What they don’t say…. The German Economy

What they don’t say….  The German Economy

GermanHere is part of an interesting article in The Daily Beast.  All this jawing back and forth and they never get down to the real reason Germany is doing so well in recovering from the worldwide economic downturn…and that’s the simple fact their CORPORATE income tax rate is only 15%, not the highest in the world as is that of the U.S.

Corporations can hire and develop new products, etc.  They are not shackled we they are here…

And if you believe the highest individual tax rate in the U.S. is 29% I’d like to know what you’re smoking.  They forgot to mention the 10% state tax rate here in Montana and in California, and the fact they begin eliminating deductions as your income climbs, in effect putting high income earners paying more and more of their income in taxes.  If you don’t get that, it in effect makes not only a higher rate for high income earners, but a larger percentage of their gross income taxable.

From The Daily Beast, for the full article go to thedailybeast.com:

When Germany’s Angela Merkel is in Washington on Tuesday, President Obama should ask her to explain how her country manages to succeed with jobs and exports despite high taxes and welfare, says Leslie H. Gelb.

As President Obama decorates German Chancellor Angela Merkel with the Medal of Freedom on Tuesday, he might reflect on her economy, rolling along in ways that shame America’s foundering recovery. Obama and non-hallucinatory Republicans might ask her about the solidity of German growth and jobs, despite high taxes, high social-welfare benefits, and high wages, all the things many Americans scorn as business killers. If the scorners would listen for a change, here’s what they would hear from Merkel about a successful German economy:

Exports, especially high-quality manufactured goods, are the driving force of Germany’s gains in a global economy. German sales abroad rank second in the world, just behind China, which has 16 times its population, and ahead of the U.S., which has four times its population.

German business and labor leaders set aside differences to pursue common interests in jobs and profits in the national economic interest.

German economic policymaking is more pragmatic than partisan. German leaders do not say that the answer can only be this or only be that; they accept the common-sense conclusion that it has to be this and that. Thus they pursue a combination of budget stimulus and austerity, higher taxes to reduce their deficits and maintain welfare benefits, and governmental investments for jobs and future competitiveness.

In other words, U.S. leaders just might learn something from Merkel about how to run a 21st-century industrial economy in a democracy. (If readers aren’t interested in how and why this is so, or if they can’t count, or just like pontificating without facts, they can skip to the last paragraph.)

Here’s what the German economy looks like:

The German growth rate is good, not great, about on par with the U.S. (Germany’s projected growth for 2011 is 2.5 percent, while the United States’ is 2.8 percent.) After the recent global recession, Germany fell further and faster than most others because global demand decreased and the German economy relies so heavily on exports. But it also recovered more quickly. It did all this while heavily subsidizing its Eastern half, which still lags economically after decades of Communist rule.

Strikingly, the growth rate stayed at positive levels despite Germany’s high tax burden, nearly the highest in the world. Its average tax rate, including social security contributions, is 50.9 percent, as compared to 29.4 percent for America, which has one of the lowest rates in the world. Most impressively, Germany’s unemployment rate stands at 7 percent against 9.1 percent for the United States.

More surprising still is how much Germany spends to take care of its people in need, or aging, or sick, or out of work. According to the OECD fact-keeping organization, German social spending in 2009 was 31.1 percent of net national income, while Americans spent only 18.1 percent, and OECD industrialized countries averaged 24.4 percent.

How does Germany manage to grow despite this tax burden?

Exports and manufactured goods lead the way. Germany was a close second to China in 2010, exporting $1.34 trillion as compared to China’s $1.51 trillion. Even more telling is that while Germany ran a trade surplus of $218 billion in 2010, the United States had a trade deficit of $497.8 billion.

For the whole article go to thedailybeast.com

The German economy, what they don’t say…a low 15% corporate tax rate!

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