What would you do if you were told you could save millions if you left for another country? Most would say, “What’s the catch?” For some corporations, the answer is “nothing.”
In the last few years the U.S. economic growth has seemed unpredictable. One trend is the departure of some companies to other countries. Companies have left the United States for countries such as Switzerland, England and Ireland.
When some of these companies answered questions concerning why they left, they gave similar answers. Companies said they were leaving for countries where wages were lower. Other companies mentioned they were following markets. As overseas customers grew, these companies said they were trying to stay close to their clients.
In addition, companies mentioned the incentives given from authorities where they relocated. This includes fewer governmental and safety regulations in the foreign country. Some executives stated that better access to skilled labor as another reason to leave.
However, a large number of companies stated high taxes and complex tax laws contributed to their decision to move to other countries. Many companies realized it was not viable economically for them to stay here when they could go somewhere else with better tax laws. Several companies reported saving millions of dollars with lower taxes.
So what are some of the differences in taxes? For example, the top corporate tax is 35 percent in the United States, while Ireland’s corporate tax is 12.5 percent. You do not have to be a mathematician to see the difference could increase profits greatly.
Of course, large companies and corporations here in the United States take advantage of every deduction and legal loophole they can and lower their tax rate significantly. But for those companies who left, that was not enough.
All of this creates more problems for our economy. If a company leaves, it contributes to the unemployment numbers. In California, new tax laws have caused 250 companies to leave for other states. California is a perfect example on a smaller scale of what could happen in the rest of the United States.
Our economy is slowly improving. The unemployment rate for this past December was down to 6.7 percent. However, if companies continue to leave, it will affect our economy adversely.
Bringing back the companies that left will be challenging. We must worry about keeping the ones here now. The government must balance lowering the tax rate or rewriting tax laws with making sure they will have enough to run the government and maybe lower the deficit. Keeping companies here will ensure our jobs.
So back to my original question, “What’s the catch?" For most of us, the answer is keeping our jobs.