Treasury Secretary Henry Paulson has a tough sell. The Treasury Department has issued a report outlining how the corporate tax code is hurting American competitiveness. The U.S. corporate tax rate is 39 percent, second highest behind Japan among the 30 OECD countries. As other nations have lowered their taxes the U.S. rate has stayed steady, so the relatively low rates of the 1980's now seem high.
Multi-national corporations say those high rates and the complexity put their firms at a disadvantage. On Capitol Hill today, the economists and executives at the Treasury Department stressed that it’s not the “companies” that are hurt by the tax rate. They explained that, ultimately, it's the shareholders, employees, and customers that experience the most pain.
While it’s a logical argument, it’s a tough sell. People -- whether they are shareholders, employees, or customers -- tend to associate “companies” mainly with their executives, and those executives are taking home huge paychecks compared to the average person’s investment return or paycheck. Plus, few companies are giving away their goods or services.
Paulson acknowledged that today. And while I heard executives willing to trade specific tax breaks for a lower overall tax rate, no one offered to pay more personal taxes or give up any salary or benefits to fund the treasury.
Comments
The issue isn't about Corporate Ethics or about the greed of corporate executives or the stupidity of corporate boards for paying them the high salaries, bonuses and benefits, it is about Taxes. Sarbanes Oxley was passed because of CEO bad behavior, but only a minority. Do corporations pay their fair share in Taxes, not at all.
We might want to lower taxes to create manufacturing jobs here in the US, since manufacturing jobs create jobs and have a ripple affect in the surrounding economy. Anyone with a background in business and/or economics knows this. Should we lower taxes so that we can promote jobs in the US, possibly.
To encourage businesses I would suggest giving a low tax break to new businesses of all kinds for the first 5 years of existence and then gradually increase it to the regular tax rate over a 20 year time period. This would encourage companies, such as GE, to open new ventures here in the US. Outsource to other lower cost countries, be my guest. As long as we follow the above practice of producing jobs here, let corporations go to lower cost countries and create jobs there. Spread the wealth and we benefit as well with export markets of people that previously could not afford our products. But use the tax system to penalize corporations that outsource jobs, but do not create a comparable amount of new jobs here in the US. The Tax system is full of incentives and disincentives anyway, which is why it is so complicated. Why should now be any different.
If lowering our rates will keep the US competative in the world market, consider targeted tax cuts. But remember that taxes are not the only consideration that companies look at when they decide to stay or go overseas.
For FY 2006, the IRS reports collections of 44.7% of Individual Income tax and 13.8% of Corporation income tax for the budget of $2.76 trillion. Individuals have assets of $55 trillion and corporations have over $60 trillion. Does anyone really think corporations are paying their fair share? Why do we have a budget deficit of 9%?
I BELIEVE ONLY THE ETHICAL COMPANIES SHOULD GET A TAX CUT SINCE MOST COMPANIES LIKE FORD SUPPORT THE GAY LIFE THEY SHOULD NOT BE DEEMED WORTHY OF A TAX CUT ALSO THEY ARE LOOKING FOR A HANDOUT COMPLAINING THAT SARBANES OXLEY IS HURTING THEM WELL POOR BABIES PASSES THE CRYING TOWEL TO THEM
Corporate execs are drastically overpaid in this country. Absolutely NO ONE is worth the many millions of dollars being paid to these GREEDY people. I believe this is finally going to catch up and we'll see how these ceo typse fare. We see it happen over and over again. As shareholders we take the hit for their greed.To me a million dollars pay in a given year is more than enough. These people don't go out of their way to help the middle income person. In fact it is with their insistance that middle income jobs have been exported to other countries. I say GOO RIDDANCE to all of them.