Politics Obama - Actually doing a good job?

The corporate tax rate is just one of many factors.

I have recently found it interesting to use Germany and Scandinavian Europe as a comparison. They do many things right.

Nation/unemployment rate/corporate tax rate(s)

Germany/~5.8 - 6.7%/~29.8%
Denmark/7.9%/25%
Sweden/7.5%/26.3%
Norway/3.4%/28%
Finland/7.5%/26%
Iceland/7.3%/20%
Eurozone/10.8%/-

Canada/7.4%/~28% (federal + provincial average)
U.S.A./8.3%/~40% (federal + state average)

Average global corporate tax rate: 22%
OECD average: 26%
European Region average: 20%.

*Also factor in tax loopholes, breaks, and credits, etc., whereby certain companies pay very little or no tax at all.

Now tell me if this is odd. Norway has by far the lowest unemployment rate and yet has one of the highest corporate tax rates. Why is that? It's because of other factors. And what about the Eurozone's average 10.8% unemployment and the European region having a corporate tax average of 20%? What's going on there? The corporate tax rate has a minimal/limited direct impact on employment rates compared to all other factors combined.

I don't have the space in this post to speculate about these European nations, but I think a lot of their current state has a lot to do with social democracy.

As for Canada, a nation with at least a modicum of social democracy (a politics of which the U.S. seems to have a de facto ban), you may think the corporate tax rate is low, and it has been coming down federally. But you need to factor in provincial tax rates: combined, certain tax rates in certain provinces mean a higher tax rate in Canada than the average in the OECD.

Where are the jobs coming from? Not likely very many directly from any recent change in rates, because the change is too recent and too marginal.

What has changed?

Well, household spending has been higher than expected. That means increased demand.

Wages have been increasing (imagine that, eh, America?). That means increased demand.

The Canadian dollar has remained strong despite global volatility. That means strong global purchasing power, which is good for companies looking to expand.

U.S. job numbers and consumer confidence have been improving. That means increased exports. The U.S. purchases 3/4 of Canada's exports.

So despite your possible misunderstanding of our corporate tax rate (federal + provincial), meaning it's closer to the U.S. rate than you may realize (especially if you consider that the average effective corporate tax rate among Fortune 500 companies is under 20%), there are many other factors that explain the surge in jobs. I haven't even mentioned other factors such as stabilizers in our economy, including a strong bank system, better regulation (than the U.S., say), stronger education and unions, etc. These things are lacking in the U.S., which may explain the disparity in jobs gains at this point in time along the business cycle (which appears to be leaving the trough behind in a more stable recovery).

And I haven't even mentioned the tar sands in the context of oil prices and ever-expanding operations.

So your simple correlation of corporate taxes and job gains falls rather flat.

Should the U.S. lower corporate tax rates? I dunno. Maybe. I'm not sure how your system works. How is small business effected, etc.? But if you're going to lower the rate, you should also do away with tax loopholes and other factors that allow billions of dollars in taxes go unpaid. Why are some companies paying no taxes? That sort of thing.

But my overall point is that there are many other influences at play. The corporate tax rate isn't a spigot that you can adjust to foster economic prosperity. Prosperity comes from the ground up. Fix education, strengthen unions, and fight poverty rather than hope for it to go away.

 

Canada's nice, but if you want to live the American Dream, then move to Denmark. There's much more social mobility going on there.

 

Men du gør ...

Thank you to my Bable Fish stuck in my ear.

But there's been some less than positive news in the media the last couple of days,
I wonder how fast will they smell blood in the water and try to highlight it, questioning the adminstration.

It flips pretty fast when it's negative news, but sometimes the positive momentum can keep going if it flips back fast enough.

I know the GOP will harp on it quick.

 

I know this...Obama doesn't have direct control over them
but he better convince the Fed to stop priming the pump.

Stop with the nil rates for purposes of keeping the economy rev'ing and job creation
and start bringing them up bit by bit to keep control of inflation.
It's getting ridiculous.
Gas up, food up...all prices up...normal cost of living has gotten outlandish, I don't know how they can say inflation is under control.
The Fed needs to remember their primary is inflation control, its secondary is job creation.

Besides, if you just bring it up a notch or two...you'll actually be showing stability of the overall economy after the crisis.
They'll be able to reload their primary weapon, the rates, because right now they've got nowhere to go.
And you can bring the country in for a soft landing...

Can't Obama use his Spock logic and golden tones on them??? (sorry, Tuvok logic. )

 

A good article on a split economy by noted center-right columnist, David Brooks
Nice to know we've doubled our exports, as Obama "promised" (he doesn't really have that much control, but he can encourage it)
And he's pointed out the new energy boom we're getting, but it doesn't translate into gas prices.
Will the public acknowledge it? Will they "feel" it??

