Replies to This Discussion

Permalink Reply by SteveInCO on November 13, 2012 at 11:41pm

You are quite correct to be angry at corporate welfare.

But this is *exactly* what the stimulus plans passed to date have been--and yes that was before the Republicans did their best to put a stop to the bullshit.  Several hundred thousand dollars spent for each job claimed to have been created.  That money wasn't given to people, it was given to...  anyone?  anyone?  Corporations!  Oh sure, the subsidies were given to "green" companies (instead of the sorts of companies that get welfare from the republicans).  Corporate welfare is corporate welfare, and it doesn't make a damn bit of difference who's getting it.  In many cases the companies go belly up after having half a billion dollars given to them; wow that's half a billion dollars to create *no*--actually *negative* jobs.

I do think some Republicans' fixating on the tax rate as the cause of the slowdown, and fixating on keeping the rate from rising, misses a very important factor.  And so do attempts to stimulate the economy by spending tons of money we don't have.

The real reason jobs are not being created is because businesses have no idea what the business environment is going to be like six months or a year down the road.  If I hire someone, how many extra costs (many associated with "Obamacare") am I going to find myself having to pay, over and above his or her salary?  How many costs will be added in the future with little or no warning?  Why should I hire someone when I don't have any idea whatsoever how much it will cost to do so--particularly if it is going to cost me more and more money to lay them off?

Some companies are cutting employee hours now, to cut the number of hours an employee works below 30... because for purposes of these regulations, 30 is now "full time."  Changing it was supposed to help employees, but it sure looks like it's hurting them.

But let's get back to taxes.

For all the screaming and hollering that we in the US are undertaxed next to all of those welfare states in Europe... well have a look at this:

http://taxfoundation.org/article/capital-gains-rate-country-2011-oecd

You will notice that by the time you combine capital gains and corporate income tax the percentage rate is over 50% in the US and it's already higher than many of the countries people here want us to emulate.  If the welfare states of western europe are a model, we should be trying to cut corporate taxes, not raise them!  Or look at table II here: http://accf.org/news/publication/an-international-comparison-of-cap...; you will see corporations here pay 35% capital gains and that's higher than Sweden, Canada, France, the UK... the only glaring exception is Germany.

Maybe those folks over in Europe have figured something out:  Maybe they know to keep the rates relatively low on entities that produce wealth.  Of course if you believe you can create wealth by simply borrowing money and passing it out as corporate welfare, this point will be lost on you.

A society cannot get prosperous by simply passing money around, more and more furiously..  Actual goods and services must be produced.  And that is being impeded by an explosion of regulation on both production and on hiring of employees, and by one of the most hostile-to-businesses tax codes in the developed world.  Which demagogues are screaming needs to be made worse.

It is a fact that the three biggest economic booms of the last century, the 20s, the 60s and the 80s, all began when taxes were cut--furthermore what was cut the most were the top rates.  (John F. Kennedy understood this, why can't anyone in his party today?) It is important. however, to cut them intelligently; cut the taxes that impede the flow of investment capital to corporations, and cut the taxes on the rewards for making correct economic decision.  If you don't do this, or worse you don't do this AND you also remove the consequences of failure for making bad economic decisions (e.g., free federal insurance for savings deposits in the late 80s S&L debacle, or have a quasi-government entity buy up crappy mortgages the instant they are created), you will find yourself bailing out a lot of really crappily run companies.

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Permalink Reply by Tom Sarbeck on November 14, 2012 at 12:06am

SteveInCO:

"The real reason jobs are not being created is because businesses have no idea what the business environment is going to be like six months or a year down the road."

Nonsense! When consumers have money and spend it, business owners have all the information they need to make hiring decisions.

You appear to believe in the fiction that a trickle-down economy works.

It doesn't; it uses money taken from taxpayers to make rich folks richer. They hire when sales income increases; until then they put their money where they pay as few taxes as possible.

You use too many words to make a case you don't defend.

