Respectfully submitted by Lawrence Rafferty (rafflaw)-Guest Blogger
While we have discussed the fairness of the taxes paid and not paid by large corporations in the past, the alleged high corporate tax rate is once again in the news. It seems that after contraception the Right’s most consistent accusation is that the corporate tax rate is way too high for corporations to compete in the world market. The facts seem to differ from those claims however.
“Corporations are lobbying for lower corporate rates and an exemption for profits they shift offshore. McIntyre, however, says “Our study provides proof that too many corporations are already being coddled by our tax system.” Findings in the report include:
The average effective tax rate for all 280 companies in the study over the three year period was 18.5 percent; for the period 2009-2010 it was 17.3 percent, less than half the statutory rate of 35 percent.
78 of the companies enjoyed at least one year in which their federal income tax was zero or less.
30 companies enjoyed a negative income tax rate over the entire three year period on their combined pre-tax profits of $160 billion.
Total tax subsidies given to all 280 profitable corporations amounted to $222.7 billion from 2008-2010.
Wells Fargo tops the list of 280 U.S. corporations receiving the most in tax subsidies, getting nearly $18 billion in tax breaks from the U.S. treasury in the last three years.
Pepco Holdings had the lowest effective tax rate of all the companies in the study, at negative 57.6 percent over the three year period.” Citizens for Tax Justice
If I understand those numbers correctly, large corporations are paying about half of the rate that they claim is too high. Another example of how little these corporations are paying was recently discussed in a Crooks and Liars article on General Electric. “General Electric is a prime example of this trend. Despite being highly profitable and subject to a theoretical tax rate of 35 percent, GE paid only a 11.3 percent tax rate in 2011. And that number was the most they paid in more than a decade. In 2010, they actually paid no taxes and got a net tax benefit of $3 billion. For the 10 year period prior to that, their effective average tax rate was 2.3 percent.” Cooks and Liars
Recently, President Obama proposed a reduction in the corporate tax rate to 28 percent for many corporations while claiming to reduce or eliminate many tax loopholes. “President Obama will ask Congress to scrub the corporate tax code of dozens of loopholes and subsidies to reduce the top rate to 28 percent, down from 35 percent, while giving preferences to manufacturers that would set their maximum effective rate at 25 percent, a senior administration official said on Tuesday. Mr. Obama also would establish a minimum tax on multinational corporations’ foreign earnings, the official said, to discourage “accounting games to shift profits abroad” or actual relocation of production overseas.” New York Times
In light of the low actual rates paid already by these corporations, I don’t understand why the rate even needs to be reduced. When General Electric pays an average of only 2.3% over ten years, what will they pay under Obama’s proposal? I think the proposal to set a minimum tax is good in theory, but the devil is in the details. I will believe it when I see it.
When politicians are screaming that corporations are people and should be allowed to deny their employees any insurance coverage for services that they have religious objections to, shouldn’t we make sure that they pay tax rates that Real people pay? How many workers were laid off or terminated while these profitable companies paid very little, if any, taxes? What are your thoughts?
(Disclosure: The author owns a small amount of shares in General Electric stock.)
Gene,
Are you intoxicated or schizophrenic? You are all over the place and fail to make sense in the process. Then you say something dumb and say its not what you said, until you explain it and repeat exactly what I said you said?! And beyond all that, now you say i am greedy because I am advocating that owners of corporations get taxed more? Thats just bizarre. I’m interested in productivity and efficiency. That’s it. And what I’ve articulated is better for our economy as a whole – including for your precious 99% – than this boneheaded liberal and ignorant crap. And except for your pussyfoot feelings, you can’t articulate any sensible explanation of how I’m wrong. Seriously, you are cutting your nose to spite your face! Whatever fiscal or social end game you want is better achieved by 0% corporate taxation!
Too bad that’s an economic fantasy that – much like communism – only works on paper. It assumes that all actors are both rational and good – a falsity about human nature – and that markets are interested in just outcomes and capable of creating them as needed – they aren’t. Just outcomes are not the driver in market transactions. Profit is. The best regulation for cheaters is better regulation with real and substantive punishments. The problem isn’t going to be solved with deregulation. It’s going to be solved by treated white collar crime as harshly as all other crime. Steal with a gun, steal with a pen, you’re still a thief. And the market may bring you to justice but just as likely the market will reward you for your profits. The business of business is profits. The business of the courts is justice. And that last bit there isn’t just because I say so, but because the Constitution says so.
