WHAT IS IT THAT COMPELS AMERICAN COMPANIES TO GO OVERSEAS ?

The reason manufacturing and jobs are going overseas is as plain as the chart in front of your face.  As you can see from the chart, corporate tax rates have been trending down in OECD countries while U.S. corporate tax rates have remained among the highest in the developed world.

A business can absorb the cost of a little higher tax than its rivals and still remain competitive – – up to a point.  But when the difference is as much as 50%, it starts to become a matter of survival, not just the ability to compete.  At 39% the U.S. rate is exactly 50% higher than the average rate in the OECD countries.

The OECD is the Organization for Economic Co-operation and Development.  It is a group of 34 nations, mostly but not all, located in Europe.  These are not third world countries.  Typical members and their current corporate income tax rates include Germany (15%), Switzerland (8%), and the United Kingdom (26%).  Our rate (39%) is the absolute highest on the entire list of OECD countries.  The only other nations that exceed the 30% level are Belgium and France.

It is no secret which political party is acting to keep it that way.  It is the same party whose constituents complain the loudest about U.S. corporations sending jobs overseas.  It is the same party whose shibboleth is tax the rich.  It’s the party that penalizes achievement and supports indolence.  It is the party with the least understanding of how wealth is created and the best skills for appropriating it to spend in the furtherance of central planning agendas.  It is the Democratic Party.

Onerous domestic taxation is not the only reason companies choose to go overseas.  Laws and regulations are another.  It is not that regulations are more liberal in foreign lands, although that is often the case for certain industries.  The relative attraction is that you can plan and deal with the devil you know better than you can with one you don’t.  If there is one word that describes the business policies coming from the Obama administration, that word would be uncertainty.  Given the President’s position on Card Check, health insurance price controls, drilling moratorium, corporate executive salary controls and eagerness to partially nationalize companies in the name of bailouts it would be foolish to assume the uncertainty would unfold to the favorable side.

While the ever socialistic Europe is moving slightly to the right, the bastion of free market society that is America, is rushing hell-bent for leather to the left.  Eastern Europeans know where we are going.  They have been there and it wasn’t good.  We need to change course before we find out what they already know.  If we continue on the present course, believe me; it won’t be good.

One response to “WHAT IS IT THAT COMPELS AMERICAN COMPANIES TO GO OVERSEAS ?

  1. Who wrote this? Do you have any idea from taxation? The statutory tax rate gives you no information whatsoever about the real tax burden. Since every country takes different deductions into account which lowers the tax base, the effective tax rate can be much lower than the statutory tax rate (it usually is) and can even be zero! (big companies like Google, Apple, Facebook and SABMiller pay less than 5% taxes!!!). And for example, according to this graph, Germany has the third lowest tax rate. It is true that the CIT from Germany is only 15 percent. However, Germany additionally levies trade tax which is usually also 15 % (min. 7 %) which leads to a total statutory tax rate of around 30 percent. Someone who doesn’t take into account that the statutory CIT rate is not the only rate that matters is not qualified to write over taxes.

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