Tag Archives: political economy

Government Regulations

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…state variety.

North Carolina is moving a bill along that would protect automobile franchisees in the state from competition.

Tesla says it is cutting out the middleman by allowing people to view different options in a showroom, but then ordering the car direct from the company online rather than buying from a salesman.  …lobbying groups say franchise dealers invest more locally and provide customer service that Tesla cannot.
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The North Carolina law…prevents customers in the state from making electronic purchases directly through manufacturers….

The premises may or may not be true that franchise dealers invest more locally (probably true) or provide better customer service (possibly true), but these are business decisions, and performance in these two areas should be assessed by the buying public in a competitive market.  Government has no business regulating this; this law is solely to protect government-favored enterprises from competition.

Yet Another Thought on Taxes

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The Wall Street Journal has reported that

Apple, Inc paid no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, Senate investigators found, a revelation that fuels the debate over whether the US tax code needs an overhaul.

The Senate thinks this is a bad thing, even as they acknowledge that Apple actually paid all the taxes it legally owed.  Senator John McCain (R, AZ), ranking Republican on the Senate Permanent Subcommittee on Investigations that hectored Apple’s CEO, Tim Cook, on that dastardly legal behavior earlier this week, gripes that

What they often leave out is the second part of the story, that Apple is one of the largest tax avoiders…Apple [is] the most egregious offender [among US corporations trying to avoid tax bills].

This despite the Subcommittee’s already completed investigations finding that Apple has, indeed, behaved entirely legally.  (Which makes me wonder, as an aside, whether McCain has outlived his usefulness and become just another RINO who needs to be terminated in his next primary.)  Regardless of any findings, though, in the finest Federal government tradition (can you say, “IRS,” boys and girls?), we’re going to hector and harass, anyway.  That was the point of haling Cook before the subcommittee to answer their inquisition.

This comes as part of a debate that the

US is undergoing…about the earnings that US companies are keeping overseas.  The profit at foreign subsidiaries are out of the reach of the IRS, and largely unusable to their US operations.

The sums amount to an estimated $1.9 trillion, according to an analysis by Audit Analytics….

However, instead of thinking about how to get their grubby mitts on all that money—which they then can dole out to select groups in return for votes and political power—these politicians should think about how much good that money would do in terms of jobs and innovation (and so more jobs) and lower product costs (and so more demand and so more jobs) were that money allowed to come home by an intelligent tax régime that would contain rates that encouraged rather than prevented repatriation of the money.

But thinking about that would require these politicians to “ask not what they can do for themselves, ask what they can do for their country.”

Obamacare Fail

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…again.

Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.

Benefits advisers and insurance brokers—bucking a commonly held expectation that the law would broadly enrich benefits—are pitching these low-benefit plans around the country.

This, of course, is backwards.  The coverages here should be paid out of pocket.  The better policy would cover only catastrophic events—like hospitalization.

Then there’s this:

[E]mployers and benefits experts have understood the rules to require robust insurance, covering a list of “essential” benefits such as mental-health services and a high percentage of workers’ overall costs….

But a close reading of the rules makes it clear that those mandates affect only plans sponsored by insurers that are sold to small businesses and individuals, federal officials confirm.

The money-saving bare bones policies are only available to large companies.  The jobs producers remain stuck with the expensive, overwrought mandated policies that they cannot afford.  Nor can they afford the penalties Obamacare exacts for not affording them.

And this from Kansas Insurance Department Special Counsel Linda Sheppard:

The whole idea is to get healthy people in and not-so-healthy people in.

Never mind that healthy people don’t need to be in, since they don’t need the coverage, and so they shouldn’t be being forced in.

Let’s Try That Again

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Joe Rosenberg, Loews Corp Chief Investment Strategist, has suggested that large, rich corporations should bailout a spendthrift, debt-ridden Federal government.  After all, he says, since the Federal government had bailed out some big businesses in the Panic of 2008, it’s only proper to return the favor.  As if two wrongs would make a right.

Rosenberg’s proposal is this in its essence:

Companies like Apple, J&J, Microsoft, and other US multinationals are major vendors to the federal government.  Instead of the deficit-ridden government borrowing money to buy their products, let the companies offer the government long-term, no-interest financing in lieu of cash.

