Today, Obama announced his plan to cut corporate tax rates to 28% from the existing 35%. There is a lower effective tax rate proposed for US manufacturers, firms that return jobs to this country and to companies that relocate to some communities that have lost big employers. The craziest part about this … the other side is already baulking at the proposal. Since when is lowering taxes something the Republicans don’t like?
It is important to understand that something clearly had to be done. Currently, the US corporate tax rate (35%) is the highest in the world behind Japan (and we all see how that’s working out, both for Japan and for us). This has led to numerous large companies moving operations and investing profits overseas in order to avoid the US tax rate (a very smart thing to do, because you will earn more on $X invested than 2/3 of $X invested). And before you scream about corporations taking that 2/3 of $X and pocketing it, keep in mind that the vast majority of small and medium sized businesses (SMEs) typically reinvest in their own business, which keeps people employed (or hires more as the company grows), trains employees, contributes to local sales and property taxes, etc. It’s not going to the coffers of entrepreneurs … trust me.
Of course, there are some caveats to the proposal:
"In turn, corporations would have to give up dozens of loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face a minimum tax on their foreign earnings."
Ah … FOUL!! Wait. Those are the caveats? Really? So, let me get this straight:
- Manufacturing and produce jobs IN the US and pay a lower tax rate?
- Relocate or open a business in a ravaged part of the US to help reignite economic prosperity to communities hit by hard times … and pay lower taxes?
- Encourage SME growth by levelling competitive landscape by requiring ALL corporations, big and small, to be taxed at the same rate?
- Tax overseas revenues made by US-based companies (who utilize US infrastructure and US employees) so you are more likely to invest in the US and not in China?
Well, that sounds good to me. And from my understanding, this will not raise overall taxes or affect individuals (although it might help individuals by encouraging more production and jobs in the US). Hmm, it will be interesting to see the arguments against this.
This article was found on Yahoo News and written by APs Alan Fram. Follow both on Twitter at:Source: