Corporate and Small Business Taxes

Interesting reading:

http://www.taxfoundation.org/publications/show/22917.html
http://www.taxfoundation.org/blog/show/1471.html
http://en.wikipedia.org/wiki/Tax_rates_around_the_world

McCain on Corporate Taxes:

Keep Tax Rates Low: Entrepreneurs are at the heart of American innovation, growth and prosperity. Entrepreneurs create the ultimate job security - a new, better opportunity if your current job goes away. Entrepreneurs should not be taxed into submission. John McCain will keep the top tax rate at 35 percent, maintain the 15 percent rates on dividends and capital gains, and phase-out the Alternative Minimum Tax. Small businesses are the heart of job growth; raising taxes on them hurts every worker. John McCain's opponent wants to increase the marginal income tax rate which applies to the nation's 23 million small business owners who pay their taxes under the individual tax rate system.

Cut The Corporate Tax Rate From 35 To 25 Percent: A lower corporate tax rate is essential to keeping good jobs in the United States. America was once a low-tax business environment, but as our trade partners lowered their rates, America failed to keep pace. American workers deserve the chance to make fine products here and sell them around the globe.

Obama on Corporate Taxes:

Enact a Windfall Profits Tax to Provide a $1,000 Emergency Energy Rebate to American Families:Barack Obama will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on Obama's long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.

End Tax Breaks for Companies that Send Jobs Overseas: Barack Obama believes that companies should not get billions of dollars in tax deductions for moving their operations overseas. Obama will also fight to ensure that public contracts are awarded to companies that are committed to American workers.

Reward Companies that Support American Workers: Barack Obama introduced the Patriot Employer Act of 2007 with Senators Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers. The legislation would provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the US; maintain their corporate headquarters in America if it has ever been in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military.

Provide Tax Relief for Small Businesses and Start Up Companies: Barack Obama will eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation. Obama will also support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation.



The United States tax rate, after taking into account state and local taxes, currently ranks as the second highest, on average, in the world. It is more expensive for corporations to do business in these states than anywhere else on Earth:

OECD Overall Rank	Country/State	Federal Rate Adjusted	Top State Corporate Tax Rate	Combined Federal and State Rate (Adjusted) (a)
	Iowa	35	12	41.6
	Pennsylvania	35	9.99	41.5
	Minnesota	35	9.8	41.4
	Massachusetts	35	9.5	41.2
	Alaska	35	9.4	41.1
	New Jersey	35	9.36	41.1
	Rhode Island	35	9	40.9
	West Virginia	35	9	40.9
	Maine	35	8.93	40.8
	Vermont	35	8.9	40.8
	California	35	8.84	40.7
	Delaware	35	8.7	40.7
	Indiana	35	8.5	40.5
	New Hampshire	35	8.5	40.5
	Wisconsin	35	7.9	40.1
	Nebraska	35	7.81	40.1
	Idaho	35	7.6	39.9
	New Mexico	35	7.6	39.9
	Connecticut	35	7.5	39.9
	New York	35	7.5	39.9
	Kansas	35	7.35	39.8
	Illinois	35	7.3	39.7
	Maryland	35	7	39.6
	North Dakota	35	7	39.6

These facts do not exactly provide incentive for corporations to keep their operations here in the United States or to bring them here from other areas of the world. It is obvious to me these tax rates need to be drastically cut in order to improve our economy and create jobs.

John McCain has proposed dropping the federal tax rate from 35% to 25%. This would certainly provide an additional incentive both for corporations to keep operations in the United States and for international corporations to bring operations to the United States. High taxes take away from the ability of a corporation to pay workers, and takes away the ability of a corporation to make a profit. If a corporation is unable to make a profit, they will go out of business or move to a different environment in which they are able to. It is essential to bring down the corporate tax rate to one that is more competitive. I believe this policy is very straightforward and will promote growth for the American economy. This policy does not directly affect jobs here in the United States, however. A company could be headquartered here in the United States, but ship their jobs overseas and receive the same tax credit.

Barak Obama is proposing a tax break for corporations that meet certain requirements related to jobs and payment/benefits for its employees. Barak Obama says he will end tax breaks for corporations that ship jobs overseas. Barak Obama has also proposed tax breaks for companies that keep jobs in the United States:

http://obama.senate.gov/press/070802-senators_durbin/

This tax credit is equal to 1% of taxable income for corporations that meet various requirements. I think this plan is a great idea, as it ties tax breaks to American jobs. However, it does not provide as flashy of an incentive to corporations to keep their operations here at home, as they are only rewarded for doing so if they meet those certain requirements.

In terms of corporate taxes, both candidates tackle one side of the issue, but not the other. McCain's policy would keep corporate operations in the United States. Obama's policy would keep corporate jobs here in the United States. It is my opinion that each of the candidate's needs to devise a plan that address both operations (corporate tax rate moved down to 25%) being kept in the United States, and jobs. In today's worldwide economy, tax breaks can not just be reserved for corporations that keep a certain percentage of their jobs here at home. Tax breaks must be rewarded for those that are creating jobs here at home. On top of the flat rate of 25% that McCain proposes, I think we should take the requirements in Obama's plan and tie them to an additional 5% corporate profit break. This would work to keep corporations based on this country, as well as the jobs they create.

Barak Obama actually an edge on McCain when it comes to small businesses. Obama has proposed doing away with capital gains taxes all together for start-up and small businesses, while providing a $500 tax credit for each employee on a small business's payroll. McCain has porposed keeping the capital gains tax at 15%.

Thoughts?