PrintJanuary 1, 2011
Canada slashes corporate tax rate to 16.5%
American lefties typically gaze northward with envy at Canada's high taxes, socialized medicine (never mind the waiting lists and Canadians fleeing southward for quick access to technology unavailable at home), and higher-density, mass transit-dependent cities. But The Canadians have figured out something that eludes American progressives: taxing corporations is a silly way to raise revenue for the state, as it hinders job creation,
Phred Dvorak writes in the Wall Street Journal:
Canada's government says the cuts and other business-attracting measures should bring more investment to the country. Economists say it's tough to figure out what the actual effects of such moves are, though some companies say Canada's relatively low taxes and stable financial and regulatory environment swayed their decisions to move operations and capital north.
It would be much better for America to cut its corporate tax rate to zero, which would spark an immediate wave of investment. Tax the resulting wealth when it is received by actual human beings, rather than at the level of job-creating legal entities. Better yet, tax the wealth when it is spent on consumption. The resulting boom will enrich everyone, though it will disappoint those who preach class envy as the basis for politics.
Taxing corporations is like taxing seed corn. It can only have the effect of hindering the creation of new wealth.
Hat tip: Instapundit, Tax Prof Blog.
