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Abolish the Corporate Income Tax!
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News that Pfizer, the world’s largest pharmaceutical company, plans to buy Britain’s AstraZeneca for $106 billion, renounce its U.S. citizenship, and declare itself a British company, has jolted Congress.

Pfizer is being denounced as disloyal to the land of its birth, and politicians are devising ways to stop Pfizer from departing.

Yet Pfizer is not alone. Hedge fund managers are urging giant corporations like Walgreens to go nation-shopping for new residences abroad to evade the 35 percent U.S. corporate income tax.

Britain’s corporate income tax is 20 percent, and Pfizer stands to save over $1 billion a year by moving there.

In what are called “inversions,” dozens of U.S. companies have bought up foreign rivals, and then moved abroad to countries with lower tax rates, cutting revenue to the U.S. Treasury.

But Pfizer is far and away the biggest.

The real question, however, is not why companies are fleeing the USA, but why our politicians continue to drive them out of the country.

Consider. Here in America we do not tax charities, churches or colleges. Yet these institutions produce a fraction of the jobs that businesses produce.

If, as a nation, we are committed to “creating jobs,” does it make sense to impose the highest corporate tax rate in the Western world on our biggest and best job creators?

Is this not economic masochism?

Many governors understand that if you want something in your state, you do not drive it out with high taxes. You strengthen the magnet of low taxes. Florida wants residents of other states to move there and retire there, so it has no income, estate or inheritance tax.

For years, Rep. Jack Kemp urged the creation of enterprise zones in poor communities like Benton Harbor, Michigan, and Harlan County, Kentucky. Businesses that relocated there would be exempt from corporate income taxes.

Why not make the United States the largest enterprise zone on earth — by abolishing the corporate income tax?

If the corporate income tax were repealed, no U.S. company would think of moving abroad, and every transnational company would think about moving to the USA.

What a message this repeal of the U.S. corporate income tax would send to corporate headquarters worldwide: Relocate your company or next factory to the USA, keep every dollar of profit you earn, and either reinvest it here or take it home. Your call.

How would America benefit?

Every U.S. company, liberated from its corporate tax burden, would see its profits soar and have more cash on hand for cutting prices, raising wages and salaries, and new investment and hires. And every company that relocated here would create new U.S. jobs.

This would be a stimulus package to end all stimulus packages.

Isn’t this what we all want? Or are we not willing to create jobs here if the means of doing so conflict with redistributionist ideology?

Consider the other benefits of abolishing the corporate tax.

Corporate lobbyists, who spend their days walking Capitol Hill corridors seeking tax breaks, and their evenings at fundraisers handing $1,000 checks to congressmen who can create tax loopholes — in a form of legalized corruption and glorified bribery, could be put out to pasture.

Armies of tax lawyers, accountants and IRS agents could be shifted to more productive work. Companies could focus full time on creating new wealth, not finding ways to keep what they have earned.

Many politicians seem to think the corporate tax punishes the rich and powerful and is an indispensable weapon in reducing inequality and redistributing wealth. This is neosocialist myth.

As Ronald Reagan used to say, corporations don’t pay taxes, people do.

ORDER IT NOW

The billions in corporate income taxes paid by Wal-Mart and McDonald’s come out of the dollars spent by consumers who shop at Wal-Mart’s and eat at McDonald’s. Where else does Ford Motor get the money to pay its corporate income tax, if not from dollars spent by Middle Americans on Ford cars and trucks?

Middle America pays the corporate income tax.

How could we make up for the lost revenue to government?

Simple. The corporate income tax last year produced $273 billion, less than a tenth of federal revenue. Imports, which kill U.S. jobs and subtract from GDP, totaled $2.7 trillion last year.

Put a 10 percent tariff on imports, and the abolition of the U.S. corporate income tax becomes a revenue-neutral proposal.

Looking back, consider what our political class has done to our once self-sufficient American Republic.

