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September 26, 2012

High Tax Rates Drive Jobs Overseas

IPI expert referenced: Tom Giovanetti | In The News | Media Hit
  OneNewsNow

When it comes to the issue of lowering the corporate tax rate, one think tank says Sweden shows more understanding than the U.S., which maintains the highest rate among developed countries.

For the second time in three years, the Swedish government says it is lowering its corporate tax rate, this time from 26 percent to 22 percent -- 13 percentage points lower than the U.S. rate of 35 percent.

Tom Giovanetti of the non-profit, non-partisan Institute for Policy Innovation (IPI) adds that Americans can pay even more in taxes.

"That's just the federal rate," he explains. "Companies also pay the state tax rate, and if they happen to be so unfortunate as to be based in New York City, they actually pay a city income tax rate."

Giovanetti says today's newspapers, television and radio programs are full of people complaining about jobs being shipped overseas, but the "dirty little truth is that it's our fault that this is going on, because of our high tax rates."

"If you hire people in the United States and make a profit and have to pay a 35.6-percent tax, or if you do it over in Ireland and you pay a 14-percent tax, than who wouldn't choose to do it in Ireland?" he asks.

The Wall Street Journal points out that even though Sweden is lowering its corporate tax rate, that country has presented a budget grounded in higher government spending, while other European governments are trying to curb expenditures.

Giovanetti says the Journal is correct, but Sweden is beginning to ratchet that down. Meanwhile, Sweden's finance minister is not ruling out further cuts to the corporate tax rate.


 

  • TaxBytes-New

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