Politicians tend to
always look at solutions to problems instead of getting to the root cause of the problem to be solved and what caused it to arise into a problem.
Such are the ways of the federal and state elected officials. Normally, they are not the “sharpest knives” in the drawer and some are “three bricks shy of a load,” so to speak. They are always quick to identify a problem and a quick fix, usually involving new legislation or amending existing. What a tragic mistake in terms of economic growth and development.
Much has been said and written about bringing back jobs to America. We need to look at the root cause why they left in the first place. The problem is government corporate tax rates and regulation. The federal government has created a climate so antagonistic to business that it’s often foolish for companies not to pack up and head for greener pastures.
Consider that America’s top marginal corporate tax rate is a whopping 39% when average state tax rates are factored in, the third highest burden in the world, according to the Tax Foundation. Only two nations in the world have harsher tax penalties – United Arab Emirates (55%) and Chad (40%). Even without state taxes, the federal government’s 35% rate is matched by just six countries: Argentina, Democratic Republic of Congo, Equatorial Guinea, Malta, Sudan and Zambia. Certainly, these countries are not sterling examples of booming economic growth.
The rest of the world is catching on to the fact that lower tax rates are better for business, Washington bureaucrats haven’t. According to the Cato Institute, America is one of only three states in the Organization for Economic Cooperation and Development (OECD not to reduce rates over the last 15 years. The average corporate tax rate for OECD countries is approximately 25%, the average globally is even lower at 24%.
There are billions of dollars in regulations. Regulation is another form of taxation, because businesses pass on the extra costs to the consumer. Any time expenses go up, the businesses only bear what is acceptable, then always pass it on to the customer.
Politicians love to punish symptoms instead of curing the disease. Is it any wonder a CEO/CFO looks at the bottom line, especially in tight markets, and wonders how they can save money and put it directly to the bottom line? Inversions to foreign countries to establish corporate headquarters only makes financial sense. The money saved can be used to expand the company, for more research/testing for new products, and expenditures for raises, more hiring, and dividends (if a public company). The old saying “money goes where it is treated best” fits in this case.
The whole idea of business is to grow and generate income for the business. It is not to provide jobs, although that is usually the by-product. When a company has to make decisions to pare down expenses because of market or economic realities, unfortunately, some people lose their jobs. I’ve been through it, as have many others. You do the best you can and move forward, hopefully to improve your lot in life.
The biggest obstacle to you and businesses is government – always. Government is not your friend, especially the federal government. If you are depending on government to make your life easier and better, get off your rear end and do it for yourself.
The government sticks it to business first, then you in the form of payroll taxes. If people had the option of not having federal and state taxes taken out of paychecks and had to pay at the end of the year, there would be a revolution. We all know we have to pay to support the government, but not the bloated, out of control behemoth it has become. When will Americans rise up and demand a change?
This next presidential election will determine the progress or fate of the country – Democrats and the Independent want more of your money, Republican candidates want more responsible budgets and spending, or so they say.
Time will tell, It’s your vote, you decide.