Monday, I reported that yet another American corporation, Medtronic, has chosen to move its headquarters abroad to avoid high tax rates. I ended the article by inquiring, “There is no denying that our federal tax code needs a major overhaul. The million dollar question is how?” Rep. Dave Camp (R-MI), Chairman of the Ways and Means Committee, has proposed a solution.
The world’s largest medical technology company, Medtronic, has announced plans to move its corporate headquarters from Minneapolis to Dublin, Ireland. With U.S. corporate tax rate at a mighty 35 percent, one of the highest in the world, it is no wonder Medtronic would rather operate from Ireland, where the rate is only 12.5 percent.
It's a 979-page plan that, among other things, lowers marginal income tax rates, lowers the corporate tax rate, increases the standard deduction for individual and married couples, phases out certain tax breaks, consolidates other tax breaks, and reforms retirement savings plans.
Over the last 25 years, every country in the developed world has made significant strides in lowering the corporate tax rate - except for the United States.
The House-Senate budget conference would do a lot to address the corporate income tax - one of the ripest areas of policy for reform that would help economic growth at all ends of the income spectrum. It's messy, it's inefficient, and it's the most economically-harmful tax of all.
I’m very leery of corporate tax reform, largely because I don’t think there are enough genuine loopholes on the business side of the tax code to finance a meaningful reduction in the corporate tax rate. That leads me to worry that politicians might try to “pay for” lower rates by forcing companies to overstate their income.
With the first quarter now over, we expect that most of the fiscal cliff-driven dividend cuts have now taken place, which means the number of companies cutting their dividends each month will go back to being an indication of the relative health of the U.S. economy, much as it was prior to December 2012.
The legislators in Washington figure that a $25 tax on bicycles that cost more than $500 should garner about a million bucks for roads.
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