The (US) economy: What should be done?

[John_Mace]

@Damuri Ajashi

So is there any way to address our loss of competitive advantage in labor?

I don’t know. What is our competitive (dis)advantage of labor?

[gonzomax]

Corporations pay very little tax now. They have off shore addresses ,tax breaks up the wazoo and when they build the local government gives them huge tax breaks to build. They do not and have not paid their share for a long time. According to a PBS program last year corporations are paying under 10 %. This crap about cutting corporate taxes is a joke. A lot of corp pay no tax or get huge rebates. How about a fair tax. How about the fact that companies use a huge amount of services ,they should pay for some of it.
Their political clout allows them to evade taxes at an incredible clip. If you have been paying attention ,we have been dropping taxes steadily for 7 years. We now have an economic mess ,that some off you think can be fixed with more of the same.

[XT]

The corporate tax rate, afaik, is something like 35% (for the wealthy Evil™ corporations of course…it varies just like it does on the personal tax side of the house). Do you have a cite to back up your ‘corporations are paying under 10 %’ statement gonzo? I know it is futile to ask you for this so I won’t hold my breath.

-XT

[XT]

While I was sitting here not holding my breath I looked it up on Wiki (my recollection, while closer to your own, was a bit off as well):

In the United States, the federal corporate rate is 35%. But since 1999, when Treasury announced the “check the box” system many corporations can elect to be treated as a pass-through entity, thereby skipping the entity level 35% tax and having all income pass through to the shareholders. This is the tax treatment that the much discussed “S” corporations receive but now many more types of state-law corporation may avoid double taxation by “checking the box”. Dividends are also subject to a lower rate of income tax in the United States.

This federal corporate rate is the second highest rate among the world’s most developed economies (those in the OECD – the Organisation for Economic Co-operation and Development). Only Japan is higher. The median is 30.0%, with notably low rates for corporations headquartered in Bulgaria (10%), Ireland (12.5%), Hungary (16.0%), Iceland (18.0%), Slovakia and Poland (19.0%).[1]

Another Wiki entry on the subject:

Tax rates

The corporate tax uses a marginal tax rate system as its base, then additional taxes may be levied based on systems such as the corporate Alternative Minimum Tax or an accumulated earnings tax. The marginal rates have shifted over time resulting in the current system with marginal rates that rise with taxable income, then fall, then rise, only to fall again for the bracket with the highest taxable income. In addition to the rates below, depending on tax preference items, a corporation may be subject to alternative minimum tax if their tax under the marginal tax rate system is less than the alternative minimum tax.

The tax rates listed above do not apply to a “qualified personal service corporation.”

Qualified personal service corporations

Qualified personal services corporations are taxed at a flat rate of 35% unlike other corporations. A “qualified personal service corporation” is a corporation, substantially all of the activities of which involve the performance of services in the field of law, health, engineering, architecture, accounting, actuarial science, performing arts, or consulting. To be classified as a qualified personal service corporation, at least 95% of the corporation’s stock, by value, must be owned directly or indirectly by employees performing the services, retired employees who performed the services, an estate of one of the aforementioned employees, or certain persons who acquired the stock as a result of the death of such an employee.[1]

Note the chart. Even corporations from 0-50k are taxed at 15% (not 'under 10%).

-XT

[athelas]

Corporations don’t pay taxes - only people pay taxes. When you tax BigCorp, BigCorp doesn’t suffer - it merely acts as a collection agency and takes money out of profits (hurting shareholders) and raises prices (hurting consumers). As attractive an idea as it is to take tax burden off people and throw it on faceless “corporations,” what a corporate tax really amounts to is a double tax on stockholders and consumers, and generally it’s the consumers who suffer more.

[gonzomax]

http://www.corporatepolicy.org/topics/Taxhavens.htm Corporations have many ways to evade taxes. There are buildings in the Caimans that are like storage places for corporations. Their only presence is a mailing address.
http://www.pbs.org/wgbh/pages/frontline/shows/tax/interviews/mcintyre.html
heres a couple that dispute the crippling tax rate that does not exist.

[gonzomax]

NOW on PBS | PBS Heres one that claims the rate is down to 8 percent.

[XT]

I see a notable lack of cites to back up the statements being casually tossed around in your PBS cite Gonzo. I note however with amusement that even YOUR cite states (without proof, true) that the average tax for the top 250 corporations in the US is between 15-20% (just to recap you claimed it was ‘under 10%’). So…even your own bullshit cite with it’s lack of backup claims higher than YOU did. Ironic, ehe?

Haven’t had time to go through your first cite yet. Work beckons…

-XT

[John_Mace]

@gonzomax

NOW on PBS | PBS Heres one that claims the rate is down to 8 percent.

Can you quote the section where it says that?

Note that the statement:

corporations pay only 10% of US tax revenues

is not the same as:

corporations only pay a 10% tax rate.

[msmith537]

@Damuri Ajashi

National association of manufacturers
the oil lobby
the insurance lobby
the real estate lobby
the banking lobby
the every other fr1kking lobby except for the regular people lobby.

