Corporate Income Taxes are really interesting once you start questioning them.  How often can our government come up with something that has absolutely ZERO benefit yet considerable downside?  It is almost enough to make you start to wonder if they do this stuff on purpose!  The movie above explains what I’m getting at, but first let me refer to some work you by someone you may have heard of.

:....”and he will always, therefore, endeavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quantity either or money or of other goods.”

“As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.”

In other words, in the natural state everyone is trying to generate as much wealth as they can and in turn the economy generates as much wealth as it can.  This is human nature.  (So the real question isn’t how to stimulate the economy, instead it is how to de-unstimulate it!)

“First, every individual endeavours to employ his capital as near home as he can, and consequently as much as he can in the support of domestic industry; provided always that he can thereby obtain the ordinary, or not a great deal less than the ordinary profits of stock.”

“In the home-trade his capital is never so long out of his sight as it frequently is in the foreign trade of consumption.  He can know better the character and situation of the persons whom he trusts, and if he should happen to be deceived, he knows better the laws of the country from which he must seek redress.”

As long as someone can make a similar profit, they would rather operate domestically than internationally.  There is less risk.  The quotes above are from “The Wealth of Nations” published in 1776 and written by Adam Smith.

It turns out that there is something we do that makes foreign production more attractive to domestic manufacturers AND simultaneously provides NO benefit to us and our economy.  We levy income taxes on corporations. 

As everyone knows, but I demonstrate it again above in the presentation, only people can pay income taxes.  Thus, Corporate Income taxes don’t shield individuals from paying taxes, they simply hide what is taking place.  However, they do provide a powerful incentive to ship manufacturing jobs overseas.  We are artificially putting us at a disadvantage when it comes to manufacturing.  So the entire impact of the Corporate Income taxes is negative!

I’ll ignore the regressive of the taxes.

I’m not saying that there is a silver bullet to bring back manufacturing jobs.  There are many reasons a lot of them have left.  But I do think we ought to undo the things that actively drive some jobs overseas and that we receive no benefit from!

Enjoy!