Keep corporate tax rates low
Imagine a baseball team with a self-imposed rule requiring its players to brandish a 50-ounce bat, while the other teams use the standard 32-ounce slugger — a huge difference when facing 95 MPH pitches.
Inarguably, there would be two results:
A) The team with the dumb rule would be in last place, for swinging significantly heavier bats would produce fewer hits, and thus fewer runs.
B) The players and coaches on that team would flee to greener pastures — namely teams without such a self-defeating rule.
Common sense clearly dictates that the last place team re-evaluate its policies, make the necessary adjustments, and halt the exodus of its players. How? By allowing its players to use lighter bats, thereby creating a winning environment and achieving a financial windfall in the process.
Naturally, it would be insanity to go in the other direction — digging in even further, and threatening sanctions against anyone leaving the team. Right?
Wrong. Welcome to the Biden White House and Democraticcontrolled Congress, who adamantly want to change the single largest factor fostering growth and keeping America’s economic status competitive: Low corporate taxes.
One of the most monumental, yet unheralded, accomplishments of the Trump administration was slashing the U.S. corporate tax rate from 35 to 21 percent. In doing so, countless businesses and millions of jobs stayed in America rather than being shipped overseas. Yet Mr. Biden and the Democratic
leadership want to change that success story by jacking rates back up under the massively disingenuous “the rich need to pay their fair share” trope.
Several years before Mr. Trump’s election, American pharmaceutical giant Pfizer attempted to buy Britain-based AstraZeneca (ultimately, the deal never materialized). While AZ had an extremely promising pipeline of cutting-edge anti-cancer medicines, there was another compelling reason for Pfizer to acquire the foreign-based firm: Massive tax savings.
If the deal had gone through, Pfizer would have almost certainly utilized a tax-inversion strategy where it would have “re-domiciled” the company in the U.K. to realize substantial tax savings.
Given the number and amount of taxes that businesses pay, it was a breath of fresh air to finally reduce the federal corporate tax rate. The results speaks for themselves, as unemployment in America dropped to historic lows (with the lowest levels ever recorded in the Black and Hispanic communities), an economy on fire, and a stock market hitting record highs.
But Mr. Biden is ignoring the age-old adage of “if it ain’t broke, don’t fix it.”
What Mr. Biden doesn’t understand is that there’s no such thing as a business tax, because companies will always — always — pass those added costs on to others. Obviously, the immediate result will be higher prices, which would add to America’s already-significant inflation issue.
Tax increases and sky-high rates stifle innovation, cause job cuts, place a cap on new hires, and take capital out of the market, where it would otherwise be invested in projects and people. If the Biden tax increases pass, companies will once again head for the exits. But instead of realizing why those businesses flee, and what can be done to halt the exodus — i.e., not creating a hostile business environment in the first place — government leaders will naturally look for a scapegoat, with threats to penalize those with the foresight to seek a more secure location. Just as we’ve seen before, we’ll even have some congressmen advocate making it a crime for businesses to leave.
But they totally miss the point. If a company can save millions (or billions) per year in taxes by relocating elsewhere, it will justifiably pursue that course. The money saved could hire more people, increase research and development, expand operations, bolster ancillary business, and otherwise fuel a productive economic engine. Unfortunately, that investment would occur overseas, creating little benefit for America. And all that because elected officials failed to keep tax rates fair.
High taxes can never be justified, but the pill might not be so bitter if at least the money was wisely spent. But since we know otherwise — given the overexcessive stimulus payments, bloated infrastructure plans, and social-engineered “woke” spending bills — any tax increase will be salt in the wound.
Winston Churchill stated: “We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” Here’s hoping that congressional Democrats learn that history lesson by joining Republicans in voting down the most taxing issue of the day.