That is right Jack. Regulations caused the enormous gap between the very wealthy and the rest of us. Do yo realize how crazy that is? Name the regulation that forced the wealthy to make huge profits while the economy tanked. The market tanked without your regulations that were removed at the end of the Clinton administration so how did this enormous wealth gap get so big?
By the way, this troll does have a life.
Rafflaw,
So were you going to respond to my answer to you or just troll? But yes, greed is good if the other assumptions hold. The reason is because for the perfect market to function, people have to act rationally in their best interest. The problem with Gecko is that the other assumptions didn’t hold – namely information symmetry. That’s when corruption happens. Thus, bringing things to light is generally good economic policy.
In other words, every anti capitalist fundamentally misunderstands that greed is not the problem, but greed with high barriers to entry, high transaction costs, information asymmetry, etc., is. The reason is because where the other assumptions hold, the market can weed out cheaters. Meaning, the best regulation for cheaters is to fix the broken assumptions of the perfect market.
Jack,
You have mentioned the “free market”and the
“perfect market”. Could you give me two examples of times and places where each of these phenomena has existed historically? In discussion terms must be defined for clarity and so I’d like some concrete, rather than theoretical examples.
Jack,
“According to him, if the government doesn’t tax then its a subsidy.”
Not exactly what I said. I said not taxing corporate profits is the equivalent of a subsidy. Because it is.
“That means that the government owns everything we make and subsidizes us by its grace to benevolently allow us to keep the government money that we made.”
No. That means you and corporations own what you/they make minus the taxes you owed, but you feel free to conflate some more bullshit however you feel you need to in order to apologize for your corporatist greed.
“And I’m the fascist?”
If you say so. I’m willing to discount that you may just be a corporatist. Equally vile as and a kissing cousin to a fascist, but not precisely the same thing unless you’re an Italian Fascist which combines the worst of both worlds.
**********
raff,
Bad guys very often want their cake and to eat it to.
Gene,
Even Gordon Gecko knows that greed is not good. It amazes me that the corporatists try to make us believe that corporations are not only people, but they are special people who shouldn’t pay taxes like real persons.
The more I think of Gene, the more I chuckle. According to him, if the government doesn’t tax then its a subsidy. That means that the government owns everything we make and subsidizes us by its grace to benevolently allow us to keep the government money that we made. And I’m the fascist?
“No, I made a policy argument based on a policy post on a legal blog. LOL!”
Yeah. You just made a bad one that was simply an appeal to greed with no legal basis.
“That’s like saying that the benefits of a car driver benefits the car by ensuring continued use by the car driver! What nonsense to completely ignore that is the OWNER of a corporation that benefits! LOL!!
And I reiterate – Limited Liability ONLY helps the OWNERS, because without the owners a corporation DOES NOT EXIST! LOL!!!”
Spoken like someone who doesn’t understand the concept of perpetuity and (limited) personality in addition to limited liability. Or like someone acting like an apologist for corporate greed.
“I move the goal posts because what I said makes equitable, financial, and common sense! And you want me to replace that with your perverse notions of “fairness?” Who elected you despot?”
You move the goal posts because you can’t argue for fuck. I don’t care if you think my definition of equity are perverse or not because they have the merit of being the definition used by the law, i.e. having or exhibiting equity: dealing fairly and equally. You call me a despot because you’re desperate. Yeah. Despots are usually so concerned with justice and fairness like I am.
“LOL!!!!! That’s right! YOU know why people are doing things better than THEY know! You are NUTS! And remember, that Jamie Dimon is one player. Go check out surveys of small business owners. Oh wait, don’t. Because you know what they think better than they do! LOL!!!!”
No. I simply know a bullshit excuse when I hear one.
“’Corporation who avail themselves to governmental services and subsidy. Not taking money from them in the form of taxation is the exact same thing as giving them money – a subsidy.’
First, this is populist nonsense. It is untenably moronic. It is NOT true.”
Saying it is not true isn’t the same thing as proving it is not true. Not taking money from them in the form of taxation is the exact same thing as giving them money – a subsidy. Prove it isn’t. That you used the word populist as a pejorative only solidifies that you’re a corporatist boot licking toad.
“Second, OWNERS of corporations avail themselves of governments services, because ONLY they can gain from a corporation! What planet are you on? You aren’t even approaching sense!”