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Permalink Reply by Gallup's Mirror on November 14, 2012 at 2:49pm

"...[C]ut the taxes on the rewards for making correct economic decision."

You know, this statement brings to mind certain attractions that might make a great Republican theme-park ride. You climb into the little car, buckle down, and off you go!

Your car turns the first corner. You see four white, uneducated, blue-collar Republican males sitting around a kitchen table in some dump, swilling cheap beer. "Yeah," one says, "we could be millionaires if we wanted. But fuck it! No way we're going choose to do that! We'd just end up having to pay 15% taxes!"

The car goes around the next corner. A billionaire is sitting in his skyscraper office on 34th street, overlooking lower Manhattan. He's surrounded by his tax lawyers. "Sorry boys," he says, "but we're shutting down. Sure, I could make another $500 million next year for me and my investors. But fuck it! Why bother? There's just not enough reward if we have to pay taxes on it!"

The car goes around the next corner. There's a 92-year-old woman laying in a nursing home bed. A doctor and nurse stand nearby. "Well," says the doctor, "they cut the funding for her medical care and housing. Take her outside and lay her on the sidewalk. Sure, she has severe dementia and diabetes, but the lazy parasite should get a job! That way, she'll have the dignity of work, and the rednecks and billionaires will have their incentives for getting rich(er)!"

Priceless.

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Permalink Reply by Gallup's Mirror on November 14, 2012 at 2:12pm

@SteveInCO

Sorry, but your position is based on factually incorrect or nonsensical statements.

You are quite correct to be angry at corporate welfare. But this is *exactly* what the stimulus plans passed to date have been--and yes that was before the Republicans did their best to put a stop to the bullshit. 

The American Recovery and Reinvestment Act is not corporate welfare. Look where the money went: $290.7B in income tax credits and hiring incentives, 244.8B for education, transportation, infrastructure, and 236.5B for medicaid/medicare, unemployment insurance, and family services.

And so do attempts to stimulate the economy by spending tons of money we don't have.

We've already covered this. The US makes money, quite literally. Look at the charts at that last link. The federal reserve has issued billions of dollars since the Bush recession started and it hasn't done a thing to inflation. The economy IS spending. There is no other way to stimulate than by spending.

The real reason jobs are not being created is because businesses have no idea what the business environment is going to be like six months or a year down the road.  If I hire someone, how many extra costs (many associated with "Obamacare") am I going to find myself having to pay, over and above his or her salary?  

The number one concern of small businesses is lack of sales, which is the result of depressed spending, and the cause of layoffs and hiring freezes. Not only that, companies with fewer than 50 employees (96% of all US firms) are exempt from responsibility requirements under ObamaCare. 

You will notice that by the time you combine capital gains and corporate income tax the percentage rate is over 50% in the US and it's already higher than many of the countries people here want us to emulate.

The effective average corporate tax rate was 12.1% according to the CBO, and 55% of US multinationals have zero or even negative tax liability in some years.

This is one aspect of the corporate welfare system I mentioned earlier. The corporations pay (mostly Republican) Congressmen to create tax loopholes and other subsidies for their types of income. The official corporate income tax rate is set at 35%, but US firms are so adept at tax avoidance (and Congress is so corrupt) they almost never actually pay it.

Also, there is no valid reason to toss capital incomes and corporate incomes into the same pile when calculating tax liability. Corporations exist mainly to shelter individuals from liability. For instance, if Chase goes belly-up, the CEO won't lose his personal fortune. After all, he says, they're totally separate things! So Chase's creditors can't touch his stuff. But when the IRS comes, suddenly it's different. It's all one big pile of money, he howls, taxed twice!

I'd be willing to make a deal with him, though. We'll tax the corporation's income and his capital gains compensation "once" as though it's all in one big pile. But when the company fails or gets sued, it's still all in one big pile, and his income and assets are fair game to Chase's creditors and litigators.

A society cannot get prosperous by simply passing money around, more and more furiously..  Actual goods and services must be produced. 

