"Only dull people are brilliant at breakfast" -Oscar Wilde |
"The liberal soul shall be made fat, and he that watereth, shall be watered also himself." -- Proverbs 11:25 |
A German corporation (AG or GmbH) is subject to corporation tax in Germany. From 2001 until 2007, distributed and retained income was taxed at a uniform rate of 25 percent. Since 2008, profits are subject to a corporation tax rate of 15 percent. In addition, corporations have to pay a so called solidarity surcharge which is calculated with 5.5 percent on corporation tax. Based on a corporation tax rate of 15 percent, solidarity surcharge amounts to effectively 0.825 percent. Corporations are also subject to trade tax which amounts to an average rate of 14 percent. The overall tax burden for corporations in Germany therefore amounts to around 30 percent.Germany also has robust worker protections, unemployment insurance that doesn't run out, and paid parental leave. Rather than laying off staff, German companies will cut hours or institute job sharing. Say what you will about the high taxes paid in Germany, but German citizens get a lot of bang for their tax buck, unlike in the US, where far too much of our taxes go into the black hole of the military. Switzerland, by contrast, is an low-corporate-tax country at a total of about 13.5%. But it too boasts a robust social safety net.
If you listen to Gov. Chris Christie, this is all about taxes. His economic program boils down to this single piece of dogma: Cut taxes, especially on the rich, and the economy will boom. Raise taxes, and you will kill jobs.
The Roche case shows that this formula is simplistic nonsense, and that there is much more to it. Note, first, that Roche had already moved its top executives and its sales and marketing operations to San Francisco, which has higher taxes than New Jersey. The work it now does in Nutley will move to Switzerland and Germany, two more places where taxes are higher than here.
These facts are not likely to penetrate the governor's conviction that lower taxes are the holy grail. President George W. Bush promised his tax cuts would create a jobs boom, and the strategy failed miserably, leaving behind only a mountain of debt.
Now Mitt Romney promises more of the same. This stuff is baked into the GOP's DNA.
The reality is that many other factors are at play when a company selects a spot to invest. An educated workforce counts. A modern transportation system. The pharmaceutical companies that have left New Jersey often go to high-tax states, like California and Massachusetts, where they can form partnerships with elite research universities. Companies also look at quality of life, and good public schools for their kids, both major draws for high-tax New Jersey.
If it were all about taxes, then Mississippi's economy would be booming.
Labels: Chris Christie, New Jersey, Republican lies, unemployment
Crankily yours,
The New York Crank