The economist axiom is you if tax something, you get less of it. This is the argument behind so called “sin” taxes on items such as cigarettes and alcohol.

This being the case, why do politicians continually rail about jobs leaving the US (or going to ATMs? Yup should have subsided the stagecoach and kept it around too) when corporations are continually taxed more for having employees?

Have a look below at how the makeup of corporate taxes has changed over the years from Political Calculations:

If you want to see less outsourcing, then your policy should be to reduce payroll taxes, which are costs of having employees. When I have worked on labor reduction efforts at a few different companies, we always add 35%-40% to the affected employees’ salaries to account for taxes and benefits for the saving calculation. It is exceptionally expensive to employ Americans.  So the questions is, what behavior do you want your policy to drive? As economist Mark Perry has written: “Build it and they will come; tax it and they will leave.”

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