Corporate Tax Rate

James Freeman laments in a recent editorial that it is “not easy to find a country with a higher corporate tax rate than America’s 40%.” He finds that even more remarkable since many of the countries with truly oppressive governments have a lower and thus more competitive tax policy.

A recent study by KPMG accountants of rates in 130 countries only turned up one country with a rate higher than the U.S. The top rate in the United Arab Emirates is 55% but is generally applied only to foreign oil companies.

Earlier this month I was teaching in Hungary as I read about the study of tax rates. I remembered that Hungary had a lower corporate tax. I looked it up. The tax rate in Hungary is 19%. Five countries border Hungary. Four of them have an even lower rate (Serbia is 15%, Romania is 16%, Slovenia is 17%, and Ukraine is 18%). Slovakia has a slightly higher rate at 22%. All of these former communist countries have a corporate tax rate less than the U.S.

The high corporate tax rate in America is driving U.S. companies overseas. I am not just talking about companies moving to Mexico and China. Many are moving to Europe. The drug company Pfizer announced its desire to purchase AstraZeneca and reincorporate in the United Kingdom. The U.S. Treasury would take a big hit if Pfizer leaves America.

It isn’t just the corporate tax rate that would hasten their departure. Most European countries do not impose a tax on profits made overseas. That allows them to repatriate profits without paying the punitive tax they would have to pay as a U.S. company. More than $2 trillion in foreign profits are held overseas by American corporations in order to avoid taxes.

America’s high corporate tax rate is higher than nearly every country in the world and will continue to drive business overseas.

Closed Minds

Harvard Professor Ruth Wisse recently wrote about “The Closing of the Collegiate Mind.” One cannot help but notice the similarity of the title to the bestselling book “The Closing of the American Mind” by Allan Bloom.

She reminds us of a time when intellectual debate was allowed on university campuses even when it was often prevented in the political arena. Today, she argues, the roles have reversed. “Open debate is now protected only in the polity; In universities, muggers prevail.”

She cites many examples. Brandeis prevented the awarding of an honorary degree to a proponent of women’s rights under Islam just as they had in the past in preventing former U.N. ambassador Jeane Kirkpatrick from receiving such a degree. New York City Police Commissioner Raymond Kelly was kept from speaking at Brown University in November. Azuza Pacific cancelled a lecture by Charles Murray. Harassment from students and faculty at Rutgers University forced Condoleezza Rice from speaking at this year’s convocation.

I might also add others examples. Dr. Ben Carson had to drop his invitation to Johns Hopkins this year. Two years ago, controversy surrounded his commencement address at Emory University. Many wanted this world-renown neurosurgeon uninvited because he believed in intelligent design.

These and other universities have two problems. First, these spineless administrators haven’t stood up to those who would limit debate in the academy. Second, many of them have actually encouraged those demanding ideological conformity.

Of course much of this has leaked into the political realm. Jonah Goldberg talks about “The War on Evil Thinking.” Anyone who disagrees with the current political correctness is labeled as evil. Critics of Obamacare are called “un-American.” Thought crime is alive and well in America, not only in the academy but in the political world as well.

We need and deserve a robust debate about the issues in this country. It is time for students, faculty, administrators, and politicians to resist the totalitarian temptation.

KIRSTEN DUNST’S COMMON SENSE by Penna Dexter

During an interview with Harper’s Bazaar to promote her latest film, “The Two Faces of January,” actress Kirsten Dunst poked a nasty hornet’s nest with her comments about traditional gender roles. “I feel like the feminine has been a little undervalued,” she told the fashion magazine. “We all have to get our own jobs and make our own money, but staying at home, nurturing, being the mother, cooking — it’s a valuable thing my mom created.”

The leading lady of the Spider Man trilogy really got slammed for saying, “And sometimes you need your knight in shining armor. I’m sorry. You need a man to be a man and a woman to be a woman. That’s why relationships work…”

I guess we shouldn’t be surprised — the feminist blogosphere and Twitter exploded.

One feminist thinker wrote a piece entitled,” Kirsten Dunst Thinks That Women Should Know Their Place Is In The Home.” No she doesn’t. She’s made 30 movies.
But a lot of women do prefer to be at home with their kids. According to a new study by Pew Research Center, stay-at-home motherhood is growing. Twenty-nine percent of mothers with children under 18 don’t work outside the home. That’s up from 23 percent in 1999.

