Thursday, February 08, 2007

Driving Companies Offshore

Terrific article on the enormous benefits of lowering corporate taxes. It's by my friend, Washington economist Kevin Hassett, in the latest issue of The American:

...Sure, the U.S. has a highly productive workforce and the world’s largest single consumer market, but the latest literature suggests that relative tax rates are a big, big deal. Indeed, the dramatic flow of international capital to the lowest tax environment is one of the strongest and most reliable findings in the history of economic science.

If a country lowers its rate below its rivals, as Ireland, now with a 12.5 percent rate, began doing more than a decade ago, then multinationals flood that nation with capital. It’s very much in the data.

And the capital attracted by low taxes leads to amazing economic growth—about 10 percent annually for Ireland in the late 1990s....