Democrats draw the wrong lesson from a corporate tax revenue report and decide it's time to drive away businesses and jobs.
Senators Byron Dorgan (D-North Dakota) and Carl Levin (D-Michigan) deserve some credit for being smart enough to go to the GAO and ask a sensible question when they commissioned a recent study on why more than two thirds of foreign corporations and about half of the domestic companies doing business in the US get away with not paying corporate taxes in any given year.…
Article comments
26 - Dan Miller
Bliffle,
I understand every word in your comment #25. I myself have used each of them on occasion. My problem is simply that when they are assembled as they are there, I don't fully understand their collective meaning.
It is obvious that when I majored in economics in college I should have been more attentive. Had I been, I might understand the logic of your argument. Unfortunately, I apparently missed some of the more complex aspects of demand curves and elasticity of demand. I would be deeply indebted were you to provide an explanation I could understand. But please, do keep it simple.
Dan
27 - Clavos
@#26:
ROFLMAO!!
...when I majored in economics in college...
Yeah, but you're a self-described old fart, and besides, the Econ curriculum at Yale (home of Skull and Bones) is dictated by the Rothschilds and taught by card-carrying Bilderbergers.
In any case, Economics, like Medicine, has advanced since then. For one thing, the UN repealed the Law of Supply and Demand years ago, in response to entreaties from the then Soviet Union. The deal was negotiated on an initiative by Reagan, in exchange for tearing down the Berlin Wall.
28 - Dave Nalle
I understand every word in your comment #25. I myself have used each of them on occasion. My problem is simply that when they are assembled as they are there, I don't fully understand their collective meaning.
This is because you lack the benefitsof a modern education with the 'whole language' sysem of learning English where words and grammar are no longer relevant and you discover meaning by mystical induction.
Dave
29 - bliffle
Frankly, I recommend Paul Samuelsons textbook on econ. It's been around a long time and has been regularly updated, and they used it at MIT where a lot of students had the math background to understand advanced concepts. I'm sure it's available at any used textbook store near a college. I bet that it's even available in BitTorrent as a PDF.
But I'm not an economist, just an interested amateur.
Samuelsons expositions of things like the Thrift Paradox or the Irish Potato Famine Paradox make econ almost thrilling. If such a thing could be.
But if I were an econ grad student I'd apply the physics/math ideas of Relaxation Oscillations and Small Perturbation Long Timebase theories to Samuelsons models, which would explain (I'm bragging) Joseph Schumpeters arguments. YMMV.
Really, you shouldn't sleep thru your classes.
30 - Clavos
Samuelson's text actually was the one used in my Econ 101 and 102 classes.
Of course, back then it was printed in hand calligraphy on parchment.
31 - Dan Miller
Samuelson's text was used in my econ 101 course as well. Back then, it was chiseled on stone tablets, and carrying the thing around was a lot of work. They were, however, useful for throwing at the mastodons which then roamed the campus.
Dan
32 - bliffle
Samuelson was first published in 1948 and has had several editions since then. IIRC, the 1970 or 1980 edition is considered best by aficianados and subsequent editions inferior as his co-author starts to revise.
33 - Dave Nalle
We used Samuelson in my high school economics class and had John Kenneth Galbraith come in as a guest lecturer.
Dave
34 - Dan Miller
Bliffle,
I think that Chaos Theory might be more useful. Economic problems are all due to those damn butterflies in China.
Dan
35 - bliffle
You're being flippant, of course, but there's a germ of truth in your little joke. In a system as extensive and complex as an Economic system the number of connections is astronomical and you need to use tools designed for massive problems to determine interrelationships. We have those tools in the scientific community and that is where we should look for solutions, not to the simple-minded hortatory screeds of preachers and partisans.
36 - Cobra
Dave writes:
"I suppose not lowering taxes and encouraging inflation, loss of jobs and companies going overseas COULD be an attractive idea if your plan was to destroy the economy so that people would beg government to put them all on the dole and nationalize every business. But who would want that...
Oh yeah, socialists."
Dave, Bush cut taxes, remember? And exactly where are we today?
"The consumer price index climbed 0.8 percent in July, the Labor Department said yesterday, twice as much as Wall Street anticipated. It was the third straight month of high inflation, and the 5.6 percent year-over-year change was the highest since January 1991, when the economy was in recession.
The government data showed that companies, which have been struggling all year with fast-rising prices for oil and other raw materials they need to manufacture and transport their goods, are increasingly passing the higher costs on to consumers."
WP.
