Tuesday, May 05, 2009

Is Obama Forcing Businesses to Leave the US?

Before Obama was even elected, the United States had the dubious distinction of having the second highest tax rate on business of any industrialized country in the world. Since being elected, the President has waged economic genocide on the US economy and industry.

Barack Obama has decided to declare war on U.S. companies that are allowed to defer paying U.S. taxes on the profits they make on their overseas investments and enjoy a provision that allows companies to make foreign subsidiaries disappear for tax purposes. These provisions exist in order to protect companies from the threat of double taxation and keeps them more competitive.
According to International Business Times (IBT), businesses that are subject to the changes "argue that Obama's plan will leave U.S.-based companies vulnerable overseas because foreign rivals won't have to pay the 35% U.S. corporate tax rate—instead paying the tax rates, in effect, overseas, where they are generally considerably lower." Much lower, as indicated, since the US is ranked near the top in this category and with Obama's recent commitment to raise taxes for those who make over $250,000, I think it is safe to say that the US will be taking the number one spot. I was visiting with my wife about this in our car and I laid out the scenario. I basically pointed out that, thanks to the Laws of Comparative Advantage, some countries offer things that certain businesses need to make competitive products or services. For US companies it is certain types of labor. As a result, companies often stay corporately located in this country, but have other parts of their business in other places.

So, I asked my wife, "what do you think these companies will do when they are double taxed by the US and the other countries where they have businesses?" She answered, "they would likely move to those other countries with lower tax rates, DUH!" She thought it was a stupid question. It wasn't my fault, Obama raised it, not me. So in an effort to keep businesses from exporting jobs overseas, Obama will actually export the entire companies.

I asked my wife, "so where did you get your degree in economics?" She said, "a degree in economics? Who needs that, all you need is a little common sense." Now that is something we need in public policy today.

Kevin Price is Host of the Price of Business, the longest running show on CNN 650 (M-F at 11 am), AOL Radio, and CBS Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

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