This is ace reporter Clif Carothers here in Detinu Setats In the Bizarro world of “Htrae” here to interview Bizarro himself on their country’s corporate tax codes for more insight.. As you know, their society is ruled by the Bizarro Code which states “Us do opposite of all Earthly things! Us hate beauty! Us love ugliness! Is big crime to make anything perfect on Bizarro World!”.
Clif: Thank you for the interview. To start off could you tell me what is the philosophy of your corporate tax policy.
S: Well Clif we want to limit GDP growth, support business failures, and encourage our businesses to leave our country to set up shop in other countries.
Clif: Huh. Well that’s bizarre. How do you accomplish that?
S: Well to start, we have the highest statutory tax rates in the free world. We take away as much profit as possible in the hope that it lowers overall corporate growth.
Clif: Well it seems it would certainly have that effect. I would suppose it would encourage other non-intended purposes also with stockholders trying to keep more of their hard earned money like higher dividends.
S: Certainly. I am sure we have higher business failure rates as a result, especially because we also discourage corporations from saving gains for a rainy day. But most businesses do not pay this high rate.
Clif: They don’t?
S: No, we set up incentives which if followed allow our corporations to escape these high rates. As an example, we encourage dangerously high debt to equity ratios by providing interest deductions but not providing equity tax incentives.
Clif: Hmm that supports your policy of more business failures. Well at least giving businesses a break from these high tax rates sounds less bizarre. Do all industries participate in these incentives?
S: Yes but not equally. For instance, our defense industry pays only about 2% taxes while our computer industry pays on average 16%.
Clif: I see, so you are trying to encourage military spending in your country while pushing away computer businesses, right? This is your taxation strategy?
S: Oh no. Our historical tax incentives have a much more logical basis than that. You see we give bigger tax breaks to industries that contributed more money to some previous politicians’ campaign funds years ago.
Clif: I see. Whew, Bizarre! Well how do these corporations get the lower rates?
S: Now that is the beauty of our system. You see we encourage companies to invest heavily in depreciable assets and give them rapid depreciation to do that. However, if they can place the assets in foreign countries and play games with transfer pricing, they can really accomplish our tax strategies, namely to place assets in other countries to support jobs overseas while paying less taxes here. Ingenious yes?
Clif: Yessss it is. Any other nifty policies?
S: Well if they promise to defer bringing their profits home and they instead reinvest them in foreign lands to take more jobs away, we allow them to defer paying any taxes, perhaps forever!
Clif: My listeners back home will be very interested in hearing about your tax policies Bizarro. Thank you for your time today.
S: Uh Clif this is Metropolis right here in the Good Ole U.S. of A. and I am not Bizarro, I am Superman your hero, and these are your Congress’s ideas for America.
Clif: I don’t know what to say… mind not computing… must .. find… kryptonite…. back to you in the Daily Planet studios, Peter…