Tuesday, May 13, 2014

Abolish the Corporate Income Tax!

By Patrick Buchanan

News that Pfizer, the world's largest pharmaceutical company, plans to buy Britain's AstraZeneca for $106 billion, renounce its U.S. citizenship, and declare itself a British company, has jolted Congress.

Pfizer is being denounced as disloyal to the land of its birth, and politicians are devising ways to stop Pfizer from departing.

Yet Pfizer is not alone. Hedge fund managers are urging giant corporations like Walgreens to go nation-shopping for new residences abroad to evade the
35 percent U.S. corporate income tax.

Britain's corporate income tax is 20 percent, and Pfizer stands to save over $1 billion a year by moving there.

In what are called "inversions," dozens of U.S. companies have bought up foreign rivals, and then moved abroad to countries with lower tax rates, cutting revenue to the U.S. Treasury.

But Pfizer is far and away the biggest.

The real question, however, is not why companies are fleeing the USA, but why our politicians continue to drive them out of the country.

Consider. Here in America we do not tax charities, churches or colleges. Yet these institutions produce a fraction of the jobs that businesses produce.

If, as a nation, we are committed to "creating jobs," does it make sense to impose the highest corporate tax rate in the Western world on our biggest and best job creators?

Is this not economic masochism?

Many governors understand that if you want something in your state, you do not drive it out with high taxes. You strengthen the magnet of low taxes. Florida wants residents of other states to move there and retire there, so it has no income, estate or inheritance tax.

For years, Rep. Jack Kemp urged the creation of enterprise zones in poor communities like Benton Harbor, Michigan, and Harlan County, Kentucky. Businesses that relocated there would be exempt from corporate income taxes.

Why not make the United States the largest enterprise zone on earth — by abolishing the corporate income tax?

If the corporate income tax were repealed, no U.S. company would think of moving abroad, and every transnational company would think about moving to the USA.

What a message this repeal of the U.S. corporate income tax would send to corporate headquarters worldwide: Relocate your company or next factory to the USA, keep every dollar of profit you earn, and either reinvest it here or take it home. Your call.

How would America benefit?

Every U.S. company, liberated from its corporate tax burden, would see its profits soar and have more cash on hand for cutting prices, raising wages and salaries, and new investment and hires. And every company that relocated here would create new U.S. jobs.

This would be a stimulus package to end all stimulus packages.

Isn't this what we all want? Or are we not willing to create jobs here if the means of doing so conflict with redistributionist ideology?

Consider the other benefits of abolishing the corporate tax.

Corporate lobbyists, who spend their days walking Capitol Hill corridors seeking tax breaks, and their evenings at fundraisers handing $1,000 checks to congressmen who can create tax loopholes — in a form of legalized corruption and glorified bribery, could be put out to pasture.

Armies of tax lawyers, accountants and IRS agents could be shifted to more productive work. Companies could focus full time on creating new wealth, not finding ways to keep what they have earned.

Many politicians seem to think the corporate tax punishes the rich and powerful and is an indispensable weapon in reducing inequality and redistributing wealth. This is neosocialist myth.

As Ronald Reagan used to say, corporations don't pay taxes, people do.

The billions in corporate income taxes paid by Wal-Mart and McDonald's come out of the dollars spent by consumers who shop at Wal-Mart's and eat at McDonald's. Where else does Ford Motor get the money to pay its corporate income tax, if not from dollars spent by Middle Americans on Ford cars and trucks?

Middle America pays the corporate income tax.

How could we make up for the lost revenue to government?

Simple. The corporate income tax last year produced $273 billion, less than a tenth of federal revenue. Imports, which kill U.S. jobs and subtract from GDP, totaled $2.7 trillion last year.

Put a 10 percent tariff on imports, and the abolition of the U.S. corporate income tax becomes a revenue-neutral proposal.

Looking back, consider what our political class has done to our once self-sufficient American Republic.

We impose on businesses, our principal job creators, the most punitive corporate tax rate in the West. Through "free trade," we tell U.S. companies that if they wish to avoid our taxes and get around our minimum wage, health, safety, and environmental laws, they can move to China, produce there, and bring their products back free of charge — and kill their competitors too patriotic to leave America.

"The Decline and Fall of the United States of America" is going to a piece of cake for future historians to write.

Patrick J. Buchanan is the author of Suicide of a Superpower: Will America Survive to 2025?


  1. How about just cutting spending.
    Replace the tax with nothing to steal from Ron Paul's abolish the income tax speech.

    1. How about a scaled up reset on the currency?

  2. Yeah, more greed! Let there be an even larger earnings gap! I love it.

    1. Right, but when you go to the store and buy the best value product for your money or quit your job for a better paying one, that's just good common sense, but when anyone else makes decisions based on economics, its greed. Got it! Greed (and envy) is part of the human condition, and for the most part completely meaningless since it is defined in the eyes of the beholder. But, if you don't like the way they are doing things, nothing is stopping you from starting a company and showing everyone a different way to do things.

    2. Anon 12:38 (assuming you're not being sarcastic)

      Hey idiot, didn't you read the article? YOU dumb ass...Y-O-U, pay the corporate income tax, NOT the corporations. YOU are arguing for a greater income gap.