NAFTA Net Displacement Was One Million Workers and a Net Job Loss of Over 44,100 in Pennsylvania. A 2006 Economic Policy Institute study found that NAFTA had displaced just over 1 million jobs in this country, and net job loss of 44,173 in Pennsylvania. [Scott, Salas & Campbell,
Obviously, letting corporations skip out on paying taxes hasn't fostered any feelings of loyalty to the American worker, or the nation in general. Hell, I didn't even bring up the subsidies, corporate welfare and bail-outs corporations receive off the backs of we, the tax payer.
Corporations should be TAXED, and FORCED to pay those taxes. I, as an American citizen, am forced to do same, under penalty of law.
Corporations and Americans citizens are both viewed as 'entities" under the law, however, as an American citizen, I pledge allegience to the flag of the United States of America. A corporation pledges allegience to profit margins and share holders.
See the difference, Dave?
--Cobra
37 - Clavos
Corporations should be TAXED, and FORCED to pay those taxes. I, as an American citizen, am forced to do same, under penalty of law.
Go ahead, tax the living shit out of those oppressive corporations; you'll send still more jobs (and corporations) offshore, and you'll still be paying the taxes the corporations who stay behind will be paying, through the raising of prices to cover those higher taxes.
Wouldn't it be better to lower corporate taxes (which we, the consumers pay, anyway) and thereby encourage corporations to stop sending jobs overseas, making them more competitive in world export and job markets, while also stimulating our own economy?
38 - Cobra
Clavos writes:
"Wouldn't it be better to lower corporate taxes (which we, the consumers pay, anyway) and thereby encourage corporations to stop sending jobs overseas, making them more competitive in world export and job markets, while also stimulating our own economy?"
Clavos, if the majority of corporations both foreign and domestic are NOT paying ANY taxes, and getting away with it, what will be their incentive to START paying taxes, no matter the rate? If you don't enforce a law, or penalize its violators, there's no incentive to follow it.
Second, corporations are sending jobs overseas because of trade agreements that encourage finding cheap labor in governments with lax environmental protections, human rights & working condition standards.
NYT
Most corporations are soul-less entities without a conscience. As long as they can cut costs, they'll do business with practically anybody, from countries we've waged war against (Vietnam) to so-called "axis of evil" members (Iran).
Why these entities are held in such high-esteem, I'll never know.
--Cobra
39 - Clavos
Clavos, if the majority of corporations both foreign and domestic are NOT paying ANY taxes, and getting away with it...
You have a credible, unbiased citation for that? Link it.
While I'm certain that many corporations are avoiding (as opposed to evading) all or part of their tax burden, according to this St. Louis Post-Dispatch article, at most 25% of US corporations are paying no tax, and many of them are doing so because they are losing, rather than making, money.
Here's another article, in US News and World Report, which goes into much greater detail than I did on the reasons for lowering corporate tax rates.
40 - bliffle
The same arguments that Clavos believes applies to corporation taxes also apply to all other taxes. So, by that argument, we should eliminate ALL taxes. What a paradise that would be! It is left as an exercise for the student to figure out how to pay government bills, such as a trillion dollar war 10,000 miles from home that has no profit-making potential.
41 - Clavos
As usual, bliffle, your reading comprehension is on a third grade (or lower) level.
I didn't advocate eliminating corporate (or any other) taxes, I suggested we lower them, to stimulate the economy and to induce corporations that have gone overseas seeking lower taxes (such as in Ireland), to come back home, thereby re-creating some of the jobs we've lost in recent years.
I don't advocate eliminating taxes; that's obviously impossible. But we should all realize, when stumping for raising ANY taxes, that WE, the citizens ultimately are the taxpayers; any hike in taxes comes out of OUR pockets, directly or indirectly.
42 - Cobra
Clavos writes:
"You have a credible, unbiased citation for that? Link it."
Most Corporations Don't Pay Income Taxes Tuesday 12 August 2008 by: Richard Rubin, Congressional Quarterly
One excellent example is our good friends at HALIBURTON. Which secured no-bid contracts for BILLIONS of dollars US taxpayers are responsible for (we're deficit spending, remember), yet pay NO income tax back to the United States due to moving themselves and the offices of their subsidiaries off-shore to the Cayman Islands.
If I claim some deduction that the IRS may have a quibble with on my tax form, I get audited. Why do you want me to CRY for Haliburton and other ungrateful corporations who take from our nation's coffers without giving back what's due?
What's so "patriotic" about that?
--Cobra
43 - Clavos
Thanks for the Truthout citation, Condor. Did you read it? Here are couple of passages:
Small companies were much more likely to pay no taxes than larger companies.