And it’s not just wealthy women. Writer Arianne Sommer told FOX News. “People nowadays have to make a living and simply can’t afford the luxury of spending the entire day at home.” But most stay-at-home mothers are actually middle class. Data from the latest Census show that 65 percent of women who stay at home with kids under 18 live in homes where the family income is less than $75,000 a year.

Katherine Connell at National Review wrote that “for many families, it makes economic sense for a parent to provide full-time child care rather than paying someone else to do it, given the cost of day care, transportation, and taxes on additional family income.”

Add to that the fact that having a parent home to raise a kid full time is a good way to help ensure that child is healthy, physically, mentally, and emotionally.
Feminism tends to foster selfishness in women. And, for the most part, selfish women aren’t great mothers…..or great spouses. Maybe that’s why so many relationships in Hollywood don’t work.

Kirsten Dunst’s stardom wasn’t enough to get her a pass from the feminist thought police. Someone even tweeted that she should join the list of actresses who “should never be allowed to talk near young girls.” Quite the opposite. She’s got a healthy take on gender roles.

We just came off a national celebration of mothers. Mothers Day draws more attention than ever. Unlike the feminist left, most Americans do not consider honoring women for their familial role archaic or oppressive.
And as for needing a knight in shining armor once in awhile, unlike the gender theorists, Kirsten Dunst knows what she’s talking about.

Transhumanism

Technology certainly played a role in catching the Boston terrorists. But this revelation is also heating up a debate about how much surveillance is too much. We now know how helpful all this new technology was in catching them. Smartphone pictures identified them. Infrared cameras verified that the brother was in a backyard boat. The best evidence came from a Lord and Taylor department store security camera.

I might also mention that this isn’t the first time surveillance technology has helped catch terrorists and evildoers. Cameras in London helped identify the terrorists in 2005. Surveillance video captured the Tucson shootings in 2011. No doubt Big Data and surveillance technology are potent weapons against terrorism.

What about our privacy? Representative Peter King (R-NY) explains: “If you walk down the street, anyone can look at you, anyone can see where you are going. You have no expectation of privacy when you are out in public.”

While that may be true, video surveillance is much more intrusive than that. Most of us have been in a shopping mall or a building and needed to adjust our clothing, clean our nose, whatever. We go around the corner thinking we are in private to attend to that need. Then we look up afterward and see a video camera that has recorded everything we just did. Maybe you were doing something silly or embarrassing only to look up and see a crowd of people taking pictures or videos of you with their phones.

Each year we seem to accept more video surveillance at the expense of our civil liberties. Think about it, in airports and government buildings you are ALWAYS on camera, except perhaps when you are a bathroom stall. With more cameras on street corners, we are approaching a level of video surveillance that reminds me of the movie “The Truman Show.”

I believe we need to have a debate about the balance between security and privacy. We shouldn’t have to give up all our privacy in the name of security.

Gun Violence

A recent study by the Pew Research Center found that a majority of Americans believe that gun violence is greater than ever. The problem with that view is that the opposite is true. Violent gun crime has dropped dramatically in the past two decades.

The Pew report explains that: “National rates of gun homicide and other violent gun crimes are strikingly lower now than during their peak in the mid-1990s, paralleling a general decline in violent crime.” Government statistics show that the rate of non-fatal violent gun crime victimization dropped 75 percent in the past 20 years. The gun homicide rate dropped 49 percent in that same period.

Most Americans are unaware of this drop in gun crime. According to the Pew survey, 56 percent of Americans believe gun crime is worse than it was 20 years ago. If you add in those people who believe it has stayed the same, then you have 84 percent who believe it has either gone up or stayed the same. Only 12 percent have the correct view: that gun violence has decreased the last 20 years.

Let’s put it another way. At a time when the nation was having a debate about guns and gun control, more than 8 out of 10 Americans had a perspective about gun violence that was completely opposite of the true reality. I think we all know why the public perception is incorrect. The news media focus our attention on crimes, especially gun crimes. This has been true for some time, but was especially true since the shooting in Newtown, Connecticut.

The Pew Research report also puts these mass shootings in context. “According to a Bureau of Justice Statistics review, homicides that claimed at least three lives accounted for less the 1 percent of all homicide deaths from 1980 to 2008.” In other words, they are very rare, but of course get lots of media attention when they occur.

This latest survey once again is a reminder that public opinion can often be wrong, and that’s why we need accurate statistics before we enact government policies.

