Saturday, June 20, 2009, 11:34 PM - Taxes
Posted by Administrator
Today, it's popular in Washington, DC to cite statistics about a high unemployment rate in this community or that city in order to justify the passage of a massive spending bill, which President Obama has attempted to sell as a jobs bill. Of course, this is how politics is played at the national or even at the state and local level. But, the real question comes down to this: what actually works and what doesn't?Posted by Administrator
We do know, for example, that raising corporate income taxes doesn't create jobs. In recent years, Michigan increased its corporate income taxes and, now, that state has become the basket case in the Central part of the US, especially in Detroit, Michigan. About a year ago, Fortune Magazine actually wrote a story about the many senior partners of major consulting firms, which were flying each week to Motown early on Monday morning from the US East Coast and then staying all week, on what it called "the Distress Bus."
So, from this example, we quickly learn that raising corporate taxes is a loser -- plain and simple. If your state chooses to raise its corporate taxes, then individual companies will begin to investigate other jurisdictions -- think "low tax" states or "No tax" states.
Certainly not all companies view it as patriotic to pay "higher taxes" just for the privilege of staying in a given state, like Michigan.
On the other hand, how does a state or a country for that matter actually generate a substantial number of jobs that can really make a difference in its society, you might logically ask. Simple. Dramatically cut corporate tax rates and, then, watch the job creation miracle unfold. As a reader, you may want some evidence to support this conclusion and, so, I ask you "What about Ireland?"
Today, Ireland offers one of the most beneficial corporate tax rates in the world at 12.5%, which is the lowest among all EU member states. This rate compares quite favorably to the 39.5% US corporate tax rate (Source: Deloitte & Touche, 2008). In fact, only Japan among the major economies of the world at 41% has a higher corporate tax rate than our country.
So, what happened in Ireland, you might ask? In Ireland, tax rates were cut, both for businesses and individuals, plus the country's fiscal and monetary house was cleaned up. In addition, US companies (which make up the largest foreign investment group in Europe) especially liked the fact that Irish workers spoke English, although a different version of the language. Ireland also believed in free trade and fought against protectionist policies, such as high tariffs. Plus, John Bruton as the leader of Ireland's Fine Gael Party was the Finance Minister, when Ireland dramatically cut its corporate tax rates and, in the process, helped to create the Celtic Tiger economy. He also served as Prime Minister from 1994-97, during which time he guided the country to a period of great prosperity.
For a quick comparison, Canada's per capita gross domestic product used to be two and a half times Ireland's. But, today, Ireland long ago passed Canada's GDP.
What was the secret of Ireland's success? The Irish miracle was the result of a dramatic policy revolution that emphasized "real" results in creating jobs. And, that's how one person, with a good idea, can positively transform a society, whether that country is Ireland or America. It's about following a vision for creating higher-paying jobs in a global information and services economy, which boosts training and education, moderates wage increases with the help and cooperation of organized labor and slashes corporate tax rates, among other factors leading to that nation's success.
By: Jim Armstrong
James O. Armstrong, who is President of NowWhatJobs.net, Inc., http://www.nowwhatjobs.net, also serves as the Editor of NowWhatJobs.net. In addition, he is the author of "Now What: Discovering Your New Life And Career After 50" and the president of James Armstrong & Associates, Inc., which is a media representation firm based in Suburban Chicago.

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