Tag Archives: taxes

Misconception

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In a Fox Business article purportedly explaining how the new international price-fixing tax agreement is supposed to work, there exists this misconception, or at least it would be a misconception in a free and free market collection of nations.

The deal is designed to target corporations that employ a litany of tactics to reduce their tax liability, often by shifting profits, and revenues, to low-tax countries, such as Bermuda, the Cayman Islands or Ireland, regardless of where the sale was made. The practice by American and foreign multinationals costs the US tens of billions of dollars each year, according to the Treasury Department.

Of course, the practice does no such thing, and Treasury Secretary Janet Yellen demonstrates her monarchist that is Big Government I mean liberal blinders when she makes such a claim.

Since the money isn’t the government’s, its absence costs the government nothing. The practice does, though, save American consumers and other end-users tens of billions of dollars each year, primarily in the form of lower prices, but also in greater R&D and more innovation—which is lower prices later. The practice also generates more business activity, both from existing businesses and from more startups, which increases economic competition—which is lower prices both in the mid- and longer-term.

The practice also attracts businesses to the nations winning the tax race to the bottom, which increases economic activity in those nations, which increases jobs and citizen prosperity; and that increased economic activity also increases competition in those tax race winning nations—which reduces prices for those nations’ citizens.

And all of that increased economic activity produces increased revenues for the various governments, obviating the need for any sort of price-fixing tax agreement.

Only an illiberal—a modern-day liberal—could love higher taxes, bigger government, and the resulting increased government dependency.

“Unfair and Absurd”

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President Joe Biden (D), through his Press Secretary Jen Psaki (via her daily press conference), said that it’s unfair and absurd that businesses should pass on to their customers the costs represented by higher taxes that Biden and his fellow Progressive-Democrats want to impose on them.

There are some…who argue that, in the past, companies have passed on these [tax] costs to consumers. … We feel that that’s unfair and absurd, and the American people would not stand for that.

Why shouldn’t businesses pass on the costs represented by taxes?

Biden’s claim raises additional questions, too. What other costs does Biden consider unfair and absurd for businesses to pass on to their customers? What is Biden’s limiting principle regarding passing costs on to customers?

Worrying about the Wrong Time Frame

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A Wall Street Journal opinion piece subheadline well summarizes the piece itself:

the Speaker pushes Democrats to take votes that will end careers in 2022

The WSJ‘s Editors write this as if they take the matter seriously. But they, and far too many others who also should know better, are taking far too short a view.

“Career ending” votes were taken in favor of Obamacare, too. Obamacare survives, and here is the Progressive-Democratic Party back in power.

So it will be with the Progressive-Democrat reconciliation bill and the pre-amendment to it that is the “infrastructure” bill. A few Progressive-Democrats might lose their seats as they vote to force passage, but these two destructive bills will live on.

And, dangerously, the Progressive-Democratic Party will recover.

More Taxing Foolishness

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This time, it’s on plastics and plastic production. Senate Majority Leader Chuck Schumer (D, NY) and Senator Sheldon Whitehouse (D, RI) each have their schemes for generating a national tax on plastic production as part of their $3.5 trillion reconciliation spend- and tax-a-thon.

Such a tax would be intended to discourage plastic production and sale as part of the Progressive-Democrats’ move to eliminate carbon from our economy.

Here are some uses to which plastics are put, though, products of which Progressive-Democrats’ move would greatly increase the cost for average Americans.

  • piping
  • plumbing
  • vinyl siding
  • gutters
  • automobiles (up to 20% plastic)
  • furniture
  • toys
  • polymer implants and other medical devices
  • food and medical packaging
  • clothing
  • seals and washers
  • gears, plain bearings, valve seats
  • shatter-resistant alternative to glass
  • insulation
  • flotation devices
  • waxed cardboard containers (20% plastic)

The list goes on and on.

Progressive-Democrats truly are waging war on our economy.

Because

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Here’s a short list of the ways President Joe Biden (D) and his Progressive-Democrat syndicate in Congress intend to take your money away from you.

  • Raise the top individual income tax rate to 39.6%

This applicable to the group of Americans at the top of our economic ladder: single individuals with taxable income of more than $452,700 and married couples with joint taxable income of $509,300. Never mind that these folks, far from just sitting on their money, (re)invest it, which facilitates innovation and job support and creation. Notice, too, that this tax restores the marriage penalty to our tax code.

  • the top capital gains tax would climb to 39.6% from 20% for Americans earning more than $1 million

This applies—Biden and his Progressive-Democrats claim—only to the very top. But it spills over. Preferential treatment of capital gains, which in the main are price increases that occur between when an asset is acquired and when it is sold, has under our non-flat tax code facilitated investing. That investing includes acquiring physical property and developing it for more valuable use for more people (housing development comes to mind), acquiring partial ownership of existing companies (which purchase money increases the value of those companies, which in turn increases those companies’ ability to raise money—for innovation and job support and creation), funding startup companies (which supports their innovation and job creation).

Capping interest in such investing limits all of those follow-ons.

  • Increase levies on inherited assets

Increase the death tax, they mean. They want to do this in two ways. One is to lower the death tax exemption threshold to $1 million from the current $11.7 million. Think about how many small businesses and farms will be destroyed by this lowered threshold.

The other way is to eliminate altogether the step up in basis of inherited assets. The basis step up means that, whatever the value of the asset was at the time it was acquired, its basic value is reset to its market value at the time of the owner’s death. Without the step up, whether those assets are stock share or the physical property of those small businesses and farms, this move, apart from the lowered exemption threshold, will force the (taxable!) sale of the assets just so the cash necessary to pay the tax vig can be raised. And that ignores the costs and litigations that will occur as heirs are forced to reach years, decades, often generations into the past to locate that original acquisition cost.

It’s almost like Progressive-Democrats don’t want us to pass anything on to our heirs.

  • End the private-equity tax break

This is the carried interest income that gets so much bad press. Carried interest is paid to partners beyond the value of their initial investment and is a payment for their efforts in increasing the value of the partnership (and in the value of each partner’s investment). While it’s accrued as an additional “fee” in real time, carried interest is retained by the partnership to support further investment and partnership growth and is paid out only when a concrete event occurs—an oil well comes home and is sold, or a hedge fund partnership is dissolved on reaching a preset milestone.

As such, carried interest is closely akin to capital gains, and the destruction of this has the same negative outcome for future investment as does damage to capital gains.

  • Hike taxes on corporations

Biden his syndicate want to raise the corporate tax to 28% from the current 21% level. This will reduce American business’ competitiveness and encourage them to resume their move to lower, foreign, tax rate jurisdictions—at the expense of American innovation and jobs. It’s also part of the syndicate’s effort to get a minimum corporate tax level set globally by an international consortium, which itself is designed to reduce national sovereignty over fiscal matters.

It’s all because Progressive-Democrats insist they Know Better how, and on what items, to spend your money than you do.