Wednesday, August 27, 2014

How Liberalism Stifles an Economy

Burger King is joining the growing list of corporations which are relocating their corporate offices outside of the country in order to avoid our onerous 35% corporate income tax. This is the highest tax rate in the developed world and since Mr. Obama took office in 2008 two dozen corporations have decided that the United States is simply too expensive to live in.

The flight to cheaper climes is called inversion and it's got a lot Democrats in a swivet which is ironic since deep down Democrats realize that taxes provide all sorts of disincentives for businesses, or at least they seem to since television commercials are running locally trying to persuade businesses to move to New York, a blue state, by offering tax breaks to businesses that come there.

Nevertheless, the Obama administration and others on the left refuse to change the U.S. rate and instead criticize and threaten corporations which participate in the exodus.

When businesses leave the country they not only pay less in taxes to Washington, they also take jobs with them which means more unemployment and even less tax revenue. The Obama administration is calling these corporations unpatriotic and threatening them with coercive sanctions to keep them here, a sort of economic Berlin wall, so to speak, to prevent corporations from going where they can thrive and prosper. It's the universal knee-jerk reaction of those with dictatorial inclinations to solve every problem by curtailing freedom.

Inversion is similar to the problem liberals have created in many of our urban areas. They tax those who pay taxes so heavily that anyone with money flees the city and all that's left are those too poor to leave and too poor to pay taxes. It's one reason why so many of our cities take on the aspect of a vast wasteland. High taxes drive out wealth.

What would happen, though, if congress decided to reduce the corporate tax rate to bring it in line with other countries in Europe and North America? What impact would that have on corporate investment, hiring, and retail prices. It sounds like it would be a boon to the economy which pretty much guarantees it won't happen anytime soon.