False. Corporations in their limited personality avail themselves directly to governmental services. That corporate agents do the heavy lifting is irrelevant. That they allegedly do so in the interests of shareholders is irrelevant.
“’Apparently you’re the one who doesn’t understand how economics works because you clearly don’t have a clue as to what a capital surplus account is for. None of the concerns I’ve addressed are taken care of by 0% corporate taxes.’
Which shows how badly you are missing it! Corporations gain nothing – indeed, they lose money for their owners – if they just sit on money. The time value of money will destroy unused capital!”
Which shows you really don’t know what you’re talking about. The time value of money doesn’t operate that way. It would only work that way if unused capital was earning negative interest.
“Once the environment is less risky, they’ll put the money to use and it will all get taxed…likely multiple times!”
Again, ignoring the issue that the currently risky environment was created by the bad faith dealings of people like Dimon and Blankfein. They have no obligation to put that money to use when the risk they created goes down. None whatsoever.
“No. I think that it is fair because it is equitable . . . .”
LOL!!! So you think its fair because you think its equitable? WOW! What cock-eyed definition of “equity” are you reading from?”
Equity is dealing fairly and equally. Fairness is characterized by honesty and justice: free from self-interest, deception, injustice, or favoritism. Everything your suggested policy isn’t.
“Watch this, I can play your game too: What I says is fair because it IS fair. And because my IS is in CAPS, you can’t do anything about it! Infinity! LOL!”
Except by definition I can demonstrate that you don’t know what fair means. Pst! It isn’t fair just because “you say it is”. As far as your fetish for all caps? Knock yourself out. Trying to shout me down doesn’t work either.
“’If you want to think that paying for the maintenance of society and the government that protects it as not good, then that is your choice’
Are you illiterate? Clearly there should be a paying, and the paying should be paid from those that benefit – those being the OWNERS!”
I’m not illiterate, but you are intractably stupid if you don’t realize that it is the laws and the courts that protect the property that corporations own and enforces the contracts they sign with others.
“’Your policy idea is not only unfair, it’s ignorant about human nature and stupid.’
Oh, so Corporations ARE people?! LOL!”
On the contrary. Corporations are legal fictions and as such should be and generally are controlled by the very government that empowers their charter and protects their rights and contractual relations in the first place. The human nature I’m referring to is the kind of unbridled greed people in management and owners can exhibit in controlling their legal fictions.
Is a Nobel Prize winner who happens to be Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University and a Centenary Professor at the London School of Economics a credible enough economist for you, Jack? Because Paul Krugman agrees that lowering corporate taxes is a bad idea too. Now come back with some kind of von Mises or Rothbard nonsense. Please. It is all so predictable. We get one or two of you apologists for corporate greed through here every month and inevitably they all go Austrian on us. All that’s going to do is get you laughed at for following an “economist” who eschews the scientific method and the analysis of data before making his “economic” principles that aren’t really economics, but rather political polemic. Much like the policy bullshit you’re trying to pass off here. So if you want to try to appeal to von Mises or his brethren as “credible”? Don’t waste your time.
Also, I know what a fascist is, Jack. Specifically I know what an Italian Fascist is. I know what a Corporatist is. Worse for you, I know them when I see them. Do you? At best, you’re a corporatist. At worst, you’re a fascist. And like most fascists and corporatists, you aren’t very good at math for being so greedy. 99 is much larger than 1. Mussolini, the father of corporatism and Italian fascism, ended up hanging in the street. You do the math and you’ll realize long term the joke is on you.
So laugh it up.
Gene H.
So many good ones…you made my night. Thank you.
“You made a policy argument is a legal blog. What did you think was going to happen?”
No, I made a policy argument based on a policy post on a legal blog. LOL!
“Nonsense. What benefits the investors benefits the corporation by ensuring their continued investment.”
That’s like saying that the benefits of a car driver benefits the car by ensuring continued use by the car driver! What nonsense to completely ignore that is the OWNER of a corporation that benefits! LOL!!
And I reiterate – Limited Liability ONLY helps the OWNERS, because without the owners a corporation DOES NOT EXIST! LOL!!!
“Moving the goal posts. I think both corporations and investment income should be taxed. Because it’s, oh, what’s the word you fail to comprehend? Fair.”
I move the goal posts because what I said makes equitable, financial, and common sense! And you want me to replace that with your perverse notions of “fairness?” Who elected you despot?
“You say it is uncertainty because that’s what people like Dimon are saying and I say they – and you by proxy – are full of shit.”
