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PostMore US Firms Move Abroad; on the "Fiscal Cliff" (Bienvenido Macario, USA, 09/03/12 5:13 am)
Happy Labor Day!
I thank Randy Black for his comments of 31 August, and for the opportunity to further discuss how high corporate taxes are preventing US firms from competing in the global market.
For Ireland, 12.5% tax of something is better than 35%, or as Romney proposed 25%, of nothing. For businesses it is no use submitting a proposal or bidding for a project knowing your price is too high, all things equal. Yet what is the use of slashing your price to end up working break-even or at a loss?
Instead of looking outward and examining how the government could help US firms compete overseas, Congress passed a law in 2004 to discourage them from moving their business abroad. They were simply thinking of getting a share from US firms' profits without contributing anything to the equation.
It did not occur to Congress in 2004 that the 35% corporate tax, in way, contributes to a strong dollar.
To answer JE's question if Romney's administration could pass a tax code, it is the US Congress's responsibility, not Obama or Rommey's administration, to enact laws supportive of US firms competing globally. Of course, the make-up of Congress will not be known until after the Nov. 2012 election.
With regards to the fiscal cliff, we now have a $16 trillion deficit, a slow economy and a real estate-housing industry that has been in depression since 2007. How will the next administration stimulate the economy, reduce deficit and raise taxes or extend the Bush tax cuts all at the same time? The way we wasted our time with election, the fiscal cliff will most likely happen in 2013.
Then there is the EU debt crisis, which I believe will officially put Europe in recession by September 20 or 21, 2012. One way or another, the US economy will be affected by a European recession. ECB Pres. Mario Draghi did not attend the annual meeting at Jackson Hole.
JE comments: How much has Ireland's 12.5% corporate tax rate helped since 2008? For example, have many corporations relocated there since the crisis began? Nobody has the stomach for a "fiscal cliff"--I thought we already fell off one. And aren't several nations of Europe already in recession--Spain, Portugal, Greece, Italy... and Ireland?
Note that Bienvenido Macario's "cliff date" for Europe is not far away: 21 September.
And finally: Happy Labor Day to US WAISers. I have celebrated by sleeping for another couple of hours.