Keeping companies from moving overseas

Obama has just taken a question on how we can keep companies from moving overseas.

He said that the number one concern for companies is having an educated work force.

Close, but no cigar.

Is an educated work force important? It is, and the jobs that are most likely to stay here in the US long term (as the President point ed out) are those that require an educated work force. Low skills jobs are more likely to moved overseas to the Third World.

But neglecting the tax end of the equation is a huge mistake. Reducing taxes on corporations is a fast acting measure. Building a highly educated work force is a slow moving measure.

Let's look at the example of the Irish.

Some years ago Ireland reduced its corporate taxes dramatically, to the lowest level in Western Europe.

The result was the "Celtic Tiger." Massive and sustained economic growth, vastly outstripping the rest of the Europe.

A friend of mine leads trade missions to Ireland and Northern Ireland, encouraging companies there to come here and vice versa. His experience in Ireland proper has been quite successful. His experience in Northern Ireland has been less successful due to teh UK (Northern Ireland, of course is part of the UK, and as such is subject to the higher corporate tax rates imposed there.)

Companies in Northern Ireland, looking across the border have repeatedly petitioned Parliament to reduce their corporate taxes to allow them to compete more successfully in getting companies to locate there. My friend says you can see a dramatic difference as soon as you drive across the border.

Reducing corporate tax rates NOW, as part of the current stimulus bill, would save America jobs (and like reduced personal income tax rates have always done) increase total revenues.

And as I (and others) have pointed out...corporations don't pay taxes. They pass the cost of taxation onto the consumer through increased prices and lower dividends.