LOL!!!!! That’s right! YOU know why people are doing things better than THEY know! You are NUTS! And remember, that Jamie Dimon is one player. Go check out surveys of small business owners. Oh wait, don’t. Because you know what they think better than they do! LOL!!!!
“Corporation who avail themselves to governmental services and subsidy. Not taking money from them in the form of taxation is the exact same thing as giving them money – a subsidy.”
First, this is populist nonsense. It is untenably moronic. It is NOT true. Second, OWNERS of corporations avail themselves of governments services, because ONLY they can gain from a corporation! What planet are you on? You aren’t even approaching sense!
“Apparently you’re the one who doesn’t understand how economics works because you clearly don’t have a clue as to what a capital surplus account is for. None of the concerns I’ve addressed are taken care of by 0% corporate taxes.”
Which shows how badly you are missing it! Corporations gain nothing – indeed, they lose money for their owners – if they just sit on money. The time value of money will destroy unused capital! Once the environment is less risky, they’ll put the money to use and it will all get taxed…likely multiple times!
“No. I think that it is fair because it is equitable . . . .”
LOL!!! So you think its fair because you think its equitable? WOW! What cock-eyed definition of “equity” are you reading from?
Watch this, I can play your game too: What I says is fair because it IS fair. And because my IS is in CAPS, you can’t do anything about it! Infinity! LOL!
“If you want to think that paying for the maintenance of society and the government that protects it as not good, then that is your choice”
Are you illiterate? Clearly there should be a paying, and the paying should be paid from those that benefit – those being the OWNERS!
“Your policy idea is not only unfair, it’s ignorant about human nature and stupid.”
Oh, so Corporations ARE people?! LOL!
“So tell us, Jack. Why do you hate democracy?”
Oh no…what’s next? Hitler? Nope…Fascist. LOL!! [Enter Goodwin, stage right.] Do you even know what a fascist is? LOL!!!!
You need to grow-up and get educated before talking about things you fundamentally don’t understand. You find me one credible economist that will barf up your junk. Frankly, you are so attention deprived, that you can’t even stay on topic. Democracy has nothing to do with oligarchy! People can democratically vote for oligarchys!!! And you think your ideology is “enshrined” in the Constitution? LOL!!
” First, I don’t remember any of this having anything to do with a legal argument. So drop the red herring.”
You made a policy argument is a legal blog. What did you think was going to happen?
“Second, corporations can’t ‘abuse’ anything for their own benefit, but only the benefit of investors.”
Nonsense. What benefits the investors benefits the corporation by ensuring their continued investment.
“LOL! You really have no idea what you’re talking about. Limited liability doesn’t help the corporation, but the owners!”
LOL! See the above statement, Benito.
“If that’s what you were really worried about, you should be interested in getting more tax from those that benefit – investors, and leave the corporations alone.”
Moving the goal posts. I think both corporations and investment income should be taxed. Because it’s, oh, what’s the word you fail to comprehend? Fair.
“Rather, what’s important is WHY companies aren’t investing and spending the money they are making, and this is the reason why. And if you are trying to affect decision making, you have to have some notions about why people make the decisions that they make. Period.”
You say it is uncertainty because that’s what people like Dimon are saying and I say they – and you by proxy – are full of shit. Risk gets return or failure. The higher the risk, the greater the potential for either. But please keep neglect the fact that the environment of higher risk was created by the bad acts of people like Jamie Dimon and Lloyd Blankfein and the corporations they control. They made the mess and want to complain about the risks of cleaning it up? Again, cry me a river.
‘And on subsidies, when was that part of the conversation?”
The instant you mentioned 0% taxes for corporations. Corporation who avail themselves to governmental services and subsidy. Not taking money from them in the form of taxation is the exact same thing as giving them money – a subsidy.
“And on subsidies, when was that part of the conversation? What’s obvious is you don’t understand a lick of economics, and rather than actually address the factual issues, you’ve thrown red-herring after red-herring. The fact is that every concern you really have is still addressed by the 0% corporate tax rate because ALL the profits end up being taxed in the hands of those that ACTUALLY MAKE MONEY – investors! ”
Apparently you’re the one who doesn’t understand how economics works because you clearly don’t have a clue as to what a capital surplus account is for. None of the concerns I’ve addressed are taken care of by 0% corporate taxes. You also don’t understand that if corporations are going avail themselves of the benefits of government – including protecting their property rights – they need to pay their fair share for the overhead of government. Those payments are called taxes.
