Tag Archives: taxes

EU and Taxes

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The European Union agreed Tuesday on a set of rules and standards aimed at closing loopholes that allow wealthy multinationals to shift profits and avoid footing large tax bills.
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“Today’s agreement strikes a serious blow against those engaged in corporate tax avoidance,” said Pierre Moscovici, the bloc’s tax affairs commissioner.

Notice that.  There’s not the slightest glimmer of a concept of discouraging corporate tax avoidance by lowering tax rates.  No, it’s not the corporation’s money; it’s the EU’s, and they’ll decide how much of the money gained by a corporation the EU will permit it to retain.

IRS Shenanigans

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The IRS, after three years of stonewalling and after a Federal judge’s explicit order to stand and deliver, has at last released the list of the organizations it claims to have targeted for blocking from tax exempt status.  “Claims” because the list has grown, from the 298 avowedly conservative organizations originally identified by the Treasury Department’s IG to a total of 426 that the IRS finally listed for the judge.

Edward Greim, a lawyer for NorCal Tea Party Patriots, a party to the suit demanding the IRS give up its list, had this about the difference in size between the list Treasury released three years ago and the list the IRS released:

Based on these changes, which to date remain unexplained, a very real possibility—if not probability—exists that the IRS modified its targeting in light of the investigations, packing its own internal lists of targeted groups to support its preferred narrative, including by adding ideologically diverse groups[.]

It would be interesting to see the dates of something representing the initial delay applied to each of these groups.

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.