We have all heard the talking points already this year. Every single GOP candidate wants to lower corporate taxes to bring our jobs back from China and else where. Unfortunately the CATO Institute put forward an article regarding the effective corporate tax rate in China, and the called it the HIGHEST in the WORLD!
China also has some challenges. Canada’s CD Howe Institute estimates that China has the highest effective corporate tax rate of all major economic powers (though the tax rate recently was reduced to 25 percent as part of a reform package, so China’s position presumably will improve when new rankings are released).
But that is not the only problem. In an effort to determine which tax systems were easy to obey and which ones made compliance difficult, the World Bank looked at the business tax systems of every significant nation, and ranked China among the ten worst.
Further more, I would like to expound on this, according to Associate Professor Donghyun PARK,Economics Division, he wrote a study and broke down the effective tax rate in China on page 45 of his report.
On page 15 of his report he states,
Table 10 shows that Singapore’s corporate tax regime is highly competitive relative to other countries. In fact, it has the lowest marginal effective tax rate on capital among the 36 countries,even though six countries have lower nominal corporate income tax rates.
Some countries with high tax rates, most notably China, attract a lot of FDI (Foreign Direct Investment), while some countries with low tax rates, such as Turkey and Portugal, fail to attract significant FDI.
On top of a very low corporate effective tax rate, their INDIVIDUAL tax rate is 5%-45% in 2011, an entire 10% more than the United States.
Since 2000 the United States has lost 10 thousand factories to China and other foreign countries. The GOP have been telling us that our high taxes scare them away. The problem here is, they ran to a HIGHER TAXED country.
This is a battle that is not about taxation. This is a battle over the cost of labor. The exceptional American standard of living is under assault by domestic and foreign investors looking to increase their dividend checks at the peril of OUR middle class way of life.
You see, the American people have been silenced through easy credit. Our declining wages have been masked by this for 30 years, but the bill is due and credit is tight and we no longer have the wages to spur demand.
It’s time for the Democratic Party to start talking about renegotiating Free Trade, and replace it with fair trade. It’s time for the federal government to protect our standard of living and call for SHARED PROSPERITY!