In return for this no-interest loan, the companies—which would be required to source the government-purchased products in the US—would be allowed to repatriate 75 cents of every dollar they lend without incurring income tax.  The repatriated cash would pay US workers and US suppliers, increasing employment in this country.

Sadly, no.  The present problem is government spending too much, not being short of money to spend.  Moreover, the demanded vig—paying a 25% tax on the repatriated funds instead of the current 35%, and that only if the money is turned over to the government, anyway—is a money loser for the companies.  On top of which, requiring the government to buy only from American sources means denying the government the lowest prices available for the goods and services it thinks it needs—more wasteful government spending.

Here’s my proposal: companies like Apple, J&J, Microsoft, and other US multinationals should stop being major vendors to the federal government.  Since the government is so addicted to spending it can’t control itself, it’s time for an intervention: stop selling to the government and thereby force it to reduce spending.  These companies will take a hit to their bottom lines from the loss of revenue, but a) the government is paying them with soon to be depreciated—heavily—dollars (that Bernanke Inflation that’s just around the corner from all of his money printing), and b) the hit will be temporary as the companies find other buyers with which to replace the government.

ObamaTaxes

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Compiled by the good folks at Americans for Tax Reform.  Se the link below for details.

President Barack Obama, in a cynical Mothers’ Day “defense” of Obamacare, actually called these taxes the

largest health care tax cut for working families and small businesses in our history.

Here’s an excerpt of the list.

  • $123 Billion: 3.8% Surtax on Investment Income (Took effect Jan. 2013).  This tax hits capital gains and dividends (think about the impact on your 401(k)s; this doesn’t only hit the evil rich).  It also taxes “other” income—things like interest, annuities, and royalties.  Think this only hits the rich?  Your 401(k) mutual funds also invest in interest-paying instruments—bonds, for instance.  Many of our seniors live on annuities.  Our farmers are making beneficial use of the royalties oil and gas producers pay them for access to these energy sources that lie below their land.
  • $86 Billion: Hike in Medicare Payroll Tax (Took effect Jan. 2013).  This isn’t the end of the payroll tax holiday, this is an Obamacare tax increase: a bump from the present employer tax of 1.45% per paycheck (2.9% for the self-employed) to 2.35% for the employer to pay (3.8% for the self employed).
  • $65 Billion: Individual Mandate Excise Tax and Employer Mandate Tax (Both take effect Jan. 2014).  Employers with 50 or more employees must offer government-approved health insurance if a single employee qualifies for a tax subsidy to buy insurance.  If they do not, they must pay a tax of $2000 for all full-time employees [emphasis added].  It gets higher under certain circumstances.
  • $60.1 Billion: Tax on Health Insurers (Takes effect Jan. 2014).  No particular reason for this one; it’s just an excuse to squeeze the insurance companies for more money.
  • $32 Billion: Excise Tax on Comprehensive Health Insurance Plans (Takes effect Jan. 2018).  These are the Cadillac plans that unions and evil rich get, and they’re pretty good policies.  But since the government doesn’t offer them, you have to pay even more extra to keep them.  Pay up, sucker.
  • $23.6 Billion: “Black liquor” tax hike (Took effect in 2010) This is a tax increase on a type of biofuel.  Because biofuels are unhealthy, so if you’re going to use them, you must pay the resulting health costs.  Never mind that the government requires you to use them.
  • $22.2 Billion: Tax on Innovator Drug Companies (Took effect in 2010): Because the innovators innovate too successfully.  Pay up, sucker.
  • $20 Billion: Tax on Medical Device Manufacturers (Takes effect Jan. 2013): A 2.3% excise tax.  Because these producers produce too successfully.  Pay up, sucker.
  • $15.2 Billion: High Medical Bills Tax (Took effect Jan 1. 2013).  Because if you can afford to get that sick, you can afford to give Uncle Sugar an extra taste.

And so on.  We’re seeing what’s in this…Act…now that it’s been passed, and it’s still incomprehensible.  Except the enormous tax increase—that’s clear to everyone but Obama.