Everybody is talking about the sky-rocketing national debt. Everyone is talking about the need to reduce spending and that is good. It should finally be obvious to the most casual observer that if we spend more than we take in that debt will continue to increase. The President will talk tonight about reforming entitlements and that ought to be interesting. But, he most likely will also promote increasing taxes on the rich as a way to reduce deficits. Republicans will rightly respond that the debt isn’t due to taxing Americans too little; the debt is due to spending too much. The President is correct, however, to the extent that increasing revenues is the other side of the coin. What liberals never have been able to learn is that increasing taxes will more than likely reduce revenue not increase it. If taxes are raised on the rich, they will do what any reasonable person would do, move more of their investments to more tax friendly places. If you could legally protect your income from taxes, you would, wouldn’t you? Of course you would. So, if raising taxes would reduce revenue, would lowering taxes increase revenue?
History says yes. Economist Arthur Laffer also says yes. You may or may not have heard of the famous or infamous Laffer Cuurve. Please check the link for a detailed explanation. But, simply put, Laffer states at a tax rate of 0% there is zero revenue and at a tax rate of 100% there is also zero revenue. Somewhere between those two extremes is a tax rate above and below which tax revenues decrease. Logical, isn’t it? Try telling that to a liberal. But it should be clear if an individual or a corporation are taxed too much, instead of adding revenue stream, the revenue stream decreases, And that leads me to the subject of today’s post.
I and a few other conservative bloggers hae been clamoring for three years that the US corporate tax rate is too high and it is counter productive. Finally one potential Republican presidential candidate is talking about this; Herman Cain. A couple of days ago The Daily Caller carried an article by Herman Cain that you definitely should read. Here are several excerpts of what Mr. Cain has to say on the subject:
For decades, Democrats have insisted on taxing profits generated by U.S. companies in foreign countries, because they think that doing so will force businesses to keep their investments in the U.S.
Wrong! A business-friendly environment always works better than force.
Our economy gains nothing as long as those profits remain abroad. Common sense says we have everything to gain if we let those profits come home without a tax.
Some multi-national businesses might use those profits to expand operations here in the U.S., which would mean more job opportunities for the 15 million unemployed people. Or maybe companies would increase salaries and wages for their employees, or they might pay a dividend to their stockholders.
Liberals will argue that there’s no guarantee that those “evil corporations” would do any of these things if they were to get such a windfall in cash. They are right, but it’s their money and their choice. It’s not the government’s money or the government’s choice. I trust businesses and business leaders to make the right choices for their owners and customers, not the government.
We live in a global economy in an age of global information. Global businesses are constantly looking for countries that are business-friendly, tax-friendly and labor-friendly. And contrary to what liberals would have you believe, businesses do not always jump to the country with the cheapest labor. Lower taxes and growth potential are usually at the top of the priority list.Liberals will always fight against anything that moves people’s money from government to the people who earned it. They’ll scream “crimes against humanity, old people, children and the poor” because they do not like totally un-taxing anything. They do not want taxpayers to discover that the right kind of tax cuts will actually help the economy and help put people back to work
To achieve bold economic growth, we need bold changes in our tax code. Significantly lowering the top corporate tax rate, reducing the capital gains tax rate to zero, suspending the tax on repatriated foreign profits, making the tax rates permanent, and a one-year payroll tax holiday for employees and employers would be a good start.
The next step would be to completely replace our outdated and messed-up tax code with the FairTax, which is a single-rate national sales tax. This would supercharge our economic growth, and there would be a huge sucking sound of businesses moving back to the United States of America instead of leaving.
Well, there is more and it is all good. I don’t know about you, but right now Herman Cain is at the top of my list of potential Republican candidates for President. I think he is right when he says these reductions in corporate taxes would supercharge our economy. What are your thoughts?