Don’t be surprised to lose if you don’t make an effort at being competitive.
And if you go out of your way to make yourself less competitive, expect to lose.
If that sounds like simple common sense, that’s because it is.
But it’s also exactly what the US has been doing for years—enacting tax policies that sabotage its global economic competitiveness.
It’s like trying to get in shape for a marathon by going on an all-McDonald’s diet. (Speaking of McDonalds, check out this funny video spoof of what their commercials should really look like.)
Here are two major reasons why the US is lagging in the global economic marathon:
The US has the highest effective corporate income tax rate in the developed world (see chart below).
Unlike most other countries, which only tax domestic profits, the US taxes the earnings of foreign subsidiaries of US companies when the money is transferred back to the US. This has had the effect of US corporations keeping over $1.9 trillion in retained earnings offshore to avoid the crippling US corporate income tax.