Rethinking Taxes

During the past 20 years a number of economic studies have been released showing that lower income tax rates actually result in more revenue for the government. Thus, the only reason for raising taxes only on the rich is to redistribute income from the rich to the poor. This reflects the failed socialist and communist ideology of Karl Marx and others who tried to manipulate earnings, incomes and taxes to create some strange version of economic equality.

The reason we have such high corporate tax rates is easily explainable. Politicians can push and vote for corporate tax rate increases because most individual taxpayers and voters do not understand or appreciate that they are hurt by high corporate tax rates in several ways.

First, corporations must protect their profits by passing on the tax income to consumers through higher prices. Second, if corporations get a better after-tax return in a foreign country with a lower corporate tax rate, they tend to send profits from their businesses to jurisdictions with lower tax rates. This is done by transfer pricing and by sending manufacturing and service jobs abroad.

Third, if corporations are getting a lower after-tax return from their U.S. investments than their foreign investment, they will make their marginal investments in low-tax jurisdictions and not in the U.S. That will result in lower productivity and fewer jobs in the U.S.

So, inadvertently, voters are hurting themselves, their families and the economy as a whole when they allow these corporate tax rates to increase and the legislators who support them to stay in office.