Don's column in the Columbian takes notice of an emerging European tax trend: cutting tax rates to boost investment and job creation. After years of economic decline, as European nations raised business taxes to fund an expanded welfare state, new political leaders have gotten the message.
Europe finally realized its mistake and conditions are improving, according to a recent article in The Wall Street Journal. For example, the German government just approved an 8.9 percent rate reduction on corporate income taxes. From a high of 52 percent in 2000, the overall tax rate will fall to 29.8 percent by 2008.
Germany's tax turnaround is part of a trend, according to The Wall Street Journal. Recently, 25 other developed countries adopted the same tax-cut strategy proposed by President Reagan in 1980.
Meanwhile, we're sliding in the wrong direction.
Ironically, the United States may soon have the world's highest corporate tax rate -39.3 percent when the state average is added to the federal government's 35 percent.
... Congress is considering higher taxes on corporate dividends and foreign-source income.
Our state is not immune, despite some important credits and exemptions.
... Washington should be especially cautious. State lawmakers resurrected the estate tax, and Washington employers continue to pay the nation's highest unemployment insurance taxes. When you add business and occupation taxes, sales taxes and property taxes, Washington ends up being one of most heavily taxed states for business.
That's one reason business remains concerned about budget sustainability. We know where lawmakers go first to cover the shortfalls.