Banks do little else but pass money around and they're quite prosperous, even to the point of being Too Big to Fail, and then having the $700 billion TARP bailout passed around to them. But that's a separate point.

It seems you're suggesting the stimulus was "simply passing money around" and no actual goods and services came of it. That's such an absurd statement that I find it hard to believe genuinely believe it yourself. And if you do I suppose, if questioned, it'll come down to your word or a link to a Fox "News" editorial. 

And that is being impeded by an explosion of regulation on both production and on hiring of employees, and by one of the most hostile-to-businesses tax codes in the developed world.  Which demagogues are screaming needs to be made worse.

Save it. It's pure fantasy. The "explosion of regulation" and astronomical tax rates exist only in the imaginations of screaming demagogues on Fox "News".

It is a fact that the three biggest economic booms of the last century, the 20s, the 60s and the 80s, all began when taxes were cut--furthermore what was cut the most were the top rates.

It sounds like you're saying trickle-down has a long record of success as a universal cure-all: it triggers booms, lowers deficits, and ends recessions. You might be persuasive if you produced some empirical data to back up these "facts". You may find that rather difficult, but by all means, have at it.

The 1920s culminated in the Great Depression, and in regulation to prevent that kind of meltdown from ever happening again. That regulation was repealed in 1999 and was accompanied by the largest tax cut in history (mostly for the top rates) and the result was Bush's Great Recession. The rich certainly did very well as a result, but the rest of us: not so much.

[C]ut the taxes that impede the flow of investment capital to corporations, and cut the taxes on the rewards for making correct economic decision. 

That's ridiculous. Lack of capital didn't cause or prolong the recession. Only 3% of small businesses say lack of capital is their top impediment, and just 8% say getting capital is a problem at all.

Businesses are struggling because consumers aren't buying. There's no reason to start or expand a business when businesses are selling under capacity (some to the point of going out of business entirely). That's lack of sales, not lack of capital. And since business incomes are the result of sales (e.i. spending) lower taxes help, but nowhere near as much higher sales.

I don't mind having a conversation about this subject, but it's less interesting (and even tiresome) when I'm the only one posting assertions backed by reason and citations from reputable sources of information. If you want to continue, do your homework. Bring something more substantial to the table than recitations of flimsy Republican ideology, or rhetorical nonsense like glibly misrepresenting my words ("passing money around more and more furiously!") rather than responding genuinely to address their substance.

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Permalink Reply by Nina van der Roos on June 24, 2013 at 4:51am

Corporations pay relatively little tax, as churches are essentially corporations what makes you think you will be anymore successful at squeezing money out of their greedy, grasping hands as any other big business _ I hope you are not hoping to appeal to their "Christian Ethic" !

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Permalink Reply by archaeopteryx on June 24, 2013 at 5:17am

"Corporations pay relatively little tax" because, in this country at least, corporations buy the politicians who make the tax laws, and the tax law loopholes.

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Permalink Reply by Doug Reardon on June 24, 2013 at 7:09pm

And, of course, almost all politicians are religious.

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Permalink Reply by archaeopteryx on June 24, 2013 at 7:46pm

At least almost all politicians profess to be religious --

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Permalink Reply by Doug Reardon on June 24, 2013 at 11:08pm

Touche'

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Permalink Reply by SteveInCO on June 25, 2013 at 2:19am

Believe it or not... we have among the highest corporate tax rates in the developed world.

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

Of course corporations get to write off almost all costs and not pay taxes on their gross income, but only on the profit... which is why they get a tax break for giving their employees health insurance, which the employees themselves wouldn't get if they bought it for themselves.

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Permalink Reply by Joshua Weinberg on June 25, 2013 at 2:27pm

Taxing churches won't get what you want though, what would end up happening would be the funneling of money to tax havens and people would suffer not churches.

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Permalink Reply by archaeopteryx on June 25, 2013 at 2:48pm

At least they would learn they no longer enjoy their privileged status.

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