In response to the financial crisis of 2008, the United States has responded by nationalizing industries and electing a president who promised to raise taxes on entrepreneurial efforts. China, the nominally Communist nation, has responded by cutting business taxes to stimulate growth. Remind me which nation supposedly supports capitalism and free enterprise (via Q&O):
CHINA may soon cut business tax as part of its efforts to prop up the slowing economy amid the global financial crisis, state media reported on Tuesday.
The government is ‘very likely’ to soon cut the business tax for enterprises by one percentage point, the China Daily said, citing an unnamed source close to policymakers.
China’s current business tax varies from three to 20 per cent, boosting government revenue by 600 billion yuan (S$131 billion) last year, according to the paper.
The news follows other state press reports last week that Beijing was planning to cut business tax for commercial banks – possibly to three percent from the current five percent, to help improve their capital adequacy.
While China improves its business climate by lowering the burden of state confiscation, the US plans to increase it, and in some cases by a significant amount. Meanwhile, the House last night voted 237-170 to sink $15 billion into the American auto industry, with government officially owning part of three private auto makers in order to dictate to management how to run their businesses. Management welcomed the move, and in fact wanted Congress to buy an even bigger stake in these companies.
Which nation is capitalist? And which is Socialist? And which party is more of one than the other? It’s hard to tell, since 32 Republicans voted for partial nationalization, and 20 Democrats voted against it. Perhaps Senate Republicans can make the distinction a little more clear with a filibuster to block this new direction in American economics.
When one looks to Beijing for rational tax policies … well, that’s just a sad day for Americans, even if it does portend a brighter future for China.