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Honeywell CEO Says The Corporate Tax Rate Should Be Zero

By Pat Garofalo  

"Honeywell CEO Says The Corporate Tax Rate Should Be Zero"

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Honeywell CEO David Cote

During an interview today, Honeywell CEO David Cote — who President Obama named to the Bowles-Simpson deficit commission — told CNBC’s Andrew Ross Sorkin that he believes the U.S. corporate tax rate should be zero. Cote added that the only reason his desired rate won’t happen is because “from a fairness perspective, nobody would be able to stand it”:

SORKIN: David, I have a tax question for you. What do you think the ultimate effective tax rate should be on corporations?

COTE: Zero.

SORKIN: Zero?

COTE: The problem is from a fairness perspective, nobody would be able to stand it. But at the the end of the day, jobs come from companies and if we wanted to create the most effective foreign direct investment pipeline you’ve ever seen, we would have the lowest rate possible.

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Cote’s belief that a low corporate tax rate will spur job creation stands at odds with the country’s current experience. After all, U.S. corporate taxes that were actually paid (the effective rate) fell to a 40-year-low in fiscal year 2011, despite corporate profits rebounding to their pre-Great Recession heights. The U.S. actually has one of the lowest effective corporate tax rates in the developed world. However, job creation has been slow, if steady.

“Our corporate tax rate last year, effectively, in terms of taxes paid for the United States, was around 12 percent, which is well below those existing in most of the industrialized countries around the world,” explained billionaire investor Warren Buffet. “Corporate taxes are not strangling American competitiveness.”

Cote made $37 million in total compensation in 2011, while spending the last few years busting unions and driving down pay and benefits for his company’s workers.

‹ Econ 101: May 31, 2012

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