And:
The report said about 80 percent of the companies studied paid no taxes because they didn't generate any profit after expenses. Money-losing companies can legitimately owe no tax, and others can use provisions of the tax code to lower or eliminate their liability. (emphasis added)
Taxes are levied on net income. If you don't have any income left after you pay your expenses, you don't owe any taxes. As your article says, 80% of the companies that didn't pay taxes in 2005 fell in this category. So, you're right: "most companies didn't pay taxes," but that's not the whole story; they legitimately didn't pay taxes because they didn't make any money.
Halliburton is an excellent example of the kind of company I was talking about that were driven offshore in the first place because the US taxes are among the highest of the developed nations. By raising Halliburton's taxes beyond a sustainable level, the government has lost ALL tax revenue from them. They, and other companies could be induced to bring their operations back (and along with them, jobs and revenue for their American suppliers) if our taxes were more competitive with other nations.
Economics is global. We are at a disadvantage, in terms of taxation, competing against nations like Ireland, which is rapidly attracting the high tech industry to relocate there because of its favorable tax rates. As a result, it's only a matter of time before American firms like IBM, HP, Intel, Apple, and Micron relocate what remains of their operations to countries like Ireland. This will occur even faster if we raise taxes even further.
And finally, I will note once more what I have said repeatedly in this and other threads: corporations that do pay taxes include those taxes in the price of their goods or services; so in reality, the taxes are paid, in the end, by their customers: US.
You asked:
What's so "patriotic" about that?
I never mentioned patriotism, which has nothing whatever to do with either business or paying taxes.
44 - Clavos
Sorry, #43 is addressed to Cobra, not Condor.
45 - Dave Nalle
Dave, Bush cut taxes, remember? And exactly where are we today?
On average about 3% better off than we would be otherwise. I find it bizaree that on top of all the problems consumers face right now you'd like to take more of their money and throw it down the sinkhole of government in the form of higher income taxes AND higher prices because of higher corporate taxes.
"The government data showed that companies, which have been struggling all year with fast-rising prices for oil and other raw materials they need to manufacture and transport their goods, are increasingly passing the higher costs on to consumers."
I quote your own source here. If corporate taxes were raised or collected more efficiently, then you could add that additional cost into what's passed on to the consumers. Surely if you understand that costs of oil and raw materials are factored in to prices, then so are taxes.
NAFTA Net Displacement Was One Million Workers and a Net Job Loss of Over 44,100 in Pennsylvania.
So if we accept that figure, in the course of 12 years we lost 1 million jobs to Mexico. During that same period we had, what, something like 10 million unfilled jobs that we had to fill with illegal immigrants? Hardly seems like America is lacking for jobs.
Corporations should be TAXED, and FORCED to pay those taxes. I, as an American citizen, am forced to do same, under penalty of law.
Of course they should, but at a reasonable level. Not at a high level which forces them to move out of the country so that we collect NO taxes and they provide no jobs. You can't apply force to them to collect unreasonable taxes because then they will just leave and you get nothing.
Corporations and Americans citizens are both viewed as 'entities" under the law, however, as an American citizen, I pledge allegience to the flag of the United States of America. A corporation pledges allegience to profit margins and share holders.
Shareholders who are average American citizens including their employees in most cases.
"See the difference, Dave?
No. It's in your head.
Dave
46 - Clavos
Cobra,
A couple more excerpts from your own Truthout citation:
But companies looking for lower-taxed jurisdictions often take profits out of the United States. The country's 35 percent top rate on corporate income is among the highest in the industrialized world.
And:
Many tax experts and lawmakers from both parties, including Ways and Means Chairman Charles B. Rangel , D-N.Y., and presidential candidate Sen. John McCain , R-Ariz., have called for lowering the corporate tax rate.
47 - Dan Miller
Clav,
bad and are raping not only the poor consumers but the environment and everything else. They should therefore be taxed out of existence, or at least out of the country. Don't worry. The Government will take care of our needs. That is something you can believe in (sorry to use a preposition to end a sentence with).
You miss the point. Corporations (as well, I suppose, as partnerships, limited partnerships, etc.) are
Dan
48 - Cobra
Dave and Clavos,
I want to thank you for your responses. I just don't think you understand that you're making my point for me.
Both of you are basically endorsing GREED.
That's right. GREED. We can go point by point if you like.
"Taxes are levied on net income. If you don't have any income left after you pay your expenses, you don't owe any taxes. As your article says, 80% of the companies that didn't pay taxes in 2005 fell in this category. So, you're right: "most companies didn't pay taxes," but that's not the whole story; they legitimately didn't pay taxes because they didn't make any money."
