We could raise Canada’s rent!
If you want to run, I’ll vote for you. This proposal is outstanding.
I jump on this bandwagon, too, Bob. Except I’d like to see you flesh out the bit about “cuts everyone a check based on whatever is appropriate for someone to buy the essentials as a function of family size”. I suspect we’d disagree on what the essentials are. But still, it’s a nice, simple system-- which is why it would never fly.
Yeah, once the poor and disenfranchised bring their awesome political clout to bear, the system will be buggered to favor their selfish concerns.
Since I’m not against the Democratic Party as such, merely most of their more boneheaded proposals, why would this bother me? An issue taken off the table for debate in this way would be a clear victory for common sense - I’d support it no matter who proposed it.
Let’s keep in mind that in the 1970s, the top income tax rate was 70%. Now, no matter what happens in American politics from now until doomsday, nobody in their right mind would propose a tax that high ever again - the damaging effects of it on the economy are too well known. At this point it doesn’t really matter how the tax was lowered because, whether we thought at the time that lowering it was wise or not, we agree now that reimposing it would be unwise.
So bring it on. I think the Republican Party can adjust - we rethought the Smoot-Hawley tariff, after all. And if we don’t, that’s the fault of us.
Certainly no sensible person would disagree that Reagonomics and the Laughable Curve are clearly the last word in modern economics, but I think you will find there are yet a few malcontents who would make so bold as to disagree.
Hard to credit, I know, but still…
It will never fly because it would disempower lobbyists. The amount of my credit would depend of course on what the national sales tax would be. For argument’s sake, assume it’s 15%. So let’s say a family of four is getting by barely on $30.000 per year. If they spend all that they make, that’s $4500 in sales taxes. Give that family a $4500 check and they wind up paying no taxes. Or you could take the sales tax rate times the per capita income rate considered to be poverty and give each person that much.
But, we had had such a top tax rate since the New Deal, had we not? Including the period of broad prosperity in the '50s and '60s.
Higher. The top rate was 91% in 1964. But not many people fell into the top brackets during that time. However, since they weren’t properly indexed for inflation, that changed in the 1970s.
The advertised purpose (removing narrowly targeted favors and lowering general rates) is generally a good idea in any case.
So the (probably mythical) Welfare Queen with 18 children will get a huge bunch of money and the two little senior citizens will have to pay sales taxes on their few miserable crumbs of food? And Richard Dastard up in his mansion on Ivory Hill pays comparatively little since he’s hoarding most of it and using the rest to bribe congressmen.
Yes, I’m exaggerating, but I have a major problem with sales tax. It’s regressive. Low income people end up paying proportionally more.
If the proposal is a revenue-neutral simplification of the corporate tax structure, I’m all for it. If it is a real tax cut, then I’d like to see evidence that this would make companies more competitive.
It might increase profits, and possibly the stock price, but that is not what companies compete on. Would it mean more jobs? Why would a company hire people if there is no more business? Would it mean more R&D? Since businesses now enjoy very high profits, I’d have to assume R&D is being funded at the optimal level, or else more money would go into it. There is no reason to fund projects with low ROI no matter how much money you have sitting around. Will companies cut prices? We’d assume that given profitability, prices are at a good level already. Anyhow, you’d never cut prices unless you can increase revenue, which taxes won’t affect. You don’t cut prices because you are a nice guy.
An across the board tax cut clearly won’t change the competitive situation for American companies competing against each other, since all will benefit. Is the US corporate tax rate significantly higher than Europe or Japan? How significant would this be compared to other factors, such as healthcare costs? How about as compared to an increased debt or decreased government services?
Notice there is nothing here about corporations being evil. Let’s here some arguments, not just the “tax cuts increase competitive” mantra. This being GD and all, let’s get some economics involved. I freely admit this would improve stock prices.
I think a single payer system, which would decrease the costs companies pay for healthcare as compared to foreign competitors and result in a healthier and more productive workforce would do a hell of a lot more for American competitiveness than another tax cut.
Not really. In your exaggerations you glaze over quite a bit.
Would the “welfare queen” get a lot of money? Probably not too much. And this system wouldn’t be a replacement for any direct payment welfare system, subsidy program, or even a tax credit. Indeed, those tax credits can still be left in place and attached to the VAT refund system.
The senior citizens you refer to would trade a consumption tax for no income tax. This would help a great many seniors who don’t consume much but still have income coming in. And it would especially help those preparing for retirement, who could sock away as much income as they wanted.
As for the rich guy you mentioned - he will always pay more tax, won’t he? After all, he is living in a mansion (your words) and that kind of conspicuous and lavish lifestyle costs money. As for the money he is “hoarding” - well, unless it is in his mattress it is capital somewhere that is being put to economic use.
So what is your specific complaint? That this system is unjust? Please look at the current system, with its multitude of favors and breaks for every monied interest under the sun, and marvel at the injustice of that. I’d sooner have a system slightly unequal than one that could be so easily gamed to benefit anyone who could bribe a Congressman, or at least influence him strongly.
Pros - US corporations might be more competitive on a global scale
Cons - The US government might have less tax money to distribute.
That about sums it up, right? I expect everyone who thinks the government needs to take care of its citizens will say corporate tax cuts are a bad idea, and everyone who thinks the government is too large, or shouldnt interfere as much in the economy, will say this is a great idea.
If we already know what you’re gonna say before we even read it, it’s no fun.
That’s a total Red Herring. They’d get more business from expansion.
