Monday, June 16, 2014

The Economy - Taxes

When taxes are too high, it has an effect what people and corporations do. For individuals this means limiting the amount of income they make, using every possible way to reduce tax liability, and when necessary, moving to a lower tax burdened state. For corporations it means using every legal way to avoid paying taxes, spending money to lower tax exposure rather than for growth, and even relocating to a new state or country. For example, Medtronics, the medical device make, just announced that it will be moving it's incorporation out of the United States to lower tax burdened Ireland. It turns out that this is not a new trend. Since 2012, 44 major U.S. corporations have moved out of the U.S. to lower their tax burden. This all has a direct effect on U.S. jobs and tax revenue. We can also see this among U.S. states. Toyota recently announced the move of its headquarters out of California to Texas. This was great news for Texas and devastating news for California. The reality is that you can't tax your way to prosperity just like you can't borrow your way to prosperity. You can only grow your way to prosperity through increasing the private sector in a health and organic way. The big picture is that there will be fewer jobs and lower tax revenue which will just make the economy worse.

What do you think?

For more:
http://www.bloomberg.com/news/2014-06-16/medtronic-is-biggest-firm-yet-to-renounce-u-s-tax-status.html