Thursday, October 13, 2016

United States Corporate Tax Rate Flawed Companies Relocating Policies clinton buffett rule takeovers


The average corporate tax rate among 20 competing markets is under 20%, but in the United States this number is 35%.
A 2016 report by Ernst & Young found that a reduction in that rate to the more competitive level of 25% would have "prevented foreign takeovers of 1300 companies".  This doesn't even account for the losses attributed to tax inversions; Fewer companies relocating is a double blessing for the United States because
1) the federal government would take in more tax revenue without having to raise the rate on remaining companies.
2) becomes more attractive to foreign entities interested in relocating their legal domicile to a more tax friendly jurisdiction.  Because America is such a large market with many net benefits this should be considered the limiting factor and thus consequential.

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Between 1986 and 2016 the number of US companies ranking among the world's top 500 by revenue fell from 218 to 128.  To maintain tax revenue, the country has had to raise the rate on the remaining companies - this hasn't helped the situation which has gotten out of control : $300 billion worth of companies taken over in 2016 highest in almost two decades.

Points to consider when voting in the next election: Policies and business


My opinion

  • since when does a bankrupt nation have the luxury of choosing expensive energy? Clinton wants to add trillions more in debt to build the infrastructure needed to produce energy at a rate of 80+ cents per kwh when coal and gas is only 25 cents.  The transition to alternative forms is the reason Nova Scotia has the highest utility rates in Canada.
  • The Trump Plan will lower the business tax rate 35%->15% and eliminate the corporate alternative minimum tax.
  • unlike Trump, Clinton is not proposing a full overhaul of the tax code.  her plan is intended to make sure the wealthy pay their "fair share" in income tax. Under her the code more complex, particularly for high-income earners who might or might not meet the Buffett Rule (every individual and company making more than $250 thousand have to pay a minimum of 30%); they could also be subject to her proposed 4% income surtax on income over $5 million.

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