“To sum the arguments, you want to tax corporations for the simple reason that 1) you think through your autocratic judgment that its fair,”
No. I think that it is fair because it is equitable and equity is an inherent part of justice and the establishment of justice is a legitimate role of government according to the Constitution in addition to the right to tax and spend
“and 2) because of some bass ackwards idea that it’s somehow just good.”
If you want to think that paying for the maintenance of society and the government that protects it as not good, then that is your choice. However, since taxation is simply how all governments of any form pay for their operations, if you want a country with 0% on corporations simply because what? they aren’t real people – “1) because you can always get that revenue from the distributions to the shareholders anyway”? so they can make more money that they have no obligation to reinvest in the economy – “2) because doing so will generally over time (not always) lead to more competitiveness globally, more jobs, higher salaries, and more taxable income in this country”? then good luck to you finding one.
Your policy idea is not only unfair, it’s ignorant about human nature and stupid. Blatantly corporatist and – in your case – I’m going to go so far as to say fascist. My ideology is democracy, not corporate oligarchy or fascism. The thing about my ideology is that it is enshrined in the Constitution as the form our government is supposed to take.
Yours aren’t. In fact, oligarchy and fascism are dead opposites to the foundational principles of this country and its legal system.
So tell us, Jack. Why do you hate democracy?
rafflaw,
Boy, I don’t think you have time for my answer. There’s a lot of reasons. But I think the easiest reason, is that the assumptions required to make the free-market work have increasingly not held – much due to the government’s poor regulation. Let me give you an example (and I’m not suggesting this as having a big economic impact, but rather just an example):
Obama’s super liberal FCC (I think) czar is heavily attacked by Republicans for burdensome regulation. Think credit cards, etc. Repubs think the market should take care of it. The problem with Republicans is that they don’t understand that the free market only works when 5 or 6 assumptions hold, and one of those is information symmetry and another is no transaction costs. Looking at credit cards, we as consumers don’t understand the agreements. I mean, we might as lawyers, but they are so convoluted that we can’t manage our lives according to them in any meaningful way. This means that the information is not symmetrical, and the transaction costs are very high. So, what Obama’s administration is doing is fixing the broken assumptions. And that’s right. They are streamlining the information, and making credit card agreements easier to understand. Within this context, it is good regulation because it’s fixing the assumptions that are not holding, meaning the Administration is trying to insure that the perfect market will actually be able to work because the assumptions will hold better going forward.
Compare that to what Clinton and Bush did with housing (again, I’m not suggesting the impact was particularly material, but it’s an example). By opening housing to lower-income and higher-credit risk individuals, the government is simply getting involved because it thinks it has a good idea. That’s the wrong approach. They need to target the broken assumptions of the perfect market, fix those, then get out of the way and let the market work. What we saw is some buyers that got into trouble, and now will have ruined credit for the next ?? years.
This is a long way of saying that the inherent problems with income disparity can only possibly be explained in 2 general ways: 1) A stupid, more incompetent generation of people have immigrated (or been born) that simply can’t compete effectively, or 2) the assumptions of the perfect market have increasingly gotten out of wack. I believe that the latter is the case. But I also believe that the government needs to stop using bandages on symptoms, and fix the disease witch are the broken assumptions. If they do this, then the perfect market will work.
Thus, I’m a capitalist because I understand that the free market is not perfect, and that smart, targeted, and objective regulation is NEEDED. But in no case should the government subjectively choose winners and losers, nor make irrational judgments based on our inflated concepts of equity. This is why Repubs and Democrats are generally both a bunch of morons.
Gene H.
You’re not making a lick of sense. First, I don’t remember any of this having anything to do with a legal argument. So drop the red herring. Second, corporations can’t “abuse” anything for their own benefit, but only the benefit of investors. I’m not suggesting that there shouldn’t be taxes, but rather that we collect taxes from the investors whom ACTUALLY MAKE MONEY. Thus, whatever crabbed notions of fairness you have are STILL ensured through the progressive income tax.
“Fair isn’t giving corporations the added benefit of 0% taxation on top of limited liability and perpetuity though. They’ve abused both of those benefits to the point that they are a threat to democracy. It is only fair to tax corporations to offset the cost of remedy for the damage they do to the fabric of the country through their limited liability avoidance of costs required to remedy their bad acts which are ultimately borne by society as a whole.”
