Tuesday, June 10, 2008

Why John McCain Wants to Lower Corporate Taxes

John McCain, the presumptive nominee of the Republican Party for President, is pledging to fight for lower corporate taxes if elected. The media and his opponents will likely treat this as accommodating "the rich" in a manner that Republicans are "known." Reality check: a policy such as this is one of the few ways to help the poor become middle class and the middle class move towards affluence. That is what good economic policy accomplishes.

How will lower corporate tax rates achieve such an objective? There are several reasons and here are a few:

* Currently the US is getting pounded on the world stage by economies that either have significantly lower tax rates, ridiculously low salaries, are both. Competition exists on the micro level (store "A" vs. store "B") and on the macro level (country "A" vs. country "B"). When companies stay here because of a better tax environment, we keep more jobs, which helps every income group.

* Lower corporate tax rates encourages individuals to become entrepreneurs to create businesses and to climb the economic ladder. This benefits those individuals willing to take the risk and all the people they will hire as they rise. This doesn't even address the new tax revenues these companies create.

* One of the only beneficiaries of high corporate taxes are, ironically, the very rich. Why? Because they are insulated from potential competition who are intimidated by the high price of corporate taxes. The other beneficiary would be the government, who enjoys the revenue and let's the government be the "bad guy" by letting businesses do the tax collecting. That leads to the final point: businesses don't pay taxes, they collect taxes, and if that negatively affects their business to the point of harming competitiveness, they will move their companies some where else or never create them in the first place. Who benefits from that?

For people who believe in the free market, like myself, McCain's commitment is great news and long over due.
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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

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Anonymous Anonymous said...

You know McCain also said he wanted to regulate CEO salaries. Your thoughts?

10:36 PM  

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