Corp. Tax Rates Highlight Party Differences
July 1st 2008 15:40
Once again, a light shines on the differences between the Democrat's tax policies and the Republican's. The Wall Street Journal reports on the results of the 2004 American Jobs Creation Act. Part of the bill,
gave American companies a one-year window in 2005 to repatriate earnings from foreign subsidiaries to the United States at a 5.25% tax rate. Normally companies must pay the 35% U.S. corporate tax rate, minus a credit for whatever foreign taxes they paid on those earnings.
Many Democrats, liberal groups and even some economists in the Bush Treasury opposed the measure four years ago, predicting it would lose revenue and merely be a tax holiday for profitable corporations.
Many Democrats, liberal groups and even some economists in the Bush Treasury opposed the measure four years ago, predicting it would lose revenue and merely be a tax holiday for profitable corporations.
The IRS says money poured into the U.S. So far the total repatriated is over $360 Billion, when experts said at most we would see $200 Billion. Instead of collecting 35% of zero, the Treasury picked up over $18 Billion in new revenue
The Joint Tax Committee estimators also blundered again by predicting a mere $2.8 billion in revenue gains in the first year and then big losses after 2005. As always, they underestimated how tax reductions change behavior.
The U.S. has gone from "a below-the-average corporate tax nation to the second highest rate in the industrial world."
Democrat House Ways and Means Chairman, Charlie Rangel, wants to make it worse for corporations by taxing foreign earnings, which are now exempt. Republican John McCain wants to lower the corporate tax to 25%!
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