Thursday, May 31, 2007

Countries competing on lower taxes!

Countries competing. On lower taxes? Yes! But the US is not playing right now. In Europe they tried in the past to prevent countries from lowering taxes on business. It wasn't fair to those that needed high taxes. Even the new "right" President Sarkozy of France proposed that countries be prevented by the European Union from lowering taxes. Now countries are racing to be more competitive for business by lowering business taxes. International Herald Tribune:
"The gloves are off," said Erik Nielsen, chief European economist with Goldman Sachs in London. "Bigger countries are now competing on taxes. This is very much something that will determine how much and where companies want to invest." The EU's average corporate tax rate at the end of 2006 was a record low of 26 percent, and more cuts are in the works this year. Gordon Brown, the British chancellor of the Exchequer and prime minister-in-waiting, in March lopped two percentage points off the top rate, which is now 28 percent. The lower house of the German Parliament last week backed Chancellor Angela Merkel's plan to pare its corporate rate to 30 percent from 39 percent.
Is the US competing? We are at 35% on capital gains - higher than what Europe is talking about - and the Democrats intend to raise taxes. No, they don't dare say "raise;" they want to phase out the horrible Bush tax cuts.