The Taxman Cometh


More and more businesses seem to be leaving continental United States for the shores of countries with friendlier commercial tax rates. Both republicans and democrats are seeking a reform in American tax law but the nature of the house is partisan and, with constantly divisive politics, very few important changes have been made. Republicans are hesitant to be seen commiserating with the Obama administration and the democrats are generally unwilling to make concessions to a republican. Votes matter and with a divided house, nobody wants to do anything untoward.

Trade agreements like NAFTA and the WTO have made domestic tax rates increasingly unreasonable for corporations. Competing with countries like Mexico where the minimum wage is less than $5/h is nigh impossible. Many astute business owners see these trade agreements as an opportunity to significantly increase their profits and don’t hesitate to leap on them, moving their business across the border to reap the benefits.

Currently, corporations pay 35% federal tax on whatever they make in the United States. This staggering rate is bettered by the vast majority of countries and so instead of manufacturing their products in the US, most industries choose to go across borders or overseas. Money brought into America from abroad is also taxed heavily and, to avoid this, most multinationals choose to simply invest overseas to preserve their profits.

Many that choose to stay still find ways to reduce their tax payments. Burger King recently merged with Canadian giant Tim Hortons and, while their headquarters remains in Miami, their billing address is a Canadian one for taxation purposes.

Obama’s administration has suggested charging a flat tax rate of 19% for multinationals which would ignore whether or not profits were brought back into the United States. Aggressive tax reforms like this are pointed in the right direction but they provide no lasting solutions. The problem here is that any forcible tax increases on large corporations only serves to push them further away. Why pay 19% when they can pay 5%?

The real resolution to this problem would come through a trade agreement across all developed and developing nations with one fixed tax rate for all corporations. Similar ideas have been tabled in conferences held for the participating parties of the Trans-Pacific Partnership (TPP) Agreement and the Transatlantic Trade and Investment Partnership (T-TIP). Unfortunately though, countries who charge minimal tax for foreign companies are very reluctant to agree to such a measure and so the option is only ever discussed briefly.

Either incentives need to be provided to these countries in order to convince them to join a universal tax agreement for big business, or incentives need to be provided to big business in order to convince them to stay in our country.

Business incentives may appear to be another point scored for the 1% but after considering that, right now, the United States has the third highest corporate tax rate in the entire world, it doesn’t seem so outlandish. Millions of jobs have been lost to outsourcing – a direct result of our incredibly high corporate tax levies.

A divided house prevents us from being able to adjust our economic policies without running headfirst into a political wall. Democrats and republicans are both obliged to keep their lobbyists, as well as their constituents happy, else they lose power. I refuse to accept corporate control and I will not sacrifice my ideals, and that is why I am an independent candidate. Voting for Art Drew is a vote for change and a more stable economy. I will bring American jobs back to America.