Thursday, March 12, 2009

The Fallacy of Rising Taxes

Corporate Oil Booms in Low Tax Switzerland

Obama talks frequently about raising taxes, but only on the wealthy. "The Wealthy", however, includes small and large businesses which employ people, and spend money in the economy as they buy equipment and patronize other businesses in the area (or Nation) to buy raw materials and other needed equipment/services.

One fallacy of the Left's thinking is this: they assume they are taxing a captive crowd. Unfortunately, many of our lucrative, high dollar employers, such as the Energy Sector, are much happier to leave the country for better tax environments. According to The Tax Foundation, the US ranked number two in the world for highest corporate tax rates, at 39%. Now Obama would have us raise taxes on those corporations further, out of some sense of punishing them for making too much money.

Then we have Ireland at 12.5% and Switzerland at 21%:

Swiss cantons are free to set their own tax rates. For example in Zug, corporate tax is about 16 percent but can fall as low as 9.5 percent for companies that do most of their business outside Switzerland. That compares with an average global corporate tax rate of 25.9 percent, according to consultancy KPMG.

"One trend that we see is that particularly Bermuda-based companies are now moving to Switzerland," said Martin Frey, a partner at law company Baker & McKenzie. "That may only partly be obviously for tax reasons, but also for security reasons and the fact that the Obama administration may go after them."

Many of our larger companies are able to do business anywhere. And you can be sure they'll do it where they can save massive amounts of money. The more our Gov. tightens its tax fist, the more jobs will flee overseas. The more jobs flee overseas, the higher taxes must be raised to handle Government spending, and a vicious loop begins. The result, less jobs for Americans to take advantage of, and less economic growth, as those companies that are left pass on their higher tax costs directly to their customers.

That's right, you raise a company's costs, and it will, in turn, pass on those costs to its customers in the form of higher prices. A tax increase on "the rich" is really a tax increase on EVERY AMERICAN.

It's definitely amateur hour in our Government.

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