Now as America faced large deficits twin deficits (trade and fiscal) thru the 2000’s, is time to redefine the policies to change such disbalances.
On the fiscal side U.S need urgently a consumption side taxes (VAT), this may not like the overall population but may help to restrain conspicuous consumption, and contain the trade deficit from the demand side.
On the supply side the corporate rate at nearly 40% remains terribly high, (and the OECD second highest), this at the time where revenues fail to hit 2% of the GDP in good times, but nations with lower nominal rates, also fetch more income from their corporations while the higher nominal tax, the less receipts (companies cut their tax bill thru several loopholes, high taxes are an incentive to such distortion) as the graphs show below
Also the countries with higher corporate taxes are more likely to show lower output growth, so higher output gain, less companies cutting artificially their tax bill added to the fiscal incentive to hire and build in America, are strong reasons to slash those rates and bring them in par with the EU at least.
Fiscal simplification could do a lot too, as easier tax fillings could fill the coffers with fresh resources.
All this new money raised from a lighter, simpler tax structure could be used to plug the deficit, improve infrastructure and finally boosting the goods producing industries, a bit like cutting trade deficit cutting demand, and increasing supply by turning more attractive America as a production site, and helping the companies to keep prices of their wares by paying less taxes thus able to absorb partially or totally the VAT, an act that importers wouldn’t be so eager to do.
¿Isn´t this look like a coherent way to raise tax revenue while stimulating production?
http://money.usnews.com/money/blogs/capital-commerce/2008/8/15/us-corporate-taxes-still-second-highest-on-planet-earth.html
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