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WHY JAPAN DROPPED THEIR CORPORATE TAX RATE

Posted by Tim Bryce on April 29, 2012

– Why are the tax rates of other countries going down, but not the United States?

(Click for AUDIO VERSION)
To use this segment in a Radio broadcast or Podcast, click HERE.

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%  

Source: OECD (Organization for Economic Co-operation and Development), Centre for Tax Policy and Administration

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!

Note: All trademarks both marked and unmarked belong to their respective companies.

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.


NEXT UP: 
UNDERSTANDING POLITICAL BRAINWASHING – how mind control is implemented in America.

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3 Responses to “WHY JAPAN DROPPED THEIR CORPORATE TAX RATE”

  1. Joyce said

    When you consider taxes like this, don’t forget all the loop holes that have allowed some companies to get away with paying NOTHING. I don’t see this adding job growth. Historically, our country has prospered when the rich pay their fair share. Instead of hiring more workers, corporation leaders have given themselves pay raises and the economy has suffered as a result.

    Like

    • Tim Bryce said

      Joyce – According to the statistics as pointed out in the article, the lion’s share of “loopholes” is for research and development and expanding facilities (or rebuilding). Regardless, after all these “loopholes” have been spent we are still paying more in taxes than everyone else.

      Like

  2. Tim Bryce said

    A J.S. of Skidway Lake, Michigan wrote…

    “Amen to this: ‘Only when the populace realizes the emperor has no clothes will they be willing to abandon the leader and follow someone else.’ I have to wonder what it will take to open people’s eyes. Your example of Sarah Palin/Tina Fey is right on target, too. SNL did a great disservice to the candidate and the American people, although the skits were funny. It’s kind of scary to realize that people trust SNL more than Fox News.”

    Like

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