The President May Have Embraced the Tax Cut, Will He Play Santa in order to Move the Economy Forward? - photo telegraph UK
TheSpringfield Republican reports: The Commonwealth of Massachusetts needs taxpayers to offset the ever increasing deficit; therefore, one Corporation with roots in Massachusetts, Smith and Wesson, has been given a 6 Million dollar incentive (tax cut) to move a manufacturing plant from New Hampshire to Massachusetts – creating 270 plus jobs. The direct result of cutting corporate taxes is an increase in employers who hire – the resultant taxes from the employees hired buffer the state’s coffers. If Massachusetts would cut the corporate tax rate, across the board, how much better off would the Commonwealth be?
Massachusetts currently ranks 32nd out of 50 states in Corporate Tax Climate (Tax Foundation), with the higher number meaning a more tax friendly state; one which would invite corporations to invest, build and hire. That said, globally, Massachusetts remains non-competitive due to the addition of Federal and Local Taxes, so much so that, as of 2009, Massachusetts ranked 3rd Globally, with the combined tax rate of 41.2, with the U.S. as a whole, ranking 34th, behind U.S. states and the nation of Japan. The lowest tax rates for Corporations can be found in Europe, in these tables, with Ireland at approximately12 %. China and India are not included in the data. (Tax Foundation)
Should the state decrease the current corporate rate by half, in a concerted effort to draw businesses away from other U.S. states, and Japan, one would find that the employment rate in the Commonwealth would substantially decrease, there would be need to import population (see current loss of population and subsequent loss of a U.S. Congressional Seat), and perhaps export the unpopular trend of cutting Corporate Taxes so that the U.S. could enjoy parity with the rest of the world. It will remain to be seen if the incoming Chair of the House Ways and Means Committee will work toward cutting the national corporate tax rate. However, given the fiscal conservative nature of Republican Dave Camp(MI), there may be a review of the national corporate rate. It will also be interesting to see if that occurred how President Obama and his new found religion (tax cuts) would react.
This should work to make the U.S. competitive as long as the Unions are left out of the mix; specifically as regards to ridiculous pension policies and other benefits that would effectively negate any tax savings: (See auto industry bailed out and immediately moving out of the U.S. to build where no unions exist.)
To those who would continue to blindly follow the ideology of the Corporation as evil, and a chicken in every pot, one must at the very least introduce a bit of sound logic. Although Corporations might be evil, they do hire individuals do to jobs, which results in an increase in the tax revenues both state and federal, while lowering the unemployment rate. One can either be an unemployed ideologue (of course, that does not include journalists, college professors, and the students at Universities nationwide, along with the leftover hippies happily ensconced in Massachusetts (and neighboring states) or a gainfully employed taxpaying member of society.
On the level of personal taxes, one may want to look at an across the board Consumption or Fair Tax, which is a sales tax on all goods at one level, regardless of income, and would replace any other Federal income taxes and associated fees. That said, a radical reformation of the current tax system does not appear likely, unless and until like minded fiscal hawks have complete control of the House and the Senate and learn to shout a little louder than the opposition.
Imagine, if you will, the State known as the most Progressive Blue State, cutting corporate tax rates in order to attract businesses to increase jobs? Yes Virginia, there is a Santa Clause.
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