      I'd also like to echo Anon 1:27. Your hypocrisy and ENVY is showing.

      Why are people so pathetically stupid when to economics?

  3. Hey, there was some mention of hedge funds acting as advisors here....but what about what hedge funds actually do?

    What about the reinsurance deals? Einhorn and others? Third Point RE, Greenlight, etc. Why don't these guys move to Texas, Florida, or Puerto Rico? Or do they? ;)

    Btw, that other famous "real insurance company" Berkshire Hathaway is the ultimate tax shelter for Bufffett (who is a POS first class hypocrite).

  4. He was doing pretty good until he suggested that lost revenue from the abolishment of the corporate income tax needed to be replaced with a tariff. I'm fine with the government "losing" as much revenue as possibly. After all, taxation is theft. The more "they" lose (i.e. are prevented from stealing) means more for producers to keep.

    And what's with this meme of "imports kill jobs." I wonder if Pat has heard of comparative advantage. Comparative advantage leads to lower priced on goods like TVs, computers, and cell phones. A tariff is a tax by a different name. It causes the prices of goods upon which tariffs have been levied to increase.

    1. A mere 10% tariff is just a revenue tariff not a protective one. His suggestions are MUCH better than what we have now (it's not just a tiny improvement, it would be a HUGE one). Although I do agree with you. Hell, I prefer no taxes of any kind. IOW, ancap.

  5. Is this article a parody? Middle America pays the corporate income tax? Hahahahaahahaahaha.....no the wealthy pay the corporate income tax. Getting rid of the corporate income tax benefits the largest shareholders and those are all wealthy people.

    10 percent tariff on imports? Middle America would bear the burden of that tax.

    1. Re; Jerry Wolfgang,

      -- Middle America pays the corporate income tax? Hahahahaahahaahaha.....no the wealthy pay the corporate income tax. --

      If you want to believe that, Jerry, whatever makes you feel better. There are people who believe that the starts influence their lives; there are those that think believing in something very hard will turn that something into reality; there are those that buy penile augmentation pills; you want to believe that it is only the rich who pay the corporate income tax. There are all sorts of gullible people out there, Jerry, just like you.

      -- Getting rid of the corporate income tax benefits the largest shareholders and those are all wealthy people. --

      Actually, getting rid of the corporate income tax will also benefits the small shareholders and those are not all wealthy people.

      -- 10 percent tariff on imports? Middle America would bear the burden of that tax. --

      Of course, and nobody said that there's agreement in all that Pat is saying. Pat Buchanan has always been the protectionist sort of fellow. The best is to have NO taxes at all, at least NO income taxes of any kind and certainly no tariffs.

    2. If you ignore the $20trillion that is held in pension and 401k plans, Jerry is right. LOL

  6. "Why not make the United States the largest enterprise zone on earth — by abolishing the corporate income tax?" Reminds me of the time I had lunch with the Mayor of Denver, Colorado during the 1980's. The mayor was enthusiastically proposing free enterprise zones in selected urban areas and apparently thought lunch with the President of Coloradans for Free Enterprise would further his campaign. I complemented him on his proposal but suggested a much bigger impact could be had if he made the whole state a free enterprise zone. Sadly he didn't take my advice and the state's economy remains mired in a statist flat line. Pat's current proposal is unfortunately ruined by his suggestion to replace lost tax income with a tariff. The worst of all possible suggestions as it kills cross-border trade and to paraphrase the famous saying: when money doesn't cross borders soldiers often do.

  7. taxing..............

    Russia Holds "De-Dollarization Meeting": China, Iran Willing To Drop USD From Bilateral Trade

    That Russia has been pushing for trade arrangements that minimize the participation (and influence) of the US dollar ever since the onset of the Ukraine crisis (and before) is no secret: this has been covered extensively on these pages before (see Gazprom Prepares "Symbolic" Bond Issue In Chinese Yuan; Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China; Russia And China About To Sign "Holy Grail" Gas Deal; 40 Central Banks Are Betting This Will Be The Next Reserve Currency; From the Petrodollar to the Gas-o-yuan and so on).

    But until now much of this was in the realm of hearsay and general wishful thinking. After all, surely it is "ridiculous" that a country can seriously contemplate to exist outside the ideological and religious confines of the Petrodollar... because if one can do it, all can do it, and next thing you know the US has hyperinflation, social collapse, civil war and all those other features prominently featured in other socialist banana republics like Venezuela which alas do not have a global reserve currency to kick around.

    Or so the Keynesian economists, aka tenured priests of said Petrodollar religion, would demand that the world believe.

    However, as much as it may trouble the statists to read, Russia is actively pushing on with plans to put the US dollar in the rearview mirror and replace it with a dollar-free system. Or, as it is called in Russia, a "de-dollarized" world.


  8. Want to bag a half billion? Here’s a step-by-step plan that almost worked:

    1. Buy your way onto the boards of publicly traded companies.

    2. Set up a labyrinth of offshore accounts and sham companies in the Isle of Man and the Cayman Islands.

    3. Pay a lawyer a lot of dough to consistently lie about who really controls your offshore edifices.