Yes, thank you for proving my point.

@jayjay

I know I’m irrational on this subject. Economics seems like it’s especially designed to screw over the little people.

Well, it’s called the Dismal Science for a reason.

What you are referring to is the Law of Unintended Consequences. Basically, in economics, there is no free lunch. So each action, even if it is designed to benefit, may have an unintended consequence of creating more harm.

For example, if you raise minimum wage, you run the risk of increasing inflation (effectively destroying any bennefit from the wage increase), increasing unemployment or driving labor offshore.

Another example is rent control. Yes it’s nice if you live in a rent controlled appartment, however, rent control also discourages investment in new construction and improvements to existing buildings and can make the neighborhood worse off.

Economics isn’t “designed to screw over the little people”. It’s just that market forces don’t care about the little people any more than a wave on the ocean cares about a dinghy in it’s path.

[John_Mace]

@Fear Itself

So why would untargetted tax cuts work any better than targetted ones? Why would these measures not also be necessary with untargetted tax cuts?

I’m not making an argument that across the board tax cuts would entice corporations to hire more people domestically-- unless we’re talking really big cuts, which I don’t think we are. The cite I posted earlier made it clear that minor changes in the tax code have very little effect on corporations’ decisions about where to locate production facilities.

But it’s good politics to pretend otherwise and say you’re getting tough with corporations who are “exporting jobs” overseas.

[Least_Original_User_Name_Ever]

@gonzomax

http://www.pbs.org/now/transcript/transcript_bermuda.html Heres one that claims the rate is down to 8 percent.

You’re probably looking for a cite more like this or possibly this .

[gonzomax]

http://www.itepnet.org/mdcr1107.pdf Heres another tax dodge. It is called “tranfer pricing”. Corporations transfer goods from a offshore plant and claim a cost which eliminates their taxes. Glaxo Smith Kline and other pharm corporations are in trouble with US and Canadian tax enforcement for this. This is the latest tax dodge.
If corporations paid near their tax rates we might not have this latest crisis. The Bushies have cut taxes during a war. Decidedly stupid. Then allowing evasion to be rampant we have the neo con dream. Not enough money to fund our programs. It is not an accident. That is what the whole thing has been designed to do. Nordquists saying make government small enough to flush down the toilet is nearing. If we have no money to fund ,then they have to die. That is how they intended to eliminate welfare,medicare and any other programs that are not designed to help the chosen ones.

[XT]

Your own cites earlier said that this corporate ‘tax dodge’ thingy started in the 90’s…which would put it under which administration? I forget…

BTW, your own earlier cite stated that the top 250 corporations in the US paid “$ 183.8 billion in 2004”. A rough back of the envelope calculation puts the average that each corporation paid (in a single year mind) at roughly $730 million.

-XT

[gonzomax]

http://www.boston.com/business/globe/articles/2004/04/11/most_us_firms_paid_no_income_taxes_in_90s/

I do not want to debate the imaginary confiscatory 35 % corporation tax. It does not exist.

[John_Mace]

@gonzomax

http://www.boston.com/business/globe/articles/2004/04/11/most_us_firms_paid_no_income_taxes_in_90s/

I do not want to debate the imaginary confiscatory 35 % corporation tax. It does not exist.

Which might be yet another reason that lowering it to 32%, if you promise to hire American workers, wouldn’t work.

[XT]

@gonzomax

I do not want to debate the imaginary confiscatory 35 % corporation tax. It does not exist.

So, if it doesn’t exist why NOT lower it to, say, 20% with no loopholes? If that is what is actually being paid wouldn’t it make good sense to just make it official?

I find it amusing that your own cites have shown that your earlier statement was pretty much bullshit yet you have still not acknowledged that fact. And these are YOUR cites from such unbiased sources as PBS…

-XT

[msmith537]

I don’t understand this animosity towards corporations. You aren’t going to create jobs by making it difficult for corporations (who provide jobs to people) to do business.

[XT]

It is an article of faith for some that corporations are evil and that in order to free the good workers and peasants they need to be slapped down and put in their rightful place as instruments who’s sole function is to provide jobs and good wages at the direction of the people. Economic engines with the reins firmly in the hands of the people!

I say that semi-tongue in cheek but seriously…that is the tone I get out of some of these anti-business rants. Leaving aside the obvious parody of communism I think a lot of people take it as that article of faith that corporations DO need to be guided, that some kind of moral obligation needs to be injected into business and business needs to be responsible for their workers welfare and livelihood…and that The Government™ is ideally suited to provide this direction and guidance. Because we all know how very qualified politicians are on the details and nuance of business and the market. One has to simply look at the clear eyed visionaries in our current government (Executive and Legislative) in the current economic crisis to see how vastly qualified they are to take on this grave responsibility.

Plus they MEAN well…they are just doing it for those poor poor peoples. And if you mean well…well, then you can’t really go wrong.

-XT

[Damuri_Ajashi]

@John Mace

I don’t know. What is our competitive (dis)advantage of labor?

Well, our incredibly high productivity is not enough to make up for our incredibly high cost compared to less productive labor in countries like China.