Next week, Nevada voters will cast their ballots and decide whether or not Nevada will institute a margin tax. The tax is a modified gross receipts tax (a type of tax only five other states have) and is modeled after the...
- The Tax Policy Blog
- Lessons for the U.S. from England's Glass Excise Act...
Lessons for the U.S. from England's Glass Excise Acts of 1745
Some lessons die very hard. After watching a number of high-profile U.K. based companies defect to Ireland, Switzerland, and the Netherlands, the British government launched an effort last year to reform their corporate tax system to make the country more attractive to business. In November 2010, the British Treasury released a detailed plan Corporate Tax Reform: Delivering a More Competitive Tax System, which called for reducing the corporate tax rate from 28 percent to 24 percent, reforming their method of taxing foreign profits (i.e.: moving toward a territorial tax system), and improving the tax treatment of intellectual property.
Interestingly, this is not the first time in which bad tax policy chased businesses, or an entire industry, out of England. As I learned during a recent visit to the Corning Glass Museum in Corning, New York, Waterford Crystal would not likely exist today were it not for the British Glass Excise Acts of 1745. Because those new excise taxes raised the price of raw materials for the English glass makers, many moved their operations to Ireland.
The Waterford Company was started in 1783 by brothers, George and William Penrose, in the port city of Waterford. The industry thrived for nearly 100 years until, according to the company's website, the firm closed due to a lack of capital and, ironically, "excessive taxation." The modern company was started in 1947 and continues to produce some of the finest crystal in the world. Perhaps some of its recent success is due to Ireland's 12.5 percent corporate tax rate.
Not to take this illustration too far, but U.S. lawmakers have been slow to recognize the effect that the high U.S. corporate tax rate is having on the nation's competitiveness and the gradual migration of many American industries to low-tax jurisdictions. The sooner we cut our corporate tax rate and reform the way we tax foreign profits as the British doing, the sooner we can reverse these trends.
Author's photo taken at the display of Anglo-Irish glass at the Corning Glass Museum.
Subscribe to the Tax Foundation Newsletter
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.