Driving the Week: Taxes, Taxes, Taxes
Both the House and the Senate will be in recess for the next two weeks, which on the one hand means no harmful bills can be passed during that time, but on the other hand means we have two weeks without something getting done on our new “accomplishment:” World’s highest corporate tax rate.
Yesterday, Japan began the process of lowering their corporate tax rate – which was the highest in the world – in order to be more competitive globally. Japan’s corporate tax rate was 39.8%, but as of April 1, it is now 36.8%. They plan to cut that rate by another 2% this year for a 5% total tax cut. Meanwhile, America’s tax rate remains at 39.2%.
Now, the left will tell you that thanks to loopholes and deductions, American companies only pay on average 29.2% of their income. What they fail to tell you is that this is still higher than the 25% average corporate tax rate of other developed nations, and even higher than their effective tax rates.
High tax rates stifle economic growth. President Obama and Congress constantly talk about fixing the U.S. tax code, yet they always find excuses not to. What’s more common is for our government to further complicate the system by cutting taxes for one industry and raising them on another – essentially using their status to pick winners and losers in our economy.
This kind of meddling needs to be stopped, and the only way to do that is to remove such loopholes and deductions from the tax code and then lower the rates. If everyone pays the same percentage, then every business competes on their merits and do not need to rely on the government in order to succeed. In this scenario, businesses – and taxpayers – win.