I disagree with the year 2000 figure, but that is by the way. The big picture is that other countries have realized that low corporate taxes create a magnetic effect that brings them business. Ireland, Singapore and South Korea are the biggest winners. These are prosperous countries with good wages. When Minnesota or Iowa has aggregate taxes on business of about 45% (which includes Federal taxes), it just cannot compete with states like Texas and South Dakota with their lower aggregate rates. And the US cannot compete with countries with tax rates in the 10 to 15 percent range found abroad today.
This not only has had the effect of drawing businesses away from the US, it has the major effect of drawing money for business expansion and investment out of the US. I believe this trend will continue because other countries are wising up, while our country is becoming less friendly to business.
One of the ironies of this comes from Ireland. Ireland as become a real darling in the past 25 years for starting businesses. This is largely because of the low corporate taxes and the high quality employees. However, as a percentage of GDP corporate income tax in Ireland is about 4%, while it is about 2% of GDP in the US. So Ireland benefits massively from the taxes it collects, yet is still objectively a low tax country when seen by a business man. Wow! Everybody does win!
In manufacturing, the country with the cheapest rate gets the business for a lot of things. Currently that means China for many consumer products. But for many other products it's Indonesia, Malaysia, etc. It keeps moving. Japan used to be the center for cheap labor, but today it is the center for manufacturing high quality goods, not cheap goods. Countries like South Korea, Singapore, and Ireland are getting companies and keeping them.
