Canada: "You Can Have NHL Teams--We Would Rather Have Corporate HQs"
An Obama administration proposal to reduce the maximum corporate rate to 28% while eliminating numerous deductions left Dr. Nathan Oeistreich of San Diego State University unimpressed. Said Dr. Oeistreich: We are cutting the rate to 28% when Canada cut its rate to 15% and we are even considering raising oil taxes. Why should we not be surprised if corporations chose Hamilton over Buffalo, Windsor over Detroit, Winnipeg over Minneapolis or Vancover over Seattle? Roger Russell of Accounting Today also criticizes the increased taxation of dividends and the continued efforts to extract taxes from foreign subsidiaries of U.S. companies; though he is willing to back off somewhat if the Obama administration is putting the proposal out simply for political reasons.
Tax proposals during a Presidential election year deservedly are generally considered with a "grain of salt;" there have been so many past promises regarding taxes during campaigns that never reached fruition (many times, thankfully the case) that it is hard to take any proposal seriously except as an attention-getter (example: Herman Cain's "9-9-9"). Oeistreich and Russell DO make one valid point: too much tax legislation ignores second-order consequences.