 2007. Those same policies have reduced the Corporate Effective Mean Rate of Taxation to 25.4% and the rest of the World is soon to follow.

More over, the policies enacted have changed the Economic Model of the Corporation. The rules of investment, innovation, and markets, no longer apply. Tax Policies or more precisely Tax LoopHoles have converted most of the Corporations that once made up the most robust manufacturing Nation on the Globe into “Financial Corporations” much like the Wall St Financial Banks that led to the demise of the economy in 2007.

I’ll save the "Nuts and Bolts" of how the Corporate Tax Policy in America did that for the next installment - More to follow

in case you missed part 1
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x88792

[mckara]

1. Have You Read... ?

Westra, Richard. (ed). Confronting Global Neoliberalism. (Atlanta, GA: Clarity Press, Inc. 2010).

You might enjoy it.

[FreakinDJ]

2. Not yet - but the title sounds very "Scholarly"

Its a very heady subject but I would sure like to see it broken down in "Working Class Terms"

The facts DEMs have known it is the Tax policy promoting the outsourcing of American jobs yet have failed to act kind of lets us know who is on our side.

[mckara]

3. You Give the Public Too Much Credit

I've given up on elected officials knowing anything, except where to collect money for reelection. The Introduction of Confronting Global Neoliberalism extends your argument. I have it in a PDF format, if you want to see it before buying it. Send a message to me on DU with an email address and I will send my ebook (2.6 MB)to you.

[upi402]

4. Clinton and Obama are taking the oxygen out of the room

where and opposition party used to live and breathe. We expect this behavior from announced Republicans, but many are still duped by DINO's.

Those folks deserve to be victimized. Many of us do not.

[FreakinDJ]

5. Obama and Hillary both have looked at eliminating "Offshore Profits Tax Deferment"

while arguably is 1 of the largest loophole outsourcing American Jobs, by no means would end the abuses that are outsourcing jobs

Additionally a lot of political hay is being made of transferring to a Corporate Territorial Tax system, which by every account will apply additional downward pressure on Corporate Tax Rates worldwide. Its a direct contradiction of the logic behind the Foreign Tax Credit policy which most lawmakers assert is to relieve downward pressure on Global Corporate Tax rates

and for every argument comes an additional Corporate Tax Loophole

[econoclast]

6. Just a counterpoint

You make reference to "...those same countries who have drastically lowered their Corporate Tax Rates (to the determent of their citizen) will also readily espouse the glut of Corporations clamoring to set up shop in their country. Even when the said Corporation is merely a “shell” creating no new jobs and thanks to “Non-Existent Corp Tax Rates", no new revenues"

Looking at a study titled : Fundamental reform of corporate income tax in OECD countries*
Bert Brys
Christopher Heady
OECD
Centre for Tax Policy and Administration


page 7 Section 2.5:

"Despite the lower corporate tax rates, corporate tax revenues as percentage of GDP have increased for most
OECD countries."

( note from econoclast - not so for the US where revenues from corporate taxes have been falling as a percent of GDP. )


Page 8: "Similar results are found for corporate tax revenue as a percentage of total tax revenue. ... Despite the strong reduction in statutory corporate tax rates, corporate tax revenues have kept pace with –
or even exceeded – the growth in GDP, and the growth in revenues from other taxes in many OECD
countries. The fact that small-sized and medium-sized OECD countries now raise more revenue from
taxing corporate income and that large-sized OECD countries, except for Japan, do not raise less revenue
seems to be inconsistent with the strong reductions in statutory corporate tax rates and marginal and
average effective tax rates."


So it appears that despite lowering their corporate tax rates dramatically, the revenues from Corporate Taxes in other OECD countries have grown a a percentage of GDP and as a percentage of total tax revenues. Hardly "non Existent"

[FreakinDJ]

7. Again that might imply more about Corp Tax structure then rate

and that is what I am arguing

Japan is highly protectionist in their Corporate Tax structure, has a high rate, and has subsidized a good portion of their industry. Compared to the Netherlands who is considered a "Tax Haven Country" with extremely low rates.

The point would be to enact a simplified tax structure that would eliminate incentives to outsource while providing balanced trade. There is little sense in robbing peter to pay paul in a global trade model