Alright, we’re gonna hafta go back to basics for this one. There’s really no such thing as an optimal level except for a specific company with a specific current amount of money, which this would change. Much less the idea that all corporations are already there. If you can get an increase in productivity anywhere and have the money you should do so. And if they just pay the executives more, they’ll be setting themselves up for later failure against leaner, meaner firms.
Theoretically, according to your logic here, you’d be able to have 100% taxes, because you apparently think it doesn’t affect corporate behavior. There is no such thing as a stortage of opportunity - just a shortage of capital to pursue it.
Partly true, but it will make them to compete more by offering higher returns (and thus inducing more competition to get them) along with more capital to exploit them. Companies which make foolish choices will tend to decline, even if they are competing only in the national area.
Increased government services have never been shown to substantially increase wealth or economic activity, much less competitiveness, except in a highly localized area (taking nearby ) or by lacking services so basic that companies refuse to frequent them (generally road networks and security). You could make an arguement that building railroads would help, but probably not significantly.
Moreover, however, the relative tax rate is not that important. Any tax reduction on either end improves the competitiveness of corporations headquartered in that area.
Quite possibly not, at least in the long run. Long-range stock prices may not change much at all, although it will tend to increase the economic vitality of the United States overall.
Given that it doesn’t seem to attract companies to numerous other countries, I suspect not. And the idea that the govenrment would be more efficient even over the current haphazard system is pretty whacked.
I’m game, as long as the sales tax applies to sales and exchanges of everything - goods, services, stocks, bonds, intellectual property, anything that can be bought, sold, and traded. You buy 100 shares of XYZ Corp., you pay sales tax on the value of the shares. You hire a lawyer, you pay sales tax on his fee. A broker charges you a commission, you pay sales tax on his commission.
And no bullshit loopholes for exchanges of equal value, like there are on some things at present. If you buy a new house while you sell your old one, you have to pay tax on the house purchase. Somebody who’s clever enough to structure a similar pair of transactions as part of an exchange of equally-valued assets still has to pay the tax on what he gets in the exchange.
Sounds fair to me.
Oh yeah - does this replace the payroll tax too? Can’t leave just that one…
Perhaps, but I’m thinking that at this stage in our history, nothing, whatever its long-term effects might be, is worth doing if it will cause a short-term reduction in total federal revenue. We’ve got too much of a deficit problem as it is.
That’s a good idea, because the more comprehensive the tax is, the lower it can be and still raise the same amount of revenue.
That’s assuming an elastic demand. For an inelastic demand, like for oil, outside of California at least, decreasing prices might not increase sales, so the tax cut will go into profitability. Can you show real numbers about how the tax cuts in the past 6 years have improved competitiveness? I’ll grant you that you can show how they have helped improve profits.
I didn’t bring up executive pay, for fear I’d be accused of hating business. But I have managed R&D. You do not fund every initiative which claims it can increase productivity. First of all, there is a discount rate issue. Second, there is a risk issue - not every claimed improvement comes true. It all boils down, as I said, to ROI. Having more money in the bank doesn’t mean you start funding projects with an ROI below the required rate set by the corporation.
Having been in Bell Labs, I can assure you that opening the spigot on R&D funds does not ensure success. I’m not talking about Area 11 research which was 5 years out. The stuff I did was 2 - 5 years out. The more money available the crappier a job was done making decisions on projects.
Now, if a company is starved for cash, then I’ll agree that there are probably a bunch of high ROI projects which don’t get funded. That’s not where we are today.
That’s something said by people whose projects which are unlikely to be rewarding say when these projects get shot down. A little scarcity is good for the soul. When I started working for the Bell System, most of the time we were limited only by how fast we could hire. That’s not a recipe for competitiveness.
As another counterexample, did the plethora of capital available during the bubble really help our competitiveness?
True with and without a tax cut.
Government spending decisions are not made solely for the benefit of corporations, but should be made for the benefit of the country as a whole. (I’m not surprised we’ve forgotten that over the past 6 years.) That is not anti-business, since often pro-business strategies do help lots of people. And even if you think feeding starving children is a bad idea if it means higher corporate taxes, consider the impact of a reduced deficit on the business climate as a whole.
Well, that contention is what we’re discussing, isn’t it? Say we have a business headquartered in New Jersey, but all the manufacturing and most of the jobs have migrated off shore. Let’s say they’ve done that for sound business reasons, so I’m not objecting. What advantage does lowering their taxes have for the region? They might hire a few more CPAs and marketers, but most of the expansion will take place overseas - even assuming lower taxes causes an expansion. The government gets no return, since the corporate taxes are reduced. They might make a few bucks on taxes on CEO salaries and options. The region doesn’t benefit. Would lower taxes mean that Mfg and R&D would come back to the US? Hell no, the ROI for moving them still holds.
Why not? Even if marketshare doesn’t change, fewer taxes means better earnings, so stock prices would go up to maintain a constant P/E. I forget the name of the earnings after taxes metric - that wouldn’t change much it’s true.
The American automakers complain that they’re at a competitive disadvantage due to Japan’s health care system. Low wage manufacturing we’ve already lost. I don’t know the health care systems in China and India - they might be government run, or the workers might be SOL. I’m of the opinion that we could save money, but that thread’s been done before. The point is that money going to Washington isn’t necessarily pissed away, and money staying with a company isn’t necessarily improving our competitiveness. I’m questioning the kneejerk conservative reaction that Bricker expressed so well. A great example of this was right after the bubble, where tax cuts were supposed to increase investments while the actual problem was overcapacity and underconsumption. (Ask any contract manufacturer in 2001-2 if they needed more capacity.) He’d laugh in your face.