Say Anything Blog

Some in Europe, anyway.  In Hungary they just passed significant, sweeping tax cuts implemented to help bring that country out of a recession.

BUDAPEST, June 29 (Reuters) - Hungary’s minority Socialist government passed a crucial test on Monday when parliament approved key 2010 tax changes to help the country recover from its worst recession in almost two decades.

The passing of the law averts the risk of early elections. Prime Minister Gordon Bajnai had said he would stay in his post as long as the Socialists and the Free Democrats support his programme, which is also the backbone of Hungary’s financing deal with the International Monetary Fund (IMF).

The tax law, which will cut personal income taxes and social contributions paid by employers to the government, was passed with 211 votes and 152 votes against, with backing from the Socialists’ former coalition allies, the Free Democrats.

In Germany, Chancellor Angela Merkel is saying that her country cannot spend its way out of the recession is and backing tax cuts as a way to recover.  But here in America?

We are trying to spend our way out of a recession, and setting ourselves up for inevitable tax hikes to pay for our spending in the future.  What’s more, Democrats are planning to end the Bush tax cuts (some of hte largest and most significant in our nation’s history), they’re devising ways to implement new taxes to pay for a new government health care program and they’re a couple of votes in the Senate away from implementing a massive new tax on carbon emissions in the form of the cap and trade carbon tax.

So as other places in the world make it cheaper for their nation’s businesses and industry to do business and produce wealth and prosperity.  Here in America we’re making it harder.

What do you think the end result of that’s going to be?  If you’re thinking it will mean more of America’s business and economic activity moving to other places in the world you’re right.

Update: Add Canada into the mix too:

In a clear indication that Canada is starting to be considered a low-tax place to do business, Tim Hortons Inc. announced Monday plans to shift its base of operations from Delaware to Canada for tax purposes.

Further, analysts indicate this is also a sign of unease among corporations regarding the U.S. business environment, where taxes are likely heading upward to deal with trillion-dollar deficits and proposed health-care reforms; and the White House is looking to crack down on companies that invest abroad. …

In Canada, the federal corporate tax rate is headed to 15% in 2012, and the federal Conservative government has called on the provinces to get to a 10% business levy by the same timeframe – for a combined 25% rate on corporate income. Alberta is already at 10%, British Columbia will be there in 2011, Ontario by 2013, and New Brunswick will go down further, to 8%, in 2012.

In the United States, the top corporate tax rate is in the mid-30% range. As a result, the U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries.

Given Canada’s geographic proximity to America, this is a lot bigger threat than Germany or Hungary going low-tax.