Corporate taxes: If corporate taxes are too high it sends jobs overseas. When I worked at Compaq the company shipped tons of jobs to Singapore, and it wasn’t for the lower wages. They would have been offset by the logistics costs (freight, handling and timing).
We moved the jobs because the corporate tax rate in the U.S. was 35% and Singapore gave us an extended tax holiday – a rate of 0%. Even with the added freight and duty costs it was a no-brainer. The tax break was like getting free labor and overhead (buildings, equipment, etc.).
The U.S. added duties to the notebook computers we built there, but it took about 30 minutes to get around that. We just assembled the maximum amount we could and added a couple parts once they got to the U.S. or Europe. That avoided most of the duties.
All this took place when I was managing the factory finances for our Houston plants. We cut costs where we could but it was impossible to compete with the Singapore model. Lots of jobs went overseas.
Later, when I was the controller for the Notebook Division, my favorite meeting of the year was with the Singapore Economic Development Board. They always had all sorts of incentives for us – training grants, tax breaks, help with partnerships and more.
Taxes affect behavior. You get less of what you tax. More tax on investments = less investments. More tax on businesses = less businesses to tax (and less employees to pay taxes and more people needing welfare).
Keep this in mind when you want to soak those big, bad corporations. I’m not saying they should pay zero taxes. But it is a fact that higher tax rates send jobs overseas. Obama either doesn’t know that or doesn’t think it would be a popular campaign idea. Either way it is bad.
Free trade: Free trade hurts some people, though usually temporarily, and is very visible. Free trade helps most people, and for a longer period, but the benefits aren’t as visible. Free trade is always best in the long run. Avoid politicians who oppose it.
Estate taxes: Death taxes are ghoulish. You do not want the government to profit from your death. Just sayin’.