LOL! You really have no idea what you’re talking about. Limited liability doesn’t help the corporation, but the owners! So that argument just blew up in your face. If that’s what you were really worried about, you should be interested in getting more tax from those that benefit – investors, and leave the corporations alone.
And whether you believe Jamie Dimon should be in prison is irrelevant and another red herring. What matters is what people with money are doing, and why they are doing it. If you want investment or distributions and corporations are doing neither but sitting on the money, you need to ask yourself why. Doing neither is simply bad business, unless there’s another third-reason – that being weighing the costs of risk. Again, I’m not even suggesting we need to get into whether it is a legitimate or rational act. And I’m certainly not painting a sob story. Rather, what’s important is WHY companies aren’t investing and spending the money they are making, and this is the reason why. And if you are trying to affect decision making, you have to have some notions about why people make the decisions that they make. Period.
And on subsidies, when was that part of the conversation? What’s obvious is you don’t understand a lick of economics, and rather than actually address the factual issues, you’ve thrown red-herring after red-herring. The fact is that every concern you really have is still addressed by the 0% corporate tax rate because ALL the profits end up being taxed in the hands of those that ACTUALLY MAKE MONEY – investors! Furthermore, this also increases competitiveness, R&D, higher salaries, etc. If you want to adjust personal income rates, Congress can still do that – so your precious “fairness” is still preserved.
To sum the arguments, you want to tax corporations for the simple reason that 1) you think through your autocratic judgment that its fair, and 2) because of some bass ackwards idea that it’s somehow just good.
To the contrary, I think taxing corporations are bad 1) because you can always get that revenue from the distributions to the shareholders anyway – thus preserving any notions of fairness you want – and 2) because doing so will generally over time (not always) lead to more competitiveness globally, more jobs, higher salaries, and more taxable income in this country.
Comparing the two, it should be obvious that it is really time to let go of your sacred cow. It’s dead, and like your ideology, it stinks.
That prior post should be addressed to Jack, not Bron.
Bron,
How do you explain why the gap between the middle class and the very wealthy has exploded in the last decade or two?
“Rather, I’m making a policy argument.”
One that has no legal basis and is seemingly based on some delusion about what corporations would do with the tax savings when history is showing us that it isn’t job creation and reinvestment but simple profit taking.
“Second, I have no idea what you are talking about with “fairness,” except that it (poorly) evades common sense. Corporations can ultimately only do one thing with profits: pay dividends to investors. Taxing investors rather than the corporation increases the business’ competitiveness globally, which help our economy and provides additional jobs. And in the end, the “profits” are taxed through investor’s income tax. So, I have no idea what you’re talking about.”
Fairness can be defined as part of the concept of equity which is required for justice, the establishment of which is one of the charter roles of our government in society as defined by the Constitution. That you don’t understand what fairness means is simply your failing. Fair isn’t giving corporations the added benefit of 0% taxation on top of limited liability and perpetuity though. They’ve abused both of those benefits to the point that they are a threat to democracy. It is only fair to tax corporations to offset the cost of remedy for the damage they do to the fabric of the country through their limited liability avoidance of costs required to remedy their bad acts which are ultimately borne by society as a whole.
“if you believe Steve Jobs or Jaime Dimon, etc., its because of uncertainty in the market.”
I believe Jamie Dimon should be in prison for his role in the financial crash, so whatever else he has to say doesn’t mean dick to me. Also, the excuse of uncertainty, and that is what it is – an excuse, doesn’t exactly win points with me when the crisis was created by many of the same people reponsible for that very uncertainty. “We screwed it up and now we don’t want to invest because we might risk losing all that money we gamed the system for to gain our capital surpluses in the first place.” Cry me a river.
If you want to subsidize corporations and call it something other than what it is, that’s your prerogative, Jack. As long as you do, I’ll call it what it is: corporatist propaganda. And your idea of tailoring policy to corporate agenda? That’s pure fascism, slick. Italian style.
You apparently don’t know your own name.
Gene H.
“If you’ve got a problem understanding the legality of taxes, see the Constitution. If you’ve got a problem understanding the concept of fairness, well, that would be your failing as a person and your parents in raising you.”