Paperbacks

One reason for the success of the iPhone is its size. Steve Jobs was a student of ergonomics and understood that a smart phone needed to be large enough to have legible graphics but small enough to fit in the hand. Apple apparently hit that “sweet spot” in designing it.

Clive Thompson, writing in the Smithsonian, explains how a similar phenomenon occurred seventy-five years ago with another American innovator. Robert Fair de Graff realized he could change the way people read books, by making them smaller. Paperback books changed America’s reading habits. To understand this, we have to look at the world before paperback books.

Good fiction and nonfiction books were not that easy to obtain. First, there were only about 500 bookstores in America, mostly clustered in the big cities. Second, books back then were expensive. A hardcover book cost $2.50. That is equivalent to paying $40 for a book today.

De Graff changed everything when he got the backing of Simon & Schuster to launch Pocket Books. These small paperback books not only easily fit in the hand but they were much less expensive. They sold for a mere 25 cents.

He also worked on distribution. Pocket Books sold in grocery stores, drugstores, and airport terminals. We take for granted that we can buy books in these venues today, but that was revolutionary back in his day. This publishing revolution was a great success. Everyone was reading paperback books. Within two years, Simon & Schuster sold 17 million.

Historian Kenneth C. Davis in his book, Two-Bit Culture, explained that the publisher “couldn’t keep up with the demand. They tapped into a huge reservoir of Americans who nobody realized wanted to read.”

Today, of course, Americans read not only printed books but e-books in a variety of formats. So as we are watching this new electronic revolution in publishing and reading, we should remember the earlier revolution when paperback books encouraged more people to read.

World is a Waffle

The world is a waffle. The U.S. Center for World Missions is using that illustration to explain the challenges of worldwide missions in the 21st century. “Mission-minded people have thought for a long time that the world was like a pancake, and the Gospel was like the syrup. As long as you poured enough syrup, eventually the whole pancake would be covered with it.”

The assumption seemed sound. Send enough missionaries, preach the gospel to enough people, and get people saved. Eventually, the Gospel would fill the whole earth. But it didn’t work out that way.

The U.S. Center for World Missions shows the flaw in the theory by looking at Africa. The church has been sending missionaries and mission money to that continent for hundreds of years. Some parts of Africa are full of believers. Other parts are still quite resistant to the Gospel. Why is that? It’s because the earth is not a pancake but a waffle.

Waffles have pockets and barriers. Syrup can’t go from one to another pocket easily. That’s a perfect illustration of what’s happening with the Gospel in various parts of the world. It fills certain areas but isn’t able to cross barriers to reach other people groups. The nature of these barriers varies. They may be racial, religious, social, economic, or linguistic.

The U.S. Center for World Missions estimates there are probably 24,000 pockets of people groups. That is like a square waffle that has 156 pockets on each side. Moreover, they estimate that about 8,000 of those pockets of people groups have not been reached with the gospel. This is the great challenge of the 21st century.

We need to get the gospel to each of these pockets with prayer and an effective ministry strategy. It won’t be easy. Learning how to overcome these barriers will also be a great challenge in the 21st century. We will need praying hearts and keen minds to reach the world for Christ.

Surveillance

Technology certainly played a role in catching the Boston terrorists. But this revelation is also heating up a debate about how much surveillance is too much. We now know how helpful all this new technology was in catching them. Smartphone pictures identified them. Infrared cameras verified that the brother was in a backyard boat. The best evidence came from a Lord and Taylor department store security camera.

I might also mention that this isn’t the first time surveillance technology has helped catch terrorists and evildoers. Cameras in London helped identify the terrorists in 2005. Surveillance video captured the Tucson shootings in 2011. No doubt Big Data and surveillance technology are potent weapons against terrorism.

What about our privacy? Representative Peter King (R-NY) explains: “If you walk down the street, anyone can look at you, anyone can see where you are going. You have no expectation of privacy when you are out in public.”

While that may be true, video surveillance is much more intrusive than that. Most of us have been in a shopping mall or a building and needed to adjust our clothing, clean our nose, whatever. We go around the corner thinking we are in private to attend to that need. Then we look up afterward and see a video camera that has recorded everything we just did. Maybe you were doing something silly or embarrassing only to look up and see a crowd of people taking pictures or videos of you with their phones.

