The Global Competitive Climate: Taxes a Top Issue

By December 31, 2008Economy, Taxation

From Der Spiegel, reporting on German Chancellor Angela Merkel’s official address for the New Year:

Chancellor Angela Merkel signalled on Wednesday that she may have dropped her opposition to cutting taxes ahead of a meeting on Monday to discuss a fresh economic stimulus package.


She gave a vague pledge to cut taxes in her New Year address due to be broadcast on TV later on Wednesday, saying: “Wherever it is justifiable with a view to the next generation, we will ease the burden on all who pay taxes and contributions.”


The remark suggests that she is prepared to make concessions to the Christian Social Union, the Bavarian sister party to her conservative Christian Democrats. The CSU has been calling for tax cuts to help avert recession.

Also, from Singapore, “Prime Minister Lee Hsien Loong’s New Year’s Day Message“:

8. Apart from these two measures, we also lowered corporate taxes in 2008. New enterprises and smaller companies enjoy further tax exemptions, which mean that many pay little or no taxes. For households, the 2008 Budget package included Growth Dividends, U-SAVE, S&CC and Rental Rebates, and top-ups to Post-Secondary Education Accounts. These schemes are helping Singaporeans, particularly lower income families, to tide over the difficult period.

From an editorial, Investor’s Business Daily, “Memo To Obama: Cut Taxes For All“:

If Obama is serious about getting the economy going again, he could do a number of things — and right away, not years from now, as with the $675 billion to $775 billion he plans to spend on infrastructure and imaginary “green jobs.” These steps would include:

• Cutting corporate tax rates. U.S. businesses pay a top rate of 35% on income. That rises to 40% when you add in state taxes. In Europe, the average corporate tax in 2007 was 24.2%, according to the international consultancy KPMG.

Is it any wonder some of our most successful corporations move offshore? Cutting corporate taxes even to 25% would improve investment returns — and lead to more jobs and output.

Want to spur investment? Cut capital gains rates, too.

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