Misunderstanding Corporate Taxes

We regularly hear certain types of commentators admonish tax policies. For example, I just read “the federal corporate tax rate is 35%, the second-highest in the world.” That statement is inevitably followed by this one “We’ll probably never know how many businesses never started up or took root in the US because tax rates are too high”. (For the record, these are real quotes but I will abstain from naming the source because although they are severely misguided on certain things, they do good, honest research on other things which I respect.)

This sort of corporate tax rate whining is ignorant and ideologically driven. It is ignorant because someone making this claim does not understand how taxes work. Alternatively, if they do understand this, then they assume their readers don’t and are using this informational sleight of hand to fool readers into supporting their agenda. In effect, their mantra is usually “anyway to lower any and all taxes, facts be damned, let misinformation fly, as long as taxes get lowered.” So, let’s examine the facts:

Remarkably genuine comments from a former Fed governor

A short CNBC interview with Laurence Meyer, a former Fed governor.

http://plus.cnbc.com/rssvideosearch/action/player/id/1684975093/code/cnbcplayershare

Sorry for the link, but I couldn’t figure out how to embed the video.

Of particular note is Meyer’s honest admission, or I should say, assertion that the Fed is deliberately weakening the dollar and inflating the stock market. That sounds like desperatation to me, but the stock market has certainly obeyed by rising.