Ummm…first, I don’t have a problem understanding the legality of taxes. Congress has broad taxation powers. Rather, I’m making a policy argument. How you conflate the two is beyond me. Second, I have no idea what you are talking about with “fairness,” except that it (poorly) evades common sense. Corporations can ultimately only do one thing with profits: pay dividends to investors. Taxing investors rather than the corporation increases the business’ competitiveness globally, which help our economy and provides additional jobs. And in the end, the “profits” are taxed through investor’s income tax. So, I have no idea what you’re talking about.
“0% corporate taxes is a subsidy no matter how you slice it. The fantasy that it would result in anything other than higher profits is just that: a fantasy.”
??? There is no fantasy here – you are 100% correct that a 0% corporate tax WOULD result in higher profits. But for who? The corporation can’t do anything with profit. Rather, those profits are distributed to investors who are then (generally) taxed at higher income rates than even at the corporate tax rate. So again, your argument doesn’t make any sense. The “fairness” is taken care of with the progressive tax rates at the personal income level, and the treasury still gets its $$$. How this is a bad solution when it increases efficiency, promotes jobs/competitiveness, and increases revenue for the treasury, is beyond me.
So what’s your point?
If it is simply that marginal tax decreases don’t change behavior, the notion is often correct. Simply reducing tax from 25% to 20%, for example, doesn’t really change much for a company that has a 16% effective tax rate. In order to change the behavior of any given company, the rate has to go below that effective rate. Why that’s a mystery is (again) beyond me.
This is cute:
“Capital surpluses and profit taking rise yet the economy as a whole is stagnant and floundering.”
Well, if you believe Steve Jobs or Jaime Dimon, etc., its because of uncertainty in the market. This administration has created a great deal of uncertainty. Whether that is justifiable or not is another matter entirely, but the fact is that with uncertainty comes risk, and with risk, people hoard their money and keep it close. Now, you can kick and scream all you want, but it won’t change the fact that this is precisely what business owners/leaders are saying. And if that’s what they’re thinking, that’s how they’re acting. But that still has nothing to do with a rebuttal of the 0% corporate tax rate.
And corporatist propaganda? I didn’t know that was the current term for economics and common sense. The truth is, a 0% corporate tax rate HELPS EVERYONE (except our global competitors). Even more, there’s NO downside! The owners of the companies are still taxed, and if they’re given more money, they’re taxed that much more. It’s really that simple. If I’ve missed something, please…illuminate my understanding.
Idealist707,
I don’t really understand your comment. The fact is if you drop corporate tax rates to 0, corporations will hold on to the money to make more money, or distribute the monies as dividends to investors who then pay income tax. Dropping the corporate tax rate to something higher than 0 will have a similar but limited effect – exactly how much, I don’t know. But for any impact, it will need to be something lower than whatever the marginal rate is for that corporation. Furthermore, my occupation has nothing to do with taxes. My policy is principal based, which is generally premised on making government more efficient. Distributing profits to investors and taxing them is much more efficient. So if efficiency puts lawyers and lobbyists, out of work, I could care less. That way, you don’t need to worry about cheating corporations, because there’s nothing to cheat. And the government gets its money in the end. In any event, I really don’t understand what you’re trying to say.
P.S. While you are comparing our country to Sri Lanka, how many of the impoverished in those countries enjoy healthcare, food subsidies, Xbox and new cars? Frankly, your numbers are wrong. Poverty is at 15.1% – not 48%. I think you’re confusing the number of those that don’t pay taxes, which is distinct. Second, your analysis poses a false dilemma. The real problem is likely the qualification of “poverty,” given the luxuries that real impoverished people don’t enjoy.
And what business would you suggest for those below the poverty line?
Everyone ought to own some type of small business, even if it is Amway. You can write off all kinds of things. A small business is gods gift to the middle class.
Quit bitching about corporate taxes and incorporate for some tax savings. You can write off things like:
your car and gas
Internet
vacations [for work of course]
your computers
faxes
printers
50% of meals when doing company business
buy a rental property through a corporation and rent it out, all that is taken off the top and I think you can even use it for a few weeks a year without penalty since you have to do upkeep.
The list is endless and only limited by the tax laws and your imagination
Quit fighting wealth and embrace it. The only way to eliminate poverty is to create wealth.
“even if it is Amway.”
Bron,
I’m aware that for tax purposes a small business can be advantageous. However, despite the purported legitimacy now conferred on it Amway is but a slightly more sophisticated version of a Ponzi scheme.
Rafflaw,
you outlined the ills. did you make in the course of commenting a final solution, including all income sources and the overseas take-home problem?
point ot time if that suits. tnx.