Stillwater News Press

Opinion

May 14, 2014

PAT BUCHANAN: Abolish the corporate income tax

STILLWATER, Okla. — News that Pfizer, the world's largest pharmaceutical company, plans to buy Britain's AstraZeneca for $106 billion, renounce its U.S. citizenship, and declare itself a British company, has jolted Congress.

Pfizer is being denounced as disloyal to the land of its birth, and politicians are devising ways to stop Pfizer from departing.

Yet Pfizer is not alone. Hedge fund managers are urging giant corporations like Walgreens to go nation-shopping for new residences abroad to evade the 35 percent U.S. corporate income tax.

Britain's corporate income tax is 20 percent, and Pfizer stands to save over $1 billion a year by moving there.

In what are called “inversions,” dozens of U.S. companies have bought up foreign rivals, and then moved abroad to countries with lower tax rates, cutting revenue to the U.S. Treasury.

But Pfizer is far and away the biggest.

The real question, however, is not why companies are fleeing the USA, but why our politicians continue to drive them out of the country.

Consider. Here in America we do not tax charities, churches or colleges. Yet these institutions produce a fraction of the jobs that businesses produce.

If, as a nation, we are committed to “creating jobs,” does it make sense to impose the highest corporate tax rate in the Western world on our biggest and best job creators?

Many governors understand that if you want something in your state, you do not drive it out with high taxes. You strengthen the magnet of low taxes. Florida wants residents of other states to move there and retire there, so it has no income, estate or inheritance tax.

For years, Rep. Jack Kemp urged the creation of enterprise zones. Businesses that relocated there would be exempt from corporate income taxes. Why not make the United States the largest enterprise zone on earth – by abolishing the corporate income tax?

If the corporate income tax were repealed, no U.S. company would think of moving abroad, and every transnational company would think about moving to the USA.

What a message this repeal of the U.S. corporate income tax would send to corporate headquarters worldwide: Relocate your company or next factory to the USA, keep every dollar of profit you earn, and either reinvest it here or take it home. Your call.

How would America benefit?

Every U.S. company, liberated from its corporate tax burden, would see its profits soar and have more cash on hand for cutting prices, raising wages and salaries and new investment and hires. And every company that relocated here would create new U.S. jobs.

This would be a stimulus package to end all stimulus packages.

Consider the other benefits of abolishing the corporate tax.

Corporate lobbyists, who spend their days walking Capitol Hill corridors seeking tax breaks, and their evenings at fundraisers handing $1,000 checks to congressmen who can create tax loopholes – in a form of legalized corruption and glorified bribery, could be put out to pasture.

Armies of tax lawyers, accountants and IRS agents could be shifted to more productive work. Companies could focus full time on creating new wealth, not finding ways to keep what they have earned.

Many politicians seem to think the corporate tax punishes the rich and powerful and is an indispensable weapon in reducing inequality and redistributing wealth. This is neosocialist myth.

As Ronald Reagan used to say, corporations don't pay taxes, people do.

The billions in corporate income taxes paid by Wal-Mart and McDonald's come out of the dollars spent by consumers who shop at Wal-Mart's and eat at McDonald's. Where else does Ford Motor get the money to pay its corporate income tax, if not from dollars spent by Middle Americans on Ford cars and trucks?

Middle America pays the corporate income tax.

How could we make up for the lost revenue to government?

Simple. The corporate income tax last year produced $273 billion, less than a tenth of federal revenue. Imports, which kill U.S. jobs and subtract from GDP, totaled $2.7 trillion last year.

Put a 10 percent tariff on imports, and the abolition of the U.S. corporate income tax becomes a revenue-neutral proposal.

Looking back, consider what our political class has done to our once self-sufficient American Republic.

We impose on businesses, our principal job creators, the most punitive corporate tax rate in the West. Through “free trade,” we tell U.S. companies that if they wish to avoid our taxes and get around our minimum wage, health, safety, and environmental laws, they can move to China, produce there, and bring their products back free of charge – and kill their competitors too patriotic to leave America.

Patrick J. Buchanan is the author of "Suicide of a Superpower: Will America Survive to 2025?"

1
Text Only | Photo Reprints
Opinion
Buy & Share Photos
NewsPress e-Edition
NewsPress Specials
AP Video
House Leaders Trade Blame for Inaction Malaysian PM: Stop Fighting in Ukraine Cantor Warns of Instability, Terror in Farewell Ravens' Ray Rice: 'I Made a Huge Mistake' Florida Panther Rebound Upsets Ranchers Small Plane Crash in San Diego Parking Lot Busy Franco's Not Afraid of Overexposure Fighting Blocks Access to Ukraine Crash Site Dangerous Bacteria Kills One in Florida Workers Dig for Survivors After India Landslide Texas Scientists Study Ebola Virus Smartphone Powered Paper Plane Debuts at Airshow Southern Accent Reduction Class Cancelled in TN Raw: Deadly Landslide Hits Indian Village Obama Chides House GOP for Pursuing Lawsuit New Bill Aims to Curb Sexual Assault on Campus Russia Counts Cost of New US, EU Sanctions 3Doodler Bring 3-D Printing to Your Hand Six PA Cops Indicted for Robbing Drug Dealers Britain Testing Driverless Cars on Roadways
Stocks
NDN Video
Famous Internet Cats Help Big Cause With Viral Video Russell Brand Slams Sean Hannity Over Gaza Conflict Segment Brian Williams Reports on Daughter Allison Williams' 'Peter Pan' Casting News Chapter Two: Composing for a film in retirement Did Jimmy Fallon Look Up Heidi Klum's Dress? Woman's Dive Goes Terribly Wrong What Drama? Miranda Kerr Poses Topless Plane crashes in San Diego Costco parking lot Justin Bieber Takes To Instagram To Diss Orlando Bloom You Won't Believe the Celeb Cameos in "Sharknado 2" Pitch Invading Morons Cause Chaos - @TheBuzzeronFOX Orlando Bloom 'Takes a Swing' at Justin Bieber In Ibiza Sadie Doesn't Want Her Brother to Grow Up "Maxim" Hotness! See Jessica Alba's Sizzling Spread Two women barely avoid being hit by train Broken Water Main Floods UCLA Orlando Bloom and Justin Bieber Reportedly Came To Blows In Ibiza Meet the Man Behind Dumb Starbucks Chris Pratt Adorably Surprises Kids at a 'Guardians of the Galaxy' Screening NOW TRENDING: Peyton Manning dancing at practice
Must Read