Corporate Taxes, the unintended consequences

Why do I keep writing economics? Nobody's listening. What do I know anyway? In one way knowing is living through it. That's the economics of the street.

An observation anyway: the higher than the rest of the world corporate tax structure in the US (35%) introduces two unintended consequences. One, a corporation including its officers can retain more of their collective income by paying sky-high bonuses thus reducing corporate income, that is, providing the officer's tax rate is substantially lower than the corporation's tax rate. Given a corporate tax rate of 35% that would be a probability. The solution would be to lower corporate tax levels below those of the executive officers, vise versa or a combination of both.

Sequestering foreign revenue from overseas factories in overseas accounts retains more of the corporate earnings whilst enjoying overseas tax rates far below our own. The corporation finds no way to bring those earnings back home, so if invested at all, the earnings are invested outside the US. The solution would seem to be a lower US tax rate than the foreign tax rate. It would not hurt to give a one time tax exemption for corporations to bring their earnings home.

Is there any wonder?