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As high as American corporate tax rates have been over the years we could always count on the Japanese to post higher rates thereby making us look not too bad. Unfortunately, this all changed recently when Japan announced they were dropping their rates leaving America alone at the top with the highest tax rates in the world. Actually, most corporate tax rates in other countries have been retreating over the last ten years in order to attract talent to their shores and promote existing businesses. To illustrate, consider how the "Combined Corporate Tax Rates" have changed over the last decade in these key countries:
| COUNTRY | 2001 | 2011 | |
|---|---|---|---|
| Canada | 40.5% | 27.6% | |
| Germany | 38.9% | 30.2% | |
| Japan | 40.9% | 34.5% | 2012 |
| UK | 30.0% | 26.0% | |
| USA | 39.3% | 39.2% | |
Canada's reduction has allowed them to escape the recession and resulted in boom times for the country. It is no coincidence that Canada's drop in unemployment (from a high of 8.7% in 2009 to 7.2% as of March 2012) parallels a decline in the corporate tax rates for the same period (from 31.02% to 27.6%). Likewise, German manufacturing has grown and surpassed the United States as the #2 exporter in the world (behind China at #1). It should therefore come as no surprise that Japan finally followed suit in an attempt to unshackle business and encourage commerce.
What about America? It is highly unlikely corporate tax cuts are in the offing as the country is saddled with an administration who vilifies American business as greedy and corrupt. If anything, the President and his party want to raise taxes thereby stifling businesses from world competition. What about all of the corporate "loopholes" we've heard about? Actually, such deductions mostly consist of research and development, along with expansion of facilities, which naturally encourages business and jobs. Even after all of these "loopholes" though, American businesses pay more in corporate taxes than their counterparts in other countries. That is a fact regardless of how you spin the numbers.
The new #2 behind the United States is France with a corporate tax rate of 34.4% (36.43% in 2001), almost five full percentage points less than the United States.
As these other countries have come to realize, the world is a competitive place and you cannot succeed by taxing people and companies to excess. In fact, their message is simple: unshackle them from the tax burden and stand out of their way.
"Common sense told us that when you put a big tax on something, the people will produce less of it. So we cut the people's tax rates, and the people produced more than ever before."
- Ronald Reagan
For an interesting video on this subject, click HERE.
Keep the Faith!
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Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com
For Tim's columns, see: timbryce.com
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Copyright © 2012 by Tim Bryce. All rights reserved.
I have been using a variety of computer word processors over the last thirty years and produced some rather fine looking documents using them, but for some reason I still miss the typewriter. Maybe it's because you can quickly type up an impressive looking envelope or fill out a form; Yes, many organizations still use paper forms, particularly nonprofits. The look and feel of a business letter seems somehow more impressive when prepared on a typewriter, more professional and authoritative if you will.
The premise behind Hitchcock's 1935 movie classic, "The 39 Steps," was not about a staircase, but rather a series of clandestine tasks to ultimately overthrow the government. It was an intriguing movie but as it turns out, it actually takes considerably fewer steps to subvert a government, four to be exact, at least according to Yuri Bezmenov, a former KGB agent. Throughout the 1960's, Bezmenov served the KGB primarily in India where he spread Soviet propaganda and disinformation to the Western world. He eventually defected to the West in 1970 and settled in Canada where he lectured and wrote about the KGB's techniques for subverting the West.
"A policy is written to protect a company from those who break the rules, not from those who follow them." - Bryce's Law
Regardless of your political inclination, there now exists a perception the main street media is not to be trusted as a source of valid news, that its integrity is kaput. Instead, news outlets are viewed more as a tool for political activism. In September 2011, the Gallup organization reported, "The majority of Americans still do not have confidence in the mass media to report the news fully, accurately, and fairly."
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A few odd stories have surfaced in the news recently which caught my attention, all involving the feeding of the homeless. Evidently there is a movement underway by local governments to curb donations of food supplies to soup kitchens. At first I dismissed it as an obscure story, but when I saw it recur in different places including New York, Philadelphia, Dallas, Nashville, and elsewhere, I knew something was underfoot.
Recently I came across a local news story having to do with road rage. Evidently, two men in their twenties got into a highway dispute in the wee hours of a morning which led to a physical confrontation whereby one man finally pulled out a gun to defend himself and killed the other person. The shooter has not been charged with a crime as he is protected by Florida's "Stand Your Ground" law. This resulted in a firestorm of letters commenting on the story, most criticizing the shooter and claiming the victim was a really nice guy. Interestingly, most of the people springing to the defense of the victim appeared to be of the same age (in their twenties). Those who came to the defense of the shooter appeared to be older. This led to a rather toxic debate on the Internet with the two sides arguing which person was at fault in the incident. So much so, I got the uneasy feeling the issue started to become as ugly as the initial confrontation, maybe more so.
An interesting technology that is gaining momentum among consumers is Radio-Frequency IDentification (RFID), and it is something we all better start paying attention to. Actually, RFID is an old concept allegedly resulting from our military and espionage efforts in WW2. It involves the miniaturization of radio transmitters to send signals for a variety of purposes; e.g., does anybody remember the transmitter James Bond hid in the heel of his shoe in the movie "Goldfinger"? RFID has come a long way since then, and has been reduced to a tiny computer chip about the size of a grain of rice. This of course means it can go just about anywhere and opens some interesting possibilities for commercial use. It is now implanted in animals to identify them, in highway toll collection devices, in passports and company identification cards thereby allowing security access to facilities. Consumers though need to pay particular attention to how RFID is being implanted in credit/debit cards, for this conceivably opens Pandora's Box to identity and financial theft.
The concept of Data Mining involves harvesting data, organizing it, and using it for such things as trend analysis. Historically, it is a technique used by companies in the absence of a managed data base environment whereby companies resigned themselves to simply pouring through huge volumes of data to arrive at some conclusions. More recently it has come to represent a technique for gathering data external to a company which is particularly useful for evaluating the likes and dislikes of consumers thereby providing the means to court their favor.
In just about any job interview, managers look at applicants for such things as skills and proficiencies, intelligence level, their ability to listen and learn, and a variety of other attributes. One aspect they are particularly interested in is the intuitiveness of the person which is difficult to quantify and substantiate. Just about all managers hope the new worker possesses this important "sixth sense" which helps to spot problems before they occur and take corrective action. One of the best icons for intuitiveness was Corporal Radar O'Reilly of M.A.S.H. fame, who would process paperwork and take care of the camp's business before the Colonel could issue the orders. As efficient as Radar was, he was the exception as opposed to the rule in the camp. The same is true in business.