Rational Tax Policy v. Name Calling

By October 5, 2007Taxation

We recently posted a letter on corporate tax policy written by Dorothy Coleman, NAM’s vice president, Tax and Domestic Economic Policy, and published in USA Today. Dorothy was responding to the USA Today’s editorial that acknowledged other countries are reducing their corporate tax rates, making U.S. businesses less competitive. (“Cut corporate tax rates? Not as silly as it sounds.”)

Anyway, earlier this week, the paper published a letter to the editor in response.

Cutting corporate taxes is bad news for U.S. businesses Joel Zauss – Charlotte

If USA TODAY reader Dorothy Coleman truly believes that cutting corporate tax rates and adding a permanent research and development tax credit “would lead to greater economic growth, higher wages for workers, an increase in productivity levels, more business investment and lower inflation,” then she truly has been guzzling the corporate Kool-Aid (“Cut corporate taxes,” Letters, Sept. 25).

This tax theory might have worked in the 1950s, when companies and workers grew old together and profits were passed down, but it doesn’t work in today’s business environment.

A more realistic result of increased corporate profits would be increased executive wages and bonuses, increased shareholder profits and continued outsourcing of jobs to the lowest bidder. Tax breaks for the rich are a form of corporate welfare. Trickle down didn’t work then, and it certainly won’t now.

Now, nomally we would respond to name calling and assertions of blind populist faith with ridicule, but pass on that today. The point is, other countries also disagree with Mr. Zauss, and they are cutting corporate tax rates to become more competitive. Sweden, Germany, France, and on and on. Yes, indeed, Joel. It’s the not the 1950s. We live in a global economy and must adapt accordingly.

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