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Blog

    Administration Seeks Higher Corporate Taxes

    06/04/2009

    Deferral allows companies to defer income into the future to avoid high marginal tax rates on income. The administration is fighting to collect deferral money with a plan that will increase taxes on international American companies by $190 billion over the next 10 years.  If the American government makes it more expensive for American companies to bring home money to the United States, then they might stop--and that could harm American workers.  Microsoft’s CEO, Steven Balmer in a recent interview said, “It makes U.S. jobs more expensive.  We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”  It’s likely that this tax hike will result in less government income in the end when American jobs and companies move overseas and reduce the size of the tax base.  

    If the administrations goal is really to “create and save jobs”, then Congress and the president should not increase taxes on business—or anyone else for that matter.  Champions of tax increases likely don’t want to see higher unemployment, but their goals necessitate it.  If they really wanted to lower unemployment, they would lower taxes and simplify the tax code.