Wednesday, July 30, 2008

The Real Reason the Europeans Like Obama

Barack Obama was received in Europe like a rock store with thousands of fans showing up to greet him and heads of state were acting like swooning teenagers. Is it because he is young? African American? Handsome? Articulate? Those might all be contributing factors but the most likely reason of all may have been revealed in an interview I had with Steve Moore, Senior Economic Editor of the Wall Street Journal.

On my show today Moore jumped into the discussion many are having through out the country and around the world -- why is Obama so popular. Maybe, instead of the conventional wisdom listed in the examples above, it is actually good old fashion competition. The Europeans believe that Barack Obama could be good for their businesses.

Much of Europe is moving away from excessive taxation that had been so pervasive and crippling on the continent and they are moving towards tax systems that attract businesses. In fact, the only Industrialized country that has more excessive taxes on corporations is Japan. According to the Tax Foundation, the United States has a combined federal and state tax rate that hovers close to 40 percent. While Ireland's is only 12.5 percent (which is why it is also one of the fastest growing economies in the world).

The European governments understand that business owners are their customers. The developing countries, like China and India, haven't attracted business because of the sophistication of their legal systems or better technology, but through cheap labor. Europe is rapidly moving towards lower taxes on wealth creation through flat tax and other predictable and low tax approaches as a way of bringing companies to them. Obama has made it clear, he plans on raising taxes on corporations, that only makes the European countries more attractive.

Obama is popular with Europeans because his policies will benefit them. Maybe he should run for office over there.

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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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