Remember the Republicans calling for austerity measures in the United States or we will follow the same fate as Greece? Well it turns out Greece has the same problem as this country, it’s a revenue problem.
Former Labor Secretary Robert Reich was on with free market, free trade ideologue, Larry Kudlow on CNBC.
Secretary Reich was calling for an increase of the top marginal tax rate to 70%. This obviously got a chuckle out of Larry Kudlow and the CATO Institute’s Dan Mitchell. During this interview Larry Kudlow made a mistake to reveal something that made me do a little digging. It turns out that Greece has a revenue problem and Robert Reich jumped right on Kudlow’s Freudian slip. While discussing Greece, Larry actually reveals that the Greek corporate tax rate is very low, the corporate tax, is 23%. He then tried to retract by saying it was a VAT (value added tax) he was talking about. The actual Greek corporate tax rate is 25%, TEN PERCENT lower than the U.S.A.
I thought lower corporate taxes increased government revenue? Remember the Laffer curve? Kudlow goes onto say that nobody pays taxes in Greece, again, Freudian slip and solidifies the argument that this is a revenue problem in Greece.
On top of all of this tax information, low corporate taxes and tax dodgers that are rampant, the unemployment rate in Greece is 14.1%. According to the Republicans running for President here in the U.S. we need to lower corporate taxes to 25% or lower to increase employment. Seriously?
This brings me to the second country that is being watched for default, Ireland. Ireland has a corporate tax rate of 12.5%. The unemployment is Ireland is 14.7%. the European Union has been approached by Ireland asking for a bailout, but Germany and other countries have told them to essentially pound sand until it raises it’s corporate tax rate to the average percentage of all EU countries, which sits around 25%.
The conservatives continue to blame social programs for the financial troubles of these countries, but the one thing they DO NOT bring up is the fact that their tax rates are a lot lower than ours. They also never talk about their unemployment being higher than ours even though their taxes are lower. They won’t bring this up obviously because it runs contradictory to their talking points.
The bottom line is corporations have been swimming in wealth and they do not want to contribute to society. It is a revenue problem, not a spending problem.