Where The Jobs Are - Or Will Be Soon
While the Democrats are playing populist demagogue politics, promising protectionist policies and confiscatory corporate taxes, other countries have laid the groundwork to get all the jobs that will disappear in the US if those populist policies become law. Iceland and Taiwan are cutting corporate taxes.
Iceland is known as the Nordic Tiger because of rapid economic growth. Much of the nation’s prosperity is the result of free-market policies, including a 36 percent flat tax on labor income, a 10 percent flat tax on capital income, and a corporate tax rate of just 18 percent (down from 50 percent at the end of the 1980s). But Iceland is not resting on its laurels. The government has just announced a reduction in the corporate tax rate:
The corporate income tax will be cut from 18 per cent to 15 per cent, effective for the 2008 income year and come into force in the 2009 assessment year.
Meanwhile, even though the 25 percent corporate tax rate in Taiwan is already substantially lower than the 39 percent-plus rate in the United States, Taiwanese politicians apparently recognize that globalization and tax competition are powerful arguments for even lower rates. Tax-news.com is reporting that the government therefore plans to slash the corporate rate to 17.5 percent - and also make unspecified reductions to personal income tax rates:
Global trade will go on even if the United States decides not to play any longer. The jobs will merely migrate to new, friendlier places. Corporations looking to make new investments will have a choice between countries that promise to take little of their returns in taxes or an enormous chunk of them.
If you were making the decision, which would you choose? Prosperity or beggaring yourself?
By guy, February 22, 2008 @ 9:27 am
Corporations will want to leave because of high tax rates?Well, I guess we’ll just have to nationalize those nasty corporations. That’ll fix the problem.
By Lars Walker, February 22, 2008 @ 9:30 am
On top of everything else, Iceland’s a kind of cool place. Grimly beautiful, and everybody heats their floors with geothermic energy.
By TimF, February 22, 2008 @ 12:28 pm
>> Global trade will go on even if the US decides not to play any longer.
That’s standard ’decoupling’ theory. Unfortunately, the ongoing financial-market problems seem intent on disproving it’s validity. Remember, the result of Smoot-Hawley was a GLOBAL reduction in trade that made what was a nasty recession into the Great Depression.
FWIW, it may not matter any more what the US does (though of course we can always make a bad situation worse), as China looks likely to crash post-Olymipics and bring the house-of-cards down (http://www.financialsense.com/editorials/petrov/2004/0902.html). History doesn’t necessarily repeat, but it sure looks like it may rhyme.
By Mockinbird, February 22, 2008 @ 3:17 pm
We need to reduce the corporate tax rate so as to compete. Robust free market capitalism is truly for our children.
By sam, February 22, 2008 @ 5:12 pm
So what you are saying is that soon Mexicans will be streaming across our southern border to catch a flight from LA to Reykjavik?