Come for the Ride…

While roaming through the numerous excellent business articles on the Wall Street Journal online, one particular nugget of gold hit me a few days ago. Did you know that the US has the second highest corporate tax rates in the world? That is, unless you’ve started a business in California, Iowa, New Jersey or Pennsylvania (among others) in which case you surpass the levels companies in Japan, the highest overall in the world. A new study from the Paris-based Organization for Economic Cooperation and Development (OECD) has confirmed that “corporate taxes are most harmful for growth, followed by personal income taxes, and then consumption taxes.” The study says “investment is adversely affected by corporate taxation,” and that the most profitable and rapidly growing companies tend to be particularly sensitive to high business tax rates.

With all the evidence pointing to high corporate taxation as a huge contributor to a slowing economy, you have to ask where this sentiment comes from? I’ll tell you, people like Senator Byron Dorgan of North Dakota who have used stastics by Government Accountability Office (GAO) such as the following: 28% of large U.S. corporations paid no income tax in 2005. He says, “It’s time for big corporations to pay their fair share.” Did anyone tell Seator Dorgan that 85% of those companies didn’t make a profit last year? The story even offers this clever quip:

American Airlines and General Motors escaped income tax for 2005 through the clever tax dodge of losing $862 million and $10.5 billion, respectively. How unpatriotic.

Are these idiots really running the show in Washington? Senator Dorgan, and the rest of the polito, need to realize that corporations aren’t a true individual like you and I. Taxing a corporation is just another form of taxing the owners and shareholders of America’s companies. More taxes don’t mean less money for companies. It means less dividends. It means lower stock prices. It means your local fireman, policeman and teacher’s IRA is X% lower because the government had to take their “fair share”.

Simply put, the tax system in the US is becoming less about generating and maximixing government revenues and more about punishing behavior and redirecting people’s labor, and that’s not right. Abolish corporate taxes all together and you’ll have such a surge of new companies, companies moving from overseas and individual startups that the US will see an economic boom such has never been seen before. And with all this extra income people will be getting, the government will get their “fair share”, not to mention we won’t be double taxed any more.

It’s going to take someone with balls to stand up for the big guy and ignore all the anti-corporate rhetoric. Corporations are amoral entities. They aren’t good. They aren’t evil. They are just a vehicle to maximize profits and when they do, EVERYONE benefits. Be it shareholders, employees, charities and other businesses, business is good for America. In a few short months there will be an election and I hope we all look at our local representatives as well as our national to remove these chains which are binding America’s corporations.

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