It is almost a pastime among some people to attack “Corporate America” and “obscene corporate profits” as the source of our nation’s economic problems. Corporations are just “greedy,” they say, spending too much of the money they earn on their CEOs instead of “spreading the wealth around.”
Those critics rarely reflect on the fact that without “corporate profits,” lots of middle-class Americans would get no “profits” at all because they would have no jobs supplied by those corporations. You may or may not like everything that a successful company does, but you can be assured that it is more valuable to our economy and our people as a whole than a failing company would be.
At any rate, perhaps you spotted a brief news item pointing out that Japan’s government plans to shave 5 percent off that country’s high corporate tax rate.
Why? Is Japan trying to be “nicer” to its corporations?
No, it is simply discovering the destructive nature of high taxes.
Japanese Prime Minister Naoto Kan said many Japanese companies have moved out of the country and put their headquarters in nations with lower corporate tax rates. That exodus has killed jobs in Japan’s already weak economy.
“That is not a plus for the Japanese economy,” the prime minister said, according to Kyodo News agency.
He said he was therefore taking the “bold step” of reducing corporate tax rates.
Actually, that is a sensible step backed up by history. The old economic rule still holds, whether in Japan, the United States or anywhere else: If you want more of something – in this case, economic activity – tax it less.