Tag Archives: taxes

States Competing for Corporations

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Competition is at the heart of America’s economic success, but not every type of contest benefits society.  Consider the growing trend of businesses cajoling states and politicians to compete for who can dole out the most corporate welfare.  It’s especially frustrating because there are already plenty of ways to promote job growth without robbing taxpayers.

And

States could start with eliminating tax carve outs and replacing them with lower-overall tax rates and lighter regulatory burdens.  Federal lawmakers could also do their part by lowering America’s highest-in-the-developed-world corporate tax rate.

And

Embracing these policies would protect taxpayers…multinational firms with multimillion-dollar profit margins.

You bet.  Lower-tax rate policies, among other things, would directly increase those entities’ profit margins by reducing the size of a cost center.  They also would let these entities lower their prices (if only slightly), which would increase their sales (if only slightly), which would then increase their profits if not their profit margins.

In the end, States compete better on the basis of who has the lower tax and regulatory rates over all rather than who gets to the better carve-outs and special treatments.  In fact, the carve-out/treatment path, among other things, leads to an enormously byzantine tax structure within which it’s increasingly difficult to measure which State’s carve-outs/treatments are better.

Wealth Redistribution

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Now it’s threatening to spread to our education institutions.

Lawmakers have a new solution for the high cost of college: make the wealthiest universities pay for it.

Of course.  Because competition among colleges to bring down costs, or reducing Federal funding for them under [pick an excuse] programs to reduce the non-student population money available to drive up costs just can’t be done.  Too many special interests would be perturbed by such a thing.

Elite US schools have grown richer since the 2008 financial crisis by investing their endowment money in everything from California vineyards to Chinese startups.  State and federal policy makers now want to tax those profits….

Gotta punish that success.  How dare these institutions accrue moneys without a government’s faretheewell?

…or force the wealthiest schools to spend down their endowments—to defray soaring student bills and refill depleted higher-education budgets.

Which governments could do easily by not sending so much taxpayer dollars to these schools.  But…special interests.

Interestingly, Republicans are in on this move.

Congressman Tom Reed (R, NY)…floated a plan late last year that would require endowments bigger than $1 billion to pay out a quarter of their earnings in grants to working-class families or face steep penalties or even the loss of their tax-exempt status.

It isn’t Government’s place to tell these schools—or any other institution—how to spend its money.  It is Government’s place to not send taxpayer dollars to these schools—or to any other institution.

No wonder Conservatives are so angrified.

Anti-Competitive G-20

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And, yes, that includes an anti-competitive Democratic Party administration representing the US in this group of twenty.

G-20 finance officials called on the Organization for Economic Cooperation and Development to report by July countries and jurisdictions that haven’t signed up to new international standards on tax transparency and information sharing.

“Defensive measures will be considered by G-20 members against non-cooperative jurisdictions,” the officials said in their statement after two days of meetings in Washington.

Wrong answer, guys.  Your threats just expose your own dishonesty.

If you really want to rein in the so-called tax havens, out-compete them in a free market: lower your own tax rates to competitive levels, and simplify your tax rules to eliminate your cynically Byzantine structures which serve only to benefit (or, just as bad, to appear to benefit) cronies and other government-favored groups.

The best defense is a good offense, but that offense must be directed at the right target.

“There is one thing which has not gone very global and that is taxation, which is still very much a local affair associated with national sovereignty,” IMF Managing Director Christine Lagarde said.

Why must taxation be standardized globalized?  What part of national sovereignty is unclear to you, Madam?

And further cynicism:

Revenue lost to tax havens is a sore point for the G-20….

It isn’t lost to you, guys; it isn’t yours to begin with, so it cannot be “lost” to you.  Again, compete: lower tax rates, and reduce the incentives to hide in “tax havens.”

And just to be clear (although, surely I’m preaching to the choir here:

haven 2. A place of refuge or rest; a sanctuary.

Thus, tax haven is a place of refuge from abuse by tax.

Tax the Rich for the Benefit of the Rest of Us?

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The Left—Democratic Party Presidential candidates Hillary Clinton and Senator Bernie Sanders (I, VT), for instance—want the rich to pay their fair share in taxes.

What is their fair share, you ask?

(…), Clinton and Sanders answer.

Here’s what the rich are paying today, according to our very own IRS, via AEIdeas:IncomeTaxShares

Notice that.  The hated 1% already are paying nearly 40% of the income taxes being paid—that includes Warren “I’m Not Paying Enough, but Don’t Ask Me to Donate to Treasury” Buffet—even though they earned less than 20% of the total income.  Meanwhile, the poor, downtrodden, and abused bottom 50% aren’t even paying 3% of the total.

Hmm….

Leadership Regarding Tax Avoidance

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Large multinationals operating in the European Union will have to publish details of profits and tax bills generated in countries considered to be “tax havens,” the bloc’s executive arm said on Tuesday as it toughened up proposals for fighting tax avoidance following the “Panama Papers” leak.

And

“By adopting this proposal, Europe is demonstrating its leadership in the fight against tax avoidance,” said Valdis Dombrovskis [European Commissioner for the Euro and Social Dialogue](!).

Never let a crisis go to waste, eh, guys?  Never pass up an excuse to increase Government intrusion and control.

Here’s a thought.  Work with me on this, it’s an unfamiliar concept for you Big Government aficionados.  How about showing leadership on tax avoidance by reducing the incentive to avoid paying taxes?  Lower your tax rates.

You haven’t demonstrated a need for all that money, anyway, and certainly you haven’t demonstrated a greater need for that money than the folks who’ve actually earned it: private citizens and their private enterprises.  All of you should be “tax havens.”