A business that doesn't make money, or loses money by definition, is a FAILED business. If you're saying that the majority of businesses in America, based upon the statistics we both source, are FAILURES, then how is this a ringing endorsement of the alleged capitalistic free entrerprise system you both claim should be rewarded with tax cuts? To me, it sounds like a poor investment. UNLESS...a large portion of these companies are cooking the books and reporting as little as possible to avoid paying taxes.
There needs to be the same vigor in AUDITING the books of these businesses as there is going after the American Citizen Taxpayer, IMHO. The IRS would certainly have no mercy on you or me.
Clavos writes:
"Halliburton is an excellent example of the kind of company I was talking about that were driven offshore in the first place because the US taxes are among the highest of the developed nations. By raising Halliburton's taxes beyond a sustainable level, the government has lost ALL tax revenue from them. They, and other companies could be induced to bring their operations back (and along with them, jobs and revenue for their American suppliers) if our taxes were more competitive with other nations."
You see? That's what I'm talking about in regards to "patriotism." Why on EARTH do you give a no-bid, government contract to a company that moved off shore to avoid paying that same government their fair share of taxes?
Without sounding too partisan, there are many in this country, mostly on the right, who feel it's not too much to ask young people of this country to pick up a gun, go overseas to Iraq and sacrifice their health, or even their lives for America.
I find it STUPIFYING that many of the same people on the right feel it's "too much to ask" for corporations to sacrifice SOME of their profits in the form of taxes when they get huge no-bid contracts for the SAME war effort, paid for by the American citizens.
GREED.
I wouldn't trade ONE of our brave military service people for any hundred Halliburton execs, and the American people are paying salaries for BOTH.
Clavos writes:
"Economics is global. We are at a disadvantage, in terms of taxation, competing against nations like Ireland, which is rapidly attracting the high tech industry to relocate there because of its favorable tax rates. As a result, it's only a matter of time before American firms like IBM, HP, Intel, Apple, and Micron relocate what remains of their operations to countries like Ireland. This will occur even faster if we raise taxes even further."
Tell me something that hasn't already happened. It's GREED. It's a race to the bottom. I bet the companies in Ireland are probably already scouting for a better tax haven. Manufacturers who found a good deal in China are already out searching for even CHEAPER labor, even if it involves almost slave conditions.
But I think both you and Dave forget that we are in a DEFICIT. We are running up a debt to hand over to the next generation that is staggering. I say, if you want to do business in the US--
Pay what you owe.
Dave writes:
"On average about 3% better off than we would be otherwise. I find it bizaree that on top of all the problems consumers face right now you'd like to take more of their money and throw it down the sinkhole of government in the form of higher income taxes AND higher prices because of higher corporate taxes."
And you'd rather throw it down the sinkhole that is Iraq, where that country now has budget SURPLUSES? And since government, through these contracts and subsidies, is giving corporations money anyhow, you want the American Taxpayer to get pimped out even further?
Dave writes:
"During that same period we had, what, something like 10 million unfilled jobs that we had to fill with illegal immigrants? Hardly seems like America is lacking for jobs."
"We" didn't have to fill anything.
Companies, who didn't want to hire American workers hired those illegals. It's called "in-sourcing." It's also called GREED.
Dave writes:
"Shareholders who are average American citizens including their employees in most cases."
Except in cases where corporations buy back their own stock to artificially inflate them.
Note: That lobbyists come to Washington influencing politicians to lower corporate taxes should come as no surprise.
--Cobra
49 - Dave Nalle
Cobra, your deep, fundamental mistake here is in thinking that 'GREED' is a bad thing. Greed is just a motivation. It is what drives business. All the people involved from the customer to the CEO want to benefit from what that company does. That's all greed is, the desire to obtain benefit, whether it's a cheaper and better product, a stock that increases in value or pays a dividend, a bonus or a raise for doing a good job for the company, or the satisfaction of a job well done. All of those things are what you lump in as 'GREED' which is a simplistic and negative way of redefining what is actually a positive value.
So long as you have that attitude which is hostile to the basic ideals which America and capitalism in general are founded on you will never be able to approach this issue in any effective way.
A business that doesn't make money, or loses money by definition, is a FAILED business. If you're saying that the majority of businesses in America, based upon the statistics we both source, are FAILURES, then how is this a ringing endorsement of the alleged capitalistic free entrerprise system you both claim should be rewarded with tax cuts? To me, it sounds like a poor investment. UNLESS...a large portion of these companies are cooking the books and reporting as little as possible to avoid paying taxes.
