Desipio Message Board

Quote from: Eli on April 14, 2011, 07:27:13 PM
This article mostly makes sense to me, but I'd invite Morph to tell me why it's wrong:

http://www.altweeklies.com/aan/9-things-the-rich-dont-want-you-to-know-about-taxes/Story?oid=3971382

The more of this I read, the worse it gets.  I will first note that it does make a good point, that the poor pay more in taxes than are often ascribed to them.  Credit where credit's due.  However, the author clearly has no idea what he's talking about in point #4.  Is he arguing that someone who has invested in a hedge fund should somehow pay taxes on unrealized gains?  I get it, Paulson made NINE BILLION DOLLARS over two years AND DIDN'T PAY INCOME TAX!!!  OH, THE HUMANITY!  Well, guess what: he doesn't really have that $9B.  It's still in his hedge fund and it could drop to zero tomorrow.  If he pulls it out, then he gets taxed on it.  But why should he get taxed on an unrealized investment?  Someone who buys a stock doesn't pay taxes on the gains until he sells the stock.  This is no different.

#7 is so unreadably illogical as to defy explanation. 

QuoteDespite all the noise that America has the world's second-highest corporate tax rate, the actual taxes paid by corporations are falling because of the growing number of loopholes and companies shifting profits to tax havens like the Cayman Islands.

Um, they shift profits away from the U.S. precisely because of the high tax rate.  Next up: crime rates fall despite rising prison populations!

Corporations decide whether to make investments (i.e., new product lines, new plant, more workers) based on how much profit they will make from the investment on an after-tax basis.  If the effective tax rate is higher, the corporation finds fewer investments profitable and thus makes fewer investments.  This is the simplest of the simple.  I am amazed this got into print. 

Quote from: morpheus on April 15, 2011, 12:47:52 PM
I am amazed this got into print. 

Phil Rogers gets his material into print, so why are you surprised?

Quote from: morpheus on April 15, 2011, 12:27:05 PM

Quote from: J. Walter Weatherman on April 15, 2011, 12:23:21 PM

Quote from: morpheus on April 15, 2011, 12:11:00 PM

Quote from: J. Walter Weatherman on April 15, 2011, 11:50:46 AM

Quote from: morpheus on April 15, 2011, 11:29:33 AM
The third explanation, that people respond to incentives by avoiding taxes through the form of business organization chosen, does make some sense to me.  However, it's also a fact that corporations choose where to locate their investments on an after-tax basis, and the US features not only high statutory rates, but also high effective rates.  And I'd bet this is the larger effect.

http://www.techceocouncil.org/clientuploads/reports/Are_US_corporate_ETRs_low_20100202.pdf

QuoteAlthough the United States relies more heavily on corporate taxes to finance the cost of government than the average OECD country, corporate taxes as a share of U.S. GDP are below the OECD average. The share of corporate tax revenues in GDP is not, however, a reliable indicator of effective corporate tax rates, because the portion of business income earned by companies subject to corporate tax varies among countries. The United States has a substantially larger share of businesses that are not subject to corporate-level tax, especially big businesses, than other OECD countries.17 Over 80 percent of U.S. businesses in 2004 and more than half of business income reported in 2002 were organized as pass-through entities and not subject to corporate-level tax.18 As a result, the taxes paid by U.S. corporations as a share of corporate profits (i.e., the effective tax rate) can be relatively high (as found in the literature reviewed above) while, at the same time, corporate tax revenues as a share of GDP (which includes economic activity of corporations and unincorporated businesses) are relatively low.

And this...

Quote from: R-V on April 15, 2011, 11:26:10 AM
I'm in favor of a much lower corporate tax rate...if the tradeoff is we increase individual tax rates as an offset so total revenue remains the same. Corporations don't pay tax anyway; people pay tax. Might as well cut out the middleman. And morph is right that a lower corporate tax rate would discourage offshoring and encourage repatriation of capital (and jobs). Permanently lowering the corporate rate is a much better idea than these every-so-often repatriation holidays which totally screw up incentives.

... all sounds good to me.

Tank, your point is that high corporate tax rates lead to avoidance of corporate taxes?  Then I guess I agree.  However, are you seriously arguing that lowering the corporate tax rate in the U.S. would not lead to more multinationals engaging in economic activity based in the U.S.?  That is pretty hard to believe.

Where did I argue that?

I have argued that the corporate tax rate is too high in the U.S. and that lowering it would lead to more job creation.  You responded with this stuff about corporations vs. noncorporations in the U.S.  I took that to mean that you were trying to rebut my argument somehow.  Are you not?

I guess I'm just pointing out that the OMGHIGHESTCORPORATETAXRATEEVER is, in practice, offset to a certain extent by greater flexibility in how economic activity is taxed in this country.

That said, I'm not in principle against lowering the statutory rate. I think this is implied in my agreeing with RV's view as quoted above.

Related:

http://www.offthechartsblog.org/top-ten-tax-charts/

(Via Krugman. Morphbutthurt: engage.)

Quote from: J. Walter Weatherman on April 15, 2011, 03:06:14 PM
Related:

http://www.offthechartsblog.org/top-ten-tax-charts/

(Via Krugman. Morphbutthurt: engage.)

Krugman stopped being relevant to economic discussion once W was elected, at the latest.  And the CBPP : blah blah ridiculous comparisons of statistical brackets that say nothing about what actually happened to real people.

DPD.  Damnit, I should know better.