 

I'm relatively indifferent. As I said, the corporate tax rate is just one of many factors. I'd be fine if they'd left it. I would probably support putting it back to the last rate if we continue to have deficit problems. It's about sensible decisions in light of the environment. Is the corporate tax rate going to have a huge impact? Probably not. It's not that the rate is making or breaking whether a company succeeds or fails, or whether an entrepreneur can or cannot get an enterprise off the ground. Again, there are many other factors. If market demand remains soft, no amount of corporate tax cuts are going to help. I don't see this as a particularly important issue. The bigger picture is important.

Why zero in on 1 of 10 factors (1 of 7 in which Denmark leads)? I will again remind you that no one factor should deserve too much credit, and yet you want to focus on 10% or 14% of the factors. Why is that? If Denmark were to fail miserably in one or two of these other factors, it could potentially drag down everything else. This isn't a case of Denmark simply being business-friendly. This is a case of Denmark doing many things right.

Also, don't forget that business includes labour:

(emphases mine)

It does sound like a rather good formula for success: a win-win-win situation (government/business/the public). Perhaps the U.S. can learn a few lessons. Canada could learn a few as well.

A few other things to note about Denmark:
• Income tax: progressive up to 51.5%
• Corporate tax: 25%
• Sales tax: 25% (federal)
• Total taxation as a % of GDP: ~49% (U.S.: ~27%, Canada: ~32%)

• Trade union membership: 70% (U.S. ~12%, Canada: ~29%)

• U.N. Education index: 0.993 (tied for first with Australia, Finland and New Zealand)
• Average university tuition: ~$0
• Bursary available to all Danish citizens:

- US$ 480/month (living with parents)​

- US$ 965/month (living away from home)​

• Optional low-interest student loans: US$ 494/month

• Health care cost: funded through federal taxation and county funding/provisons
• WHO health system ranking: 34 [higher than the U.S. (37), lower than Canada (30)]

 

Uhh...Are you talking about Obama...or the GOP in general???
Because truly no entity all-together ever has set "spin" with such fervour, given a few catch-phrases, repeated ad-nauseam, even in the face of the obvious,
than the modern GOP, and especially that of recent years.

NO NEW TAXES!
WHERE'S THE BIRTH CERTIFICATE?!
CUT GOVERNMENT SPENDING!
ABORTION KILLS
DEATH TO KILLERS
DESTROY THE DEPT OF EDUCATION
SUPPORT THE DEPT OF HOMELAND SECURITY
NO CHILD LEFT BEHIND
DON'T QUESTION YOUR PRESIDENT
THE PRESIDENT IS RUINING YOUR COUNTRY
MISSION ACCOMPLISHED
OBAMA WENT INTO LIBYA ILLEGALLY
THE SURGE WORKS (iraq - Bush)
THE SURGE DIDN'T WORK (afghanistan - Obama)
THERE'S NO WAR AGAINST WOMEN
OBAMA'S WAGING A WAR AGAINST WOMEN

and so on, etc, etc, etc...

Please, don't even try to spin the GOP's favorite tactic of spinning on Obama.
Remember, unlike many we have memories.

I think there's a phrase for that, "The pot calling the kettle black"
Calling them a parrot, is being a parrot yourself.

Judge the man on his true actions and qualities, not bullshit.

 

Actually, I've found the recent GOP being very passive-aggressive.
Attacking with fury & outrage on one hand...no holds barred (nor facts either).
Then acting with shock & indignation when ANY suggestion of negativity is thrown their way.

They are better at drawing fouls than the best NBA floppers.

 

Canada is still wrangling with a $17 billion deficit. (For reference, our GDP is ~$1.76 trillion, and we have things such as universal health care and a stronger social safety net than in the U.S.) You say that this may give us more flexibility in structuring taxes to suit our needs. I think by "structuring taxes" you mean cutting taxes. (Correct me if I'm wrong.) However, I don't see the point in the comparison. Doesn't the opposite affect the U.S.? That they have less flexibility because of a higher deficit? Does this not mean that tax cuts are a luxury that cannot be afforded? That if things are bad deficit-wise, that legislation such as the Bush tax cuts are a bad idea that should be revoked? You know, to suit your needs?

And the expectation of growth in Canada has little to do with taxes.

The same could be said for any one of these factors. This is my point. I don't know why you'd focus on this one factor, when all these factors are important. If any one of these factors were not "true," Denmark wouldn't be in the position it's in currently. You are overemphasizing the importance of this one factor. You seem to favour the idea of a be-all and end-all to a nation's challenges. It's not that simple. If you look closely at Denmark, you'll see why. But not too closely. Back away from this one factor you seem so enamoured with.

Do you have any more to say? You've more or less used a bunch of words to say, "I agree."

Health care is just one issue, and it's not the core problem in the U.S. The core problem is a political system controlled by corporate interests "for the benefit" of a relatively powerless citizenry/workforce. The core problem is neoliberalism having too much political leeway in determining the best direction for America's future. That neoliberal policies are assumed ideal is the core problem.