'Economic patriotism'; tax rates and border jumpers
July 26. 2014 7:24PM
In 2008, Joe Biden famously said that paying more in taxes was patriotic. Now the Obama administration and the Democrats in Congress are making a big push to defend high corporate taxes by using the same rhetoric. To see how dumb this is, imagine Gov. Maggie Hassan, rather than the White House, making the same argument.
The Obama administration claims that American companies are being unpatriotic when they buy foreign firms and then move their headquarters overseas so they can save millions in taxes. "Economic patriotism," according to the White House, requires staying put and paying your high tax rates like loyal little subjects. Granite Staters know this is specious because we know what happens to places that maintain high tax rates in the face of cross-border competition.
For decades, New Hampshire had New England's leading economy because our overall tax burden was so much lower than everyone else's. Then Massachusetts wised up and cut personal and corporate tax rates. Massachusetts now has the 34th best corporate tax ranking in the country, according to the Tax Foundation. New Hampshire is 48th. Our business taxes are very high by national standards, and we are paying the price.
Are New Hampshire business owners unpatriotic if they make the rational decision to save money by relocating to Massachusetts?
The reason some companies are trying to move their corporate headquarters overseas is because the United States foolishly maintains the world's highest corporate tax rate at 35 percent (it is 39 percent when state and local rates are factored in). The average rate of Organization for Economic Cooperation and Development (OECD) countries is 25 percent. Yet America's high rate actually raises less revenue than the OECD average, The Economist reported last week.
Rather than further punish U.S. companies, we should be keeping them and luring others by copying other OECD countries and slashing our tax rates.