Category Archives: regulation

EU, Taxes, and Competition

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European Union regulators delayed decisions on whether four multinational companies including Apple Inc and Amazon.com Inc may have benefited from illegal tax sweeteners, citing difficulties in obtaining information to make their case.

The difficulty isn’t just from the companies: the nations involved also are reluctant to give up the data.

There’s this, too:

At a time of austerity in many countries, governments across the continent are seeking to shore up their finances and demonstrate to taxpayers that wealthy multinationals are paying their fair share of tax.

And

Brussels cannot impose tax policy on the bloc’s 28 governments, but regulators are using an EU-wide ban on selective state aid to companies to crack down on individual tax deals that they deem to have given an unfair advantage to certain enterprises.

And

The aim of the investigations, Ms [EU’s European Commissioner for Competition Margrethe] Vestager added, is to set a precedent that would “inspire” national governments to change legislation to ensure their tax systems are in line with EU rules. That has already happened in Ireland, where the government has announced it would phase out the controversial double-Irish tax loophole, she said.

Of course, all of this would go by the boards if the EU and its member nations could understand their governments don’t need the money; they need to reduce their government spending. The money in the nations’ citizens’ hands would be far more efficiently used—and provide the competition Vestager’s office claims to want.

Even accepting the fiction that each nation’s tax code should look like every other nation’s tax code, because all the nations are carbon copies of each other.  After all, suppressing competition among the nations is a core task of Vestager’s office.

The SEC’s Abuse of Authority

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Actually, it’s Dodd-Frank’s abuse, and the SEC is only implementing the abuser’s requirement, but still….

At issue here is an SEC proposed rule that purports

to give investors greater clarity about the link between what corporate executives are paid each year compared to total shareholder return—the annual change in stock price plus reinvested dividends, according to people familiar with the measure.

There are a couple of things wrong with this. One, minor on the scale of this…rule’s…transgression is the idea that stock price and dividend handling are the measure of a business’ management. No, these are the outcomes; the actual measures are on the business’ financial sheets. Those P&L, Cash Flow, and Balance Sheets, among a host of other performance reporting documents, are freely available to shareholders—and to prospective shareholders: they’re public documents.

The larger problem, though, is this: the executives’ performance is the business of the shareholders, not the government. This is just a backdoor effort to insinuate government deeper into the management of private businesses.

Dodd-Frank needs to be repealed, and D-F-related SEC (and others’) rules rescinded as soon as this administration can be replaced.

Regulation and Inflation

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Here’s one example of how regulation drives inflation, in the milieu of corporate CEO compensation. Charles Murray, at AEIdeas, provides it.

On multiple occasions the SEC [Securities and Exchange Commission] amended its rules to increase the disclosure of compensation data and to force boards to explain their rationale for the amounts. That, combined with the influence of the arbiters of corporate governance, created an inviolable requirement for compensation committees to be advised by consultants. A perfect recipe for increasing compensation.

Thusly:

In 70’s and even the 80’s the compensation of the CEO seemed to be mostly a matter arrived at between the board and the CEO that resulted from discussions and negotiations and the public disclosure was a matter of a few pages. But there was then nothing like the pressure to conform to best practices backed up by the reliance upon the advice of consultants and the concomitant availability of market data that there is today.
…
You can guess how it works. No board that isn’t about to fire its CEO really wants to admit that their CEO is a less-than-average performer by paying him or her less than average. But if the lowest-paid CEO’s are always being brought up to the average, then the average increases every year. Then for the high performers to be paid well, their compensation needs to be increased, but that raises the average…and so on every year. And the compensation committee and the board always have this market data before them, the recommendations of their consultants and “best practices” to adhere to. These influences are not easily resisted. You see the result.

It’s hard to believe the enormously intelligent regulators didn’t see this coming from the jump. The apparent abuse—that obscene CEO compensation—seems just another excuse to justify their jobs.

Time Warner and Comcast

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The merger has gone bust, harassed into being discarded by the FCC and DoJ. The latter, for instance,

…said it had significant concerns that the merger would make Comcast “an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers.”

This is an…ironic…concern, given that DoJ’s partner in the merger’s destruction had only recently arrogated that gatekeeper role to itself with its Net “neutrality” rule recently announced.

Unfortunately, with this FCC and this DoJ, we can’t know whether the cancelation of the merger was a good idea or a bad one. And that’s bad for business and bad for American consumers.

Get Off My Lawn

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The union looking to organize workers at Boeing’s South Carolina plant has put its plans in a holding pattern, claiming workers are so opposed to signing up that they chased labor leaders off their porches at gunpoint.

Poor babies. That’s private property you’re trespassing on. Get off. Stay off until you have the owner’s permission. How is that so hard to understand? Even by a union hack.

More importantly, though: how did those union hacks get these workers’ home addresses? Who gave up that private information without the workers’ permission?

It also appears the union is making all of this up. The police say they’ve received no reports of any such behavior either in North Charleston, the location of the plant, or in the surrounding areas.

The hacks did go crying to their momma though.

The union filed an unfair labor practice with the National Labor Relations Board in which it alleged that “two organizers were threatened at gunpoint and others reported hostile and near-violent confrontations,” according to a union press release.

It’ll be interesting to see President Barack Obama’s NLRB make the case that ejecting trespassers from private property is somehow unfair.