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Back in black: Lowering corporate tax rates
Tuesday 26 April 2011 - by Dave Goodman
However, Alan Viard of the American Enterprise Institute for Public Policy Research, who has previously argued that corporation tax is deeply flawed, claims that, since in many developed countries all other factors are essentially equal, a low corporate tax is a government's best hope of attracting big business.
"There is a worldwide downward trend" he says.
"Calling it a 'race to the bottom' is too negative a phrase, but we are currently seeing a race to the lowest tax rate - I call that a race to the top to get the best rate.
"There is a strong view among some that the location of investment is sensitive to tax rate. There may be other factors, but when a lot of countries have a lot of good things going for them the tax rate has a big impact.
"A country certainly makes itself a more attractive place for investment with a low rate. You are going to invest where you think that your rate of return is highest - a high tax is a competitive disadvantage and Obama has realised that."