Each year we seem to accept more video surveillance at the expense of our civil liberties. Think about it, in airports and government buildings you are ALWAYS on camera, except perhaps when you are a bathroom stall. With more cameras on street corners, we are approaching a level of video surveillance that reminds me of the movie “The Truman Show.”

I believe we need to have a debate about the balance between security and privacy. We shouldn’t have to give up all our privacy in the name of security.

TOYOTA’S MOVE by Penna Dexter

The mayor of Torrance, California got a bit of a shock recently. The Wall Street Journal reported that six weeks ago, Frank Scotto was celebrating the opening of the city’s new athletic fields with officials of Toyota Motor Corporation. Toyota, “the city’s biggest employer and a prime benefactor had given a half-million dollars toward the project.”

The Journal points out that the mayor of this city, about 30 miles southwest of downtown LA, now has to figure out how to “fill the 101-acre hole the giant auto maker will leave behind when it vacates its sprawling campus and moves 3,000 jobs to a new North American headquarters” in Plano, near Dallas, Texas.

In an email, Jim Lentz, chief executive of Toyota’s North American operations, said: “The business environment had nothing to do with the decision to leave California.”
Not sure what he meant because he later cited Texas’ business-friendly climate — and low taxes — as major reasons for choosing Plano.

The company had, as a key criterion for its new headquarters, that it be near affordable housing and high-quality schools. Other attractions were Dallas’s two airports, especially DFW providing employees of Toyota “direct-flight capability to any of its U.S. plants and Japan.”

Toyota is not the only large company that has moved to Texas and it’s not the only large auto company to have left southern California. (Nissan moved to Franklin, Tennessee in 2006.) California has simply become less economically competitive than Texas and many southern states — for many reasons.

Start with right-to-laws. The Journal reports that “just 4.8 % of workers in Texas and 6.1 % in Tennessee belong to a union compared with 16.4 % in California.” Less restrictive zoning and environmental regulations in the South are part of the reason real estate is cheaper there. And California has a high state income tax whereas neither Texas, nor Tennessee has one.

A draconian renewable energy mandate makes electricity 50 % more expensive in California than in the South. And higher taxes, blending requirements, and a bias against drilling make the price of gas in California 70 to 80 percent more per gallon.

California has so much to recommend it. I know. I grew up there. My high school was across the street from the ocean. Every time I visit my family there I’m nostalgic about so much that makes the state beautiful, and enjoyable. But bad economic policy has made California a difficult state for companies and middle class individuals to afford to live in.

Governor Jerry Brown was asked about Toyota’s relocation plans. He said, “We’ve got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it.”

Millions benefit from California’s generous pension and welfare programs. But the state is chasing producers out with over-regulation and high taxes. Many companies, and individuals have made the calculation — that’s neither smart nor sustainable.

Robin Hood

A surprise bestseller by French economist Thomas Piketty certainly has generated lots of talk and controversy. His book, “Capital in the Twenty-First Century,” arrived on the scene as the president and many members of Congress were talking about income inequality. It is controversial for many reasons. One of them is his endorsement of an 80 percent tax rate in an attempt to level incomes.

Stephen Moore, writing in the Wall Street Journal, takes a moment to deal with what he believes is the “Robin Hood Fallacy.” While it sounds moral to take from the rich to give to the poor, there is much more going on in this argument.

Thomas Piketty believes that “meritocratic extremism” is ruining our economy. Stephen Moore says that is another way of saying that you get to keep the fruits of your labor. Instead, the progressive French economist believes we need to raise taxes on the rich. This will, he argues, level the playing field and have no negative impact on the economy.

Stephen Moore asks a good question. If tax rates don’t matter, then it is hard to explain why Florida and Texas (states with no state income tax) have gained four times the number of jobs over the last 20 years compared to states with the highest rates (like California and New York).

Stephen Moore also says that the national story is even more compelling. In the 1960s, President Kennedy cut tax rates. In the 1980s, President Reagan also cut tax rates. Three things happened. First, the economy exploded. Second, the share of income taxes paid by the rich increased. Third, total tax receipts doubled.

If your goal is to have the rich pay more, lowering tax rates seems like a better solution. In the 1970s, the richest 1 percent paid about 19 percent of all federal income taxes. Now the rich pay close to 38 percent of all federal income taxes.

Over the next few months, lots of people will be talking about this book from the progressive French economist. It’s worth remembering some of the concerns Stephen Moore has about the “Robin Hood Fallacy.”