Another example of how high taxes are bad for the economy
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.