April 2, 2012

On Sunday, April 1, Japan gave the United States a wonderful April Fool's Day Present: They lowered their corporate taxes below ours and made the United States the nation with the highest corporate tax rate in the world!

That is no joke! Japan wasn't "pranking us with a fool's joke." That nation literally made a fool of the United States.

If only it was a very bad April Fool’s Day joke, but it’s not.  As of April 1, the U.S. will have sole possession of the highest corporate tax rate in the developed world.  When the average tax that states add to the 35% federal corporate tax is included, American businesses are tagged at a 39.2% rate.  Japan is the latest nation to lower the tax rate on business and in so doing will relinquish the dubious top tax rate distinction to the USA. 

Over the last two decades OECD nations (The Organization for Economic Co-operation and Development) have been lowering corporate tax rates.  For anyone concerned about America’s ability to compete internationally, see to following chart.

Republicans and Democrats, including Barack Obama, have talked about lowering the business tax rate, but so far, talk is all that has happened.  The President’s plan is really a kind of shell game that would raise other taxes in exchange for a lower tax on profit. That makes him proud.

The global lowering of corporate rates "is part of a world-wide recognition that high corporate taxes create economic distortions.  Most obviously they encourage businesses to locate operations in other countries," according to the editors at the Wall Street Journal.  "American liberals argue that most U.S. companies don't pay the top federal statutory rate of 35% because of various loopholes and credits, but the high rate encourages multinationals to keep their profits overseas to invest there rather than in the U.S." concludes the WSJ

If the President and Congress were truly serious about creating jobs, stimulating the economy and recovering from the deepest, longest recession since the Great Depression then lowering the corporate tax rate to a globally competitive level should be a no-brainer.  But, even that doesn't get done in the toxic environment of Washington.  

We believe that the Constitution of the United States speaks for itself. There is no need to rewrite, change or reinterpret it to suit the fancies of special interest groups or protected classes.