Smoot-Hawley Strikes Back
While many of our elected representatives have the intellectual prowess of Rep. Corrine Brown (that is to say, they’ve barely completed elementary school), many also attended the finest universities in the world.
Where they seemingly learned nothing.
The Wall Street Crash was exacerbated by (Republican) President Herbert Hoover’s enactment of the Smoot-Hawley Tariff Act, thus guaranteeing himself one of the least enviable legacies around. Instituting protectionist policies and clamping down on free trade during an economic downturn is not clever.
And neither is forcing businesses to pay more tax, particularly at a time when they’re struggling to even keep afloat.
President Obama seeks to increase federal revenue by amending a tax system that is “full of corporate loopholes.” Does he not realize why these loopholes exist?
Because corporate tax rates in the US are so high. According to the OECD, the US has a combined marginal corporate rate of nearly 40 per cent (second only to Japan).
Whereas in, say, the Republic of Ireland it is 12.5 per cent.
This is veering between domestic corporate tax and the taxation on foreign profits that American companies are liable to, but President Obama cannot be oblivious to the simple truth that punitive taxation will cause business to flee these shores for fairer climes. So why does he persist?
He either thinks that the fundamentals of economics do not apply to him or he believes that it’s a no-lose situation: business will pay up or, failing that, they will leave, ceding their economic role to the government.
Perhaps President Obama might know better if he had ever poured sweat and blood into creating a business of his own.
UPDATE: I’ve just listened to a statement by the president and Tiny Tim. Aside from the hilarity of hearing Tim Geithner chide business for tax evasion, he let slip the real reason why this policy is being pursued – it’ll result in another 800 government (IRS) jobs.
May 5th, 2009 at 09:26
Once again, Obama gaffed. He said that he is doing this so that ALL Americans will pay their share. Really? I don’t think so.
Obama is cutting open the goose looking for golden eggs, killing the egg layer in the process. Stupid, stupid man!!!!