You don't get it at all. It has nothing to do with success or faulure. It has to do with responsibility. A business which pays more in taxes or for raw materials than it has to is irresponsible and mismanaged. It is failing in its fiduciary responsibility to its shareholders. It may become a failed business as a result, but if it is a competently run business it will find ways to minimize expense and maximize profit. That is its primary responsibility. If taxes in one country are higher than in another then it is responsible management to move operations to where taxes are less of a burden.
You see? That's what I'm talking about in regards to "patriotism." Why on EARTH do you give a no-bid, government contract to a company that moved off shore to avoid paying that same government their fair share of taxes?
Because you also want to run your government operations responsibly and that company gave you the lowest price bid. Taking it is your responsibility to the taxpaying citizen.
I find it STUPIFYING that many of the same people on the right feel it's "too much to ask" for corporations to sacrifice SOME of their profits in the form of taxes when they get huge no-bid contracts for the SAME war effort, paid for by the American citizens.
It's not unreasonable to expect companies to pay taxes. It is unreasonable to expect them to pay higher taxes to do business in the US than they would pay to do business in other developed nations. We are pricing ourselves out of the market with rapacious business taxes and we don't have the right or the power to compel payment if the companies can move overseas.
When we send our soldiers to fight in Iraq or wherever, they are volunteers. Companies are volunteers too. They can choose not to participate in business in America if they find the environment hostile.
Dave
50 - bliffle
When we cut taxes we have to make up the revenue loss either by taxing someone else, incurring debt, or reducing spending. Everybody talks about reducing spending but nobody does anything about it. We, apparently, are too cowardly to make corresponding increases in other taxes for fear of making transparent that we are transferring wealth from one sector to another. So the result is that we increase debt.
The proof is in the pudding. This admin cut taxes and increased debt to pay for it. We've increased debt by $5trillion, and devalued our currency by 40% to pay for our extravagances.
Is this wise? Can we keep doing this?
How long do we keep doing it? Until US citizens are as poor as Chinese citizens? Until the New York environment is as polluted as Beijing? What advantage do we get from debasing ourselves to be as miserable as a Chinese peasant?
If a globalized economy results in US companies being at a disadvantage because of US corp taxes, might that not cause one to contemplate reigning in a rush to globalization?
51 - Cobra
Dave writes:
"Cobra, your deep, fundamental mistake here is in thinking that 'GREED' is a bad thing."
Well, it IS one of the Seven Deadly Sins, Dave. I can't find many mainstream religions that endorse greed and covetousness. I suppose a social Darwinist could endorse a philosophy based entirely of selfish engorgement, but when you break it down all "Gordon Gekko" like that...
Dave writes:
"When we send our soldiers to fight in Iraq or wherever, they are volunteers. Companies are volunteers too. They can choose not to participate in business in America if they find the environment hostile."
Yeah, they're volunteers... for now. If another President with an imperialistic, neo-con, invade/regime change/occupy foreign governments philosophy gets elected, all bets are off.
If companies choose not to do business in America because they want a free ride, I say good riddance. I'm not crying for them.
bliffle writes:
"How long do we keep doing it? Until US citizens are as poor as Chinese citizens? Until the New York environment is as polluted as Beijing? What advantage do we get from debasing ourselves to be as miserable as a Chinese peasant?"
That's pretty much the goal of Neo-con economics. Borrow and Spend until there is nothing left but a fuedal system of serfs and lords.
--Cobra
52 - Clavos
If a globalized economy results in US companies being at a disadvantage because of US corp taxes, might that not cause one to contemplate reigning in a rush to globalization?
last I checked, bliffle, we don't rule the world, so your idea is silly.
53 - Dan Miller
Bertrand Russell, one of my few heroes and a (gasp) "liberal," contended that were we all motivated by enlightened self interest, the world would be a far better place. I have seen quite a lot during my lifetime to support his view, and very little if anything to counter it. The operative word is "enlightened," which connotes (among other things) long term rather than short term.
Dan(Miller)
54 - Clavos
And Cobra, go ahead and raise the corporate taxes more.
Prices will go up, but not for long, because the practice of moving firms overseas will accelerate,turning into a headlong rush, and then you WILL hear a "giant sucking sound," as jobs and capital go with them.
55 - bliffle
We can control our own imports and exports without the consent of the rest of the world. But we surrender sovereignty when we empower the WTO and as we allow US businesses to practice unrestricted international trade.
That's the way everyone used to do it until about 20-30 years ago, so we know it can work. What seems NOT to work is unrestrained globalization. The neocons are providing the proof of the PaleoCons contention that a one-world government would be disastrous.