People react to taxes. That is why a 10% increase in a tax rate does not produce a 10% increase in revenue. Two of the fastest growing states in the Union are Florida and New Hampshire, neither of which levies an income tax. California has the greatest financial shortfall and the highest income tax rate in the nation. These are not coincidences. They are the result of personal and business reaction to relative tax rates.

Ireland is considering raising the Corporate tax rate from 10 to 12.5 percent. Microsoft, Hewlett Packard, Merrill Lynch, Intel and Google have all made public announcements that they may locate processing operations elsewhere if such a proposal becomes law. Should just one of them carry through with a move, Ireland could lose more by loss of that taxpayer than it gains from the increase in rates. You can expect not only the companies that expressed their objections, but all international corporations to reconsider any expansion plans they had for within the Emerald Isle.

The loss of manufacturing in the U.S. is not just cheap labor elsewhere; it is also the corporate tax rate. At 35% it is the second highest in the developed world. Those who complain that jobs are being exported overseas should be arguing for reducing the corporate tax rate. More often than not, they are doing just the opposite.

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