At Least Some People Get It

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The Obama administration continues to scratch its collective head over what to do about creating jobs. After the disastrous failure of the numerous mega-billion-buck bailouts intended to lower the unemployment rate, even the now happily departed lame-duck Congress refused to pass another massive pork bomb. The Obamanistas, devoted Keynesians all, have pushed through more spending more quickly than any other administration in history. The national debt, which stood at $13 trillion on June 2, 2010, closed the year at $14 trillion. So we have spent beyond the dreams of Keynes’ avarice, and the unemployment rate still hovers near 10%.

Meanwhile, up in the Great White North, our Canadian friends have shown the way. For the fourth year in a row, they are lowering their federal corporate tax rate. It has just been dropped to 16.5%. This is less than half the American federal rate of 35%. Amazing, considering that Canada is sometimes supposed to be the pure welfare state, while we are the pure capitalist one.

And it won’t stop there. In 2012, the Canadian federal rate will drop to 15%, bringing the combined federal and provincial rate on businesses to about 25%. Back in 2000, the combined Canadian corporate income tax rate was 42.6%, so the decline has been dramatic.

Besides cutting the corporate tax rate, the Canadian government has eliminated corporate surtaxes as well as levies on capital.

All these incentives, combined with Canada’s healthy financial sector — Canada never created crazy government agencies to encourage and then purchase bad mortgages (it apparently grasps the concept of moral hazard!) — are enticing increased business investment. Spectra Energy of Houston, for example, has decided to invest $2 billion in Canadian energy and infrastructure projects. The Citco Group, a financial firm, has decided to open its only North American bank in Canada. And the big accounting firm KMPG has moved many of its operations to Canada.

American corporate taxes remain the second highest in the industrialized world. Our competitors to the north have grasped the idea that to tax an activity is to deter it. The Canadians obviously want more business, not less. And the reason they want more is that they grasp the fact that business creates jobs.




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Comments

Clown

KJB claims that I am a "clown" for saying that Canada is doing the right thing economically for lowering its corporate tax rates. It is worth noting that not long after I wrote my piece, Obama himself came out in favor of lower corporate taxes. I guess that he, too, is a "clown." Moreover, he has kept us in both Iraq and Afghanistan, and kept military spending at the level the Evil Bush set it, so I guess that he, too, is a "Retardican."

And a damn good thing, too.

Nobody--least of all me--ever said that all a country needs for prosperity is low corporate income tax rates, and all other features of its domestic and foreign policies are irrlevant. Only a clown would interpret what I said that way.

Sui-juris

I miss the print version of Liberty. As the low-brow comments illustrate, the internet version has opened the flood-gates for all the riff-raff to post their inane, vapid comments, and to otherwise hurl their offal. We've diluted the readership gene pool somewhat, I fear.

prolefeed

What comments? Reason.com routinely gets hundreds of comments per post. These threads at Liberty are average maybe one comment apiece.

And perhaps you could give an example of those comments you deem low-brow, since I haven't been seeing that?

KJB

If only it were that simple.

Damn few US corporations even pay taxes because of all the loopholes and tax incentives given to them, and that is because business is constantly buying favors from politicians here. Do they do that in Canada too?

Reason two: Our military budget is out of control. The US Retardicans seem to think we need to be prepared for everyone else in the world to attack us all at once along with the Martians as well. In all the stupid talk about cuts lately the military budget has never been cut. I think I remember reading that our military spending is higher than all the rest of the world, or nearly all of it.

Reason three: Didn't I read that when this happened, the housing market collapse, Canada still had a well regulated financial market and housing market? Different author for that article, I'm sure.

This clown seems to be more a spokesperson for the Retardicans than an economist, he's just spouting his opinion without doing proper research I think. I am not an economist but I know this article is way too short for a proper analysis.

But that's just my silly opinion you know.

Visitor

The entire concept of the legalism "corporation" is evil through and through. The idea of creating an association, giving it rights as an individual, and then letting managers (who are just employees of the corporation) off the hook for their mismanagement is a moral travesty. Wouldn't the most petty criminal be thrilled walk away from his bad actions, blame it on "the straw man" and count himself as not responsible? No. He's not rich enough, and he doesn't have a contract with "the straw man" that absolves him of the evil that he does. If we ever get a business paradigm that puts the responsibility back on the shoulders of those who make the business decisions, then I will be interested in talking about taxes.

Federal Farmer

@ KJB,

Libertarians agree that the tax code is far too complicated, whether you're thinking of tax loopholes or tax subsidies. Additionally, we disagree with corporatism (or businesses buying favors from politicians). I'm positive that Gary Jason feels the same way.

On multiple occasions, the writing staff of Liberty has denounced the excessive spending of the Department of Defense.

Furthermore, Gary Jason is a philosophy instructor, not an economist. You don't have to be an economics major to understand the benefits of having a lower corporate tax rate than most of the industrialized world: Businessmen who seek international expansion would rather settle on a tax rate of 15% than 35%.

On an unrelated note, I want to know why infrastructure is a primary "investment" for the United States, as the President so boldly put in his speech. Where are the Op-Eds written by CEO's and business owners that complain about a lowsy infrastructure being a factor in their expansion? Where are the polls and research papers that give us empirical evidence that business owners consider infrastructure in the U.S. to be a problem for their own growth? Perhaps the government does not consider jobs created from businessmen. Rather, they only consider jobs developed from tax-payers.

trig

Yeah dems have done such a great job of cutting military spending...

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