Use access key #2 to skip to page content.

Another example of how high taxes are bad for the economy

Recs

22

June 30, 2009 – Comments (14) | RELATED TICKERS: THI

The U.S. government is spending money at an alarming rate.  Eventually something is going to have to be done to shrink the budget deficit.  Don't hold your breath for less government spending.  If Uncle Sam can't tighten its belt and spend less, it is going to have to raise taxes.  That's a fact.  We can't just keep spending beyond our means indefinitely.  The money will eventually have to come from somewhere.

Higher income taxes on the individual level will serve as a drag on economic growth going forward because consumers can't spend what they don't have and consumer spending in the U.S. is unfortunately what drives our economy.  In addition to income tax, the government collects taxes on corporations.  One would think that the higher the corporate tax rate is, the more money the government will rake in.  Unfortunately, it does not work like that.  Companies eventually get annoyed with paying high taxes.  I have found yet another example of the high U.S. corporate tax rate driving a business out of the country.

Tim Hortons Inc., which has been a U.S.-registered company since it was spun-off from Wendy's two years ago, announced yesterday that it plans to shift its corporate structure from a U.S. company to a Canadian one to take advantage of a better tax rate. Its current tax rate in the U.S. is 33%.

Tim Hortons plots return to Canadian structure

Just like that, all of the revenue that the government had been getting from Tim Horton's is gone. Poof.  All in an effort to squeeze a couple more points in corporate taxes out of companies than our northern neighbors (or neighbours as they say in Canadian :) ).  I'm not saying that we shouldn't tax anyone, just that politicians need to look at the big picture and not be penny wise, pound foolish.

This isn't a Democrat versus Republican issue.  Government spending was out of control when that idiot puppet "W" was in office and it has gotten worse now that the Dems are in charge.  Once it is abundantly clear that the economy has stabilized we need stop spending money like water, or we're all going to eventually have to pay the price in higher taxes, higher interest rates, inflation, etc...  For now, the government should focus its efforts on cutting as many programs as possible that do not directly stimulate the domestic economy.  They should start by pulling the plug on the wasteful war in Iraq as quickly as possible.  They should give the folks at CAPS a red pen and let them go through the budget.  I guarantee you that we'd find a ton of pork and waste that could be cut immediately.

Deej

14 Comments – Post Your Own

#1) On June 30, 2009 at 10:18 AM, dbjella (< 20) wrote:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage."

--Lord Alexander Tytler on the fall of the Athenian republic

Report this comment
#2) On June 30, 2009 at 10:21 AM, catoismymotor (< 20) wrote:

+ 1 rec.

Report this comment
#3) On June 30, 2009 at 10:23 AM, farmnut1985 (34.68) wrote:

Didn't you know that Washington DC's water supply has a chemical that makes them all colorblind so they can't tell if it is red or black, so they just assume it is in the black.  Maybe they ought to change the format on their excel spread sheets to put the minus "-" sign in front of the number or put it in brackets so they can see the balance is negative.

Report this comment
#4) On June 30, 2009 at 10:28 AM, SkepticalOx (99.46) wrote:

Oh, they know they're in the red. Just that when these representatives and senators go back to their "constituents", they are handed lists of things that these people want. 

If they don't pony it up, these constituents will vote for someone else.

Don't blame DC. Blame the people who voted these people in. 

Report this comment
#5) On June 30, 2009 at 10:29 AM, SkepticalOx (99.46) wrote:

Hrmph... before someone attacks my last line there... Yes, DC holds some blame too. :P

Report this comment
#6) On June 30, 2009 at 11:24 AM, edwjm (99.87) wrote:

Wow!  Am I glad I read this!  When I first saw what was on the 'blog' page for this blog, I almost skipped over it, thinking 'another of those borrow-and-spend Republicans ranting about how all the world's ills can be cured by tax cuts.'  But I did go on to read the whole blog. 

"Once it is abundantly clear that the economy has stabilized we need stop spending money like water" indicates that you do understand the need to "prime the pump." 

