National Debt Clock

Monday, March 29, 2010

A Healthy Dose of Catastrophe

Congress voted to subject the 28 percent tax benefit to the regular good ol' American-as-apple-pie corporate tax rate of 35 percent. For the purposes of comparison, Sweden's corporate tax rate is 26.3 percent, and Ireland's is 12.5 percent. But just because America already has the highest corporate tax in the Organization for Economic Co-operation and Development is no reason why we can't keep going until it's double Sweden's and quadruple Ireland's.

If you impose a sudden 35 percent tax on something, are you likely to get as much of it? Go on, take a wild guess. On the day President Obama signed Obamacare into law, Verizon sent an e-mail to all its employees warning that the company's costs "will increase in the short term." And in the medium term? Well, U.S. corporations that are able to do so will get out of their prescription drug plans and toss their retirees onto the Medicare pile. So far, just three companies - John Deere & Co., Caterpillar and Valero Energy Corp. - have calculated that the loss of the deduction will add a combined $265 million to their costs. An additional 3,500 businesses presently claim the break. The cost to taxpayers of that 28 percent benefit is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person. So we're roughly doubling the cost of covering an estimated 5 million retirees.

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