Necessary Roughness

When President Chirac wants to cut corporate tax rates from 33 percent to 20 percent.

Financial Times reports that President Jacques Chirac set forth this idea in a debate against socialist opposition. The socialists prefer to reverse recent tax cuts. Sound familiar?

“We must beware of ideologies and illusions: reducing working time as a solution to unemployment, higher tax instead of reform,” he said in an annual speech to unions and employers. He also suggested a lower 10 per cent rate for companies that shared profits equally between shareholders and employees.

Laurence Parisot, head of the business lobby Medef, welcomed the proposal as setting “the right direction”, while adding that other taxes remained more onerous for small and medium sized companies.

The U.S., by the way, had a 2006 corporate tax rate of 39.3%.

A reduction in corporate tax would be a very, very good thing for France, and a fine example for the United States to follow. Corporations will have freedom to hire more labor, give raises, pay off debts, and update equipment. Ultimately, the individual pays the corporate tax, through the higher cost of goods and services and/or through the postponement of improvements that would make one’s job more efficient and rewarding.