Quote from: morpheus on April 15, 2011, 03:25:30 PM

Quote from: J. Walter Weatherman on April 15, 2011, 03:06:14 PM
Related:

http://www.offthechartsblog.org/top-ten-tax-charts/

(Via Krugman. Morphbutthurt: engage.)

Krugman stopped being relevant to economic discussion once W was elected, at the latest.  And the CBPP : blah blah ridiculous comparisons of statistical brackets that say nothing about what actually happened to real people.

At least you're not given to resorting to ad hominems or anything.

Quote from: J. Walter Weatherman on April 15, 2011, 03:33:22 PM

Quote from: morpheus on April 15, 2011, 03:25:30 PM

Quote from: J. Walter Weatherman on April 15, 2011, 03:06:14 PM
Related:

http://www.offthechartsblog.org/top-ten-tax-charts/

(Via Krugman. Morphbutthurt: engage.)

Krugman stopped being relevant to economic discussion once W was elected, at the latest.  And the CBPP : blah blah ridiculous comparisons of statistical brackets that say nothing about what actually happened to real people.

At least you're not given to resorting to ad hominems or anything.

If it works for Krugman...

Quote from: morpheus on April 15, 2011, 03:30:33 PM
DPD.  Damnit, I should know better.

Leave Gil out of this.

Quote from: Internet Apex on April 15, 2011, 03:41:55 PM

Quote from: morpheus on April 15, 2011, 03:30:33 PM
DPD.  Damnit, I should know better.

Leave Gil out of this.

Game.  Changed.

Quote from: morpheus on April 15, 2011, 12:47:52 PM
  I get it, Paulson made NINE BILLION DOLLARS over two years AND DIDN'T PAY INCOME TAX!!!  OH, THE HUMANITY!  Well, guess what: he doesn't really have that $9B.  It's still in his hedge fund and it could drop to zero tomorrow.  If he pulls it out, then he gets taxed on it.  But why should he get taxed on an unrealized investment?  Someone who buys a stock doesn't pay taxes on the gains until he sells the stock.  This is no different.

I hate it when you are right.

Quote from: CBStew on April 15, 2011, 04:42:59 PM

Quote from: morpheus on April 15, 2011, 12:47:52 PM
  I get it, Paulson made NINE BILLION DOLLARS over two years AND DIDN'T PAY INCOME TAX!!!  OH, THE HUMANITY!  Well, guess what: he doesn't really have that $9B.  It's still in his hedge fund and it could drop to zero tomorrow.  If he pulls it out, then he gets taxed on it.  But why should he get taxed on an unrealized investment?  Someone who buys a stock doesn't pay taxes on the gains until he sells the stock.  This is no different.

I hate it when you are right.

Of course when he does pull it out, he gets taxed at 15% instead of 35% as his 'carry' is considered capital gain, so he 'saved' a cool 1.8 Billion (and Morph, I bet you he would had made the trades to earn a measly 6B instead of 7.8

Quote from: morpheus on April 15, 2011, 12:47:52 PM

Quote from: Eli on April 14, 2011, 07:27:13 PM
This article mostly makes sense to me, but I'd invite Morph to tell me why it's wrong:

http://www.altweeklies.com/aan/9-things-the-rich-dont-want-you-to-know-about-taxes/Story?oid=3971382

The more of this I read, the worse it gets.  I will first note that it does make a good point, that the poor pay more in taxes than are often ascribed to them.  Credit where credit's due.  However, the author clearly has no idea what he's talking about in point #4.  Is he arguing that someone who has invested in a hedge fund should somehow pay taxes on unrealized gains?  I get it, Paulson made NINE BILLION DOLLARS over two years AND DIDN'T PAY INCOME TAX!!!  OH, THE HUMANITY!  Well, guess what: he doesn't really have that $9B.  It's still in his hedge fund and it could drop to zero tomorrow.  If he pulls it out, then he gets taxed on it.  But why should he get taxed on an unrealized investment?  Someone who buys a stock doesn't pay taxes on the gains until he sells the stock.  This is no different.

#7 is so unreadably illogical as to defy explanation. 

QuoteDespite all the noise that America has the world's second-highest corporate tax rate, the actual taxes paid by corporations are falling because of the growing number of loopholes and companies shifting profits to tax havens like the Cayman Islands.

Um, they shift profits away from the U.S. precisely because of the high tax rate.  Next up: crime rates fall despite rising prison populations!

Corporations decide whether to make investments (i.e., new product lines, new plant, more workers) based on how much profit they will make from the investment on an after-tax basis.  If the effective tax rate is higher, the corporation finds fewer investments profitable and thus makes fewer investments.  This is the simplest of the simple.  I am amazed this got into print. 

Of course, with loopholes big enough to sail the Titanic through, you could cut the rate down to 1% and it wouldn't matter, because it's still not as good as 0.

Arizona, leading the league in intolerance.

Quote
It's official: the state of Arizona would "prefer" you not be a gay if you want to adopt a kid.

Governor Jan Brewer today signed a bill into law that makes it as difficult as humanly possible for gay people to adopt children in Arizona.

The new law doesn't necessarily say homosexuals can't adopt kids -- but it states that Arizona would prefer that married couples be given higher consideration for adoptions than non-married people, if all other factors are equal.

In other words, since homosexuals aren't allowed to tie the knot in Arizona -- yet -- they would lose out to heterosexual married couples every time.

Birthers even too crazy for Jan Brewer.