"They should start by pulling the plug on the wasteful war in Iraq as quickly as possible.  They should give the folks at CAPS a red pen and let them go through the budget.  I guarantee you that we'd find a ton of pork and waste that could be cut immediately." indicates you realize that spending is the problem, and I think that we all realize that both Dems and Reps are to blame for this.  Both spend excessively, the only difference between them is whether to tax or borrow to foot the bill.  Both Ronald Regan and George W. Bush have proved conclusively that the Republican approach leads to disaster.  Now that the Democrats are in control will they prove that the tax-and-spend approach is also detrimental?

Report this comment
#7) On June 30, 2009 at 11:41 AM, outoffocus (23.23) wrote:

"consumers can't spend what they don't have"

We've been doing that for the past 10 years. Thats where all our "unprecedented growth" has come from.  Whats better is our government expects us Americans do continue this practice in order to bring us out of this downturn. 

I wont be convinced that we will fully come out of this downturn until all of America (governments, corporations, non-profits, and individuals) realizes that we can't spend what we dont have indefinitely.

Report this comment
#8) On June 30, 2009 at 11:42 AM, ByrneShill (77.14) wrote:

Hmmm, deej, the problem might not be that US corporate taxes are that high, but canadian's are too low. As a canadian I can tell you that it is getting frustrating to see that individuals are taxed to oblivion while large corporations get more in subsidies than what they pay in taxes. The situation has become ridiculous. Even without ecading taxes (which they do, a LOT), canadian corporations pay a max of 20% tax. A study showed that our big banks pay roughly 11-13% corporate taxes on profits (hard to tell as they hide boatloads of money in the bahamas).

But tim hortons is a special case. It shouln't have become a US corporation to begin with. THI plays a lot on its canadian roots here, and not being a canadian company was starting to hurt sales. Moving headquarter to canada was making sense from a PR point of view.

Report this comment
#9) On June 30, 2009 at 11:45 AM, ByrneShill (77.14) wrote:

@outoffocus: I would argue that THI's donuts also had to do with US's "unprecedented growth". :)

Report this comment
#10) On June 30, 2009 at 12:12 PM, BMFPitt (78.72) wrote:

I think that we all realize that both Dems and Reps are to blame for this.  Both spend excessively, the only difference between them is whether to tax or borrow to foot the bill.  Both Ronald Regan and George W. Bush have proved conclusively that the Republican approach leads to disaster.  Now that the Democrats are in control will they prove that the tax-and-spend approach is also detrimental?

I think of it more like the Republicans are the guy who's 250k in debt because they keep falling for get rich quick schemes.  Democrats are that guy who's 150k in debt because they are compulsive shoppers, but the stuff they buy has maintenance costs that put them on the hook for much more in the future.  Also, the get rich quick guy is always talking about how financially irresponsible the compulsive shopper is.

Report this comment
#11) On June 30, 2009 at 6:17 PM, ReadEmAnWeep (38.96) wrote:

“Both Ronald Regan and George W. Bush have proved conclusively that the Republican approach leads to disaster.  Now that the Democrats are in control will they prove that the tax-and-spend approach is also detrimental?”

 

One problem with that comparison is that the previous administrations answer was not to act as republicans normally would do with small government and small government spending. Bush’s answer to everything was to spend more money. You can look at the government’s debt at the start of his presidency and at the end if you want.

 

Report this comment
#12) On July 01, 2009 at 12:43 AM, bostoncelitcs (42.63) wrote:

Dubya was the only President in history to institute a "tax cut" during a time of war.  If anyone in their right mind thinks the Obama administration can "undo" the damage done to our economy in the first one hundred, two hundred or the first year of his administration they are kidding themselves.

Report this comment
#13) On July 01, 2009 at 6:36 AM, dbjella (< 20) wrote:

Could someone please explain how Presidents are totally responsible for spending money?  I thought all appropriation/budgets bills start in congress and Presidents either sign or veto.

Report this comment
#14) On July 01, 2009 at 1:15 PM, edwjm (99.87) wrote:

dbjella:

Gerald Ford vetoed.

George W. Bush did not!

Report this comment

Featured Broker Partners


Advertisement