The new Canadian budget includes estimates of marginal effective corporate tax rates for major countries (page 149). These rates measure the tax load on new investments, such as a manufacturing company buying new machines and expanding a plant.
Canada’s federal government introduced a budget yesterday that includes new estimates of corporate tax revenues. I’ve discussed how Canada has cut its statutory corporate tax rate to a fraction of the U.S. rate, yet Canada raises more revenue. The new budget shows that the Canadian federal 15 percent tax raised 1.9 percent of GDP in revenue in 2012, while the U.S. federal tax at 35 percent raised just 1.6 percent, per CBO.
Transportation Secretary Ray LaHood recently said that “America is one big pothole.” President Obama, members of Congress, and pundits often claim that our infrastructure is “crumbling.” The Senate Budget Committee’s new spending plan, for example, uses that word no fewer than ten times in calling for a $100 billion infrastructure package. And in a report released yesterday, the American Society of Civil Engineers gives the nation a grade of D+ on its infrastructure.
For supporters of limited government, there is some good news coming from Washington. On entitlement spending, House Budget Committee Chairman Paul Ryan’s new spending plan would reform Medicare and Medicaid, repeal Obamacare, and balance the budget over 10 years.
That’s the title of a quarter-page advertisement in the Washington Post on Wednesday.
In a story regarding federal budget cuts, the Washington Post reports:
‘One of the last presidents to balance the budget was Herbert Hoover,’ [Rep. Peter] King added darkly, referring to the penny-pinching Republican blamed for deepening the Great Depression.
What a loaded and inaccurate statement!
In his State of the Union address, President Obama laid out an array of new spending proposals, including a $50 billion plan for highways, bridges and other projects. He wants to attract “private capital” for the plan, but the problem is that federal planners would remain in control of the allocations.
Grover Cleveland says “yes.”
Calvin Coolidge says “yes.”
Economic research has only a tenuous relationship to economic policymaking in Washington. President Obama’s new proposal to raise the federal minimum wage from $7.25 to $9.00 is a case in point. It would bad for workers and the economy, but the administration seems to be ignoring the large body of theory and evidence on the issue.
In my recent study on infrastructure, I noted that federal spending is often designed to aid private interests, not the general public interest. As one example, I pointed to the Army Corps’ “MRGO” canal in Louisiana that was aimed at helping the shipping industry, but ended up being a wasteful boondoggle and harming the public interest.