We impose on businesses, our principal job creators, the most punitive corporate tax rate in the West. Through “free trade,” we tell U.S. companies that if they wish to avoid our taxes and get around our minimum wage, health, safety, and environmental laws, they can move to China, produce there, and bring their products back free of charge — and kill their competitors too patriotic to leave America.

“The Decline and Fall of the United States of America” is going to a piece of cake for future historians to write.

Patrick J. Buchanan is the author of “Suicide of a Superpower: Will America Survive to 2025?”

Copyright 2014 Creators.com.

 
• Category: Economics • Tags: Taxes 
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  1. “As Ronald Reagan used to say, corporations don’t pay taxes, people do.”

    One remembers Reagan once saying, with a perfectly straight face and on his most versimilitudinous tippy-toes, “The United States will NEVER be the first to use nuclear weapons.”

    Did Buchanan infect Reagan, Reagan Buchanan, or were they mutually contagious?

    Last time one looked US “corporations” were recognized as legal persons, no?

  2. Jason says:

    I would be curious if Mr. Buchanan or anyone else could cite current examples of large American corporations (with some proof of the claim) that have raised wages, cut prices and invested in new hires. A quick glance at the past 20 yrs. would seem to show instead the systematic gutting of the middle class, massive layoffs and outsourcing of production jobs in order to maintain, or more accurately increase the dividends, bonuses and profit of management and shareholders. This will not change with the removal of corporate income tax, without some form of reciprocal regulation. Greed has reached a near religious level in the lives of the captains of industry. The jobs created in your unregulated enterprise zones will serve merely to create a new form of slavery. Semantics aside, workers who work out of a sense of desperation for wages that do not meet the needs of their families are too in a state of bondage. While I appreciate many of your insights in the realm of foreign policy Mr. Buchanan, this piece most definitely fits nicely with the nickname of your column here.

  3. Dave37 says:

    Considering the way things are now it doesn’t sound like a bad idea to me though I don’t know if overseas cheap labor and lack of enviromental laws there wouldn’t be a consideration for business. We could always tariff the heck out of anything imported too but that will never happen even if China let us.

  4. Gary says:

    No company needs to pay a corporation income tax. How? Simply form a general partnership. Then all money will be taxed on an individual basis only. Of course there is the bit bit about general partnerships having unlimited liability, but that is the trade-off. If you want limited liability pay the corporation income tax. That is basic economics.

  5. Rod1963 says:

    Late Imperial Roman and their successors the Byzantines played that game and ran out of funds.

    Corporations are no friends of the American people. First we let them outsource our jobs to Asia by the millions(ten + and counting) where the labor is a $1 a hour and no environmental laws. The goods come back to the U.S. at the same price it was when it was made here, except the corporations pocket the difference. Then we gave them tax cut after tax cut, let them move their HQ’s to the Bahama’s so as to escape the tax man.

    None of that was good enough for them. They still whine like stuck hogs.

    Not only that they are immortal and have now personhood status as bizarre as that sounds. Leave it lawyers to concoct such insanity. So it means they can own senators and congress the way we own DVD’s. That’s okay though because it’s Democracy or so the doddering old black robed freaks in D.C. tell us. It’s okay for a hundred corporate CEO’s to have more say than the rest of the people combined.

    Screw them. It was the corporations that wrecked this country, ever since Clinton greenlighted free trade, they’ve been sending jobs and IP overseas, leaving us destitute and our people dependent on government aid when they should had jobs.

    Now Bucky wants to drive a stake in the tax base. Idiot.

    Here’s my solution: Lets impose a tariff on everything they sell in the U.S. It doesn’t matter if they make it here or not. They are a foreign corporation so slap it to them. Say make it 20% of retail price.

    Watch them scream like stuck pigs. They can’t pass on the tariff without destroying their market base so they have 2 choices. Relocate back to the U.S. or eat the costs.

    Prior to the income, tariffs were the main way the government obtained it’s revenue.

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