freeman3 wrote:Yes, RJ but the rate that really matters is what US companies actually pay in taxes. A study by the GAO a few years ago found that profitable US corporations with assets of ten million paid only a total of 16.9% of their world-wide income in taxes (only 12.6% in US federal taxes). Wow . What a big discouragement-- you get zapped at 12.6%. Another way of looking at it--that I think filters out manipulation of data to support one's political viewpoint--is to look at corporate taxes as a share of GDP. In a ranking of 27 nations 16 of them collect corporate taxes at a higher percentage of GDP than we do.

http://www.oecd-ilibrary.org/taxation/t ... 510-table5

No need to transfer another trillion to the leisure class...

It can be very hard to discuss issues around here. First Ricky spends about 10 posts (or 100 if you includes other threads) accusing Dr. Fate and me of ignoring the experiences of other countries as if we are narrow and stupid parochial American. (This is all after what I viewed as personal attacks that I ignore broad swaths of the U.S. poor population as if I'm an a**hole.)

Then I provide examples where I agree that we should examine policies of other countries and show policies which other countries do better than the U.S., such as tax rates. Instead of responding to the point, Freeman launches into his own criticism of U.S. corporations and then takes another stab at the leisure class (which is certainly not the same thing as a U. S. corporation).

For this particular point, you can see the evils of Washington. The politicians create an insanely complex U.S. tax code with high tax rates and oodles of legislation and regulation that requires attorneys and accountant at sometimes over $1,000 an hour to help corporations figure it out. It is worth it for large corporations to do that because the dollars at issue are big enough that it matters. And there is a lot of exposure if they get it wrong. But for smaller corporations (the ones that the politicians allegedly care about) it is just not affordable, so they have to live dangerously and risk audit and/or pay higher tax rates, such as 34% at $75,000 of income, and over 40% if you are in California. Corporations making $75,000 a year are not part of the leisure class.

The obvious answer, which as been recommended by many Republicans and some Democrats too is to lower rates and get rid of loopholes. Hey, that's what Sweden does. Even Trump has been able to figure this out, and he's no rocket scientist or brain surgeon. But our system doesn't do that. The Democratic party (and some Republicans too) have blocked this obvious reform . And in fact, we can't even discuss it on these boards without Freeman taking a potshot at the leisure class.

Meanwhile, we have a system that encourages corporations to locate overseas to avoid the sometimes over 45% income tax rate. This inadvertently keeps funds kept overseas and not dividended back to U.S. shareholders (who are not just in the 1%). Also, attorneys and accountants and other administrative types are employed in Dublin and Singapore and Isle of Man and Bermuda instead of Chicago and San Francisco and New York. Whole buildings are built in tax havens employing paper pushers. These are good jobs that are being exported. Yet the left spends time vilifying a free trade agreement because it will allegedly result in the export of other jobs. Nor will they let us build a pipeline from Canada which will also result in the high paying middle class jobs that they desperately say they want.

Anyhow, I liked 2 parts of Bernie Sanders stump speech yesterday. Federally legalizing marijuana would be excellent. I also like his inviting the Muslim woman to join him and talking about his own family's experiences.

I'm not sure what you're saying RJ. You posted indicating that you thought corporate tax rates were high and international corporations are going elsewhere because of it. I posted two pieces of evidence that contradicted that assertion: (1) that large US corporations are able to avoid anything close to that rate, paying 16.9% of their profits in taxes (including federal, state, and foreign ). I also pointed out that overall corporate taxes as a percentage of GDO are not onerous compared to other advanced western countries, coming in 16th out of 27th.

So the clearly shows that corporations that do business globally need not be concerned about high US corporate tax rates. They can easily avoid them. You complained about smaller US corporations being affected and that they cannot hire tax accountants. Those corporations are pretty much stuck here so that is not going to affect the economy.

So what you're really talking about is tax fairness. I am ok with small corporations having the same rate as for individuals. I guess that in theory an owner could be hit twice, but there are ways to structure things to avoid this. We could have a conversation about if there is anything that could or should be done to lower corporate tax rates for small corporations. There is also issue about whether some corporations ( like Disney) should be hit the highest rate while other corporations use tax shenanigans to avoid taxes.

But I am very dubious that if we lower tax rates that we will able to close tax loopholes. All we will get is a wealth transfer to those who already have a lot.

And I guess it is hard when the other side is posting things that oppose your position. But I think the answer is to show why the other side's position is wrong. I posted two key pieces of evidence showing that real corporate taxes are not that high on US businesses that are global enterprises and that corporate taxes as a percentage of GDP compare are not high compared to other wealthy countries. You did post, not evidence exactly but an argument, that some smaller corporations might be unfairly hit. And that 's fine,

But the start of your post where you seem to be implying I'm an unreasonable debater...I don't know where that is coming from. I may have taken a shot at the leisure class but first I posted strong evidence that our corporate taxes are effectively not that high. And you really have not responded to that evidence.

freeman3 wrote:I'm not sure what you're saying RJ. You posted indicating that you thought corporate tax rates were high and international corporations are going elsewhere because of it. I posted two pieces of evidence that contradicted that assertion: (1) that large US corporations are able to avoid anything close to that rate, paying 16.9% of their profits in taxes (including federal, state, and foreign ). I also pointed out that overall corporate taxes as a percentage of GDO are not onerous compared to other advanced western countries, coming in 16th out of 27th.

So the clearly shows that corporations that do business globally need not be concerned about high US corporate tax rates. They can easily avoid them.

If this is true, why do corporations work so hard at keeping their money overseas? Do they hate the US?

Freeman:

And I guess it is hard when the other side is posting things that oppose your position. But I think the answer is to show why the other side's position is wrong. I posted two key pieces of evidence showing that real corporate taxes are not that high on US businesses that are global enterprises

The first piece of "evidence" that you posted fully supports my position.

•U.S. corporations dodge $90 billion a year in income taxes by shifting profits to subsidiaries — often no more than post office boxes — in tax havens.
•U.S. corporations officially hold $2.1 trillion in profits offshore — much of it in tax havens — that have not yet been taxed here.

Hmmm, why do they do that? Because they are evil or because U.S. corporate income tax rates are too high?

Other than that you have provided no evidence that U.S. corporate income tax rates should stay where they are. You've just asserted that they should be the same as individual income tax rates and that they should be the same as in the past. But that's not evidence.

You've also asserted that Corporations don't pay their fair share. Perhaps? But is that a function of the rate not being high enough or is that a function of all the loopholes that both Republican and Democrats put in the tax code? Why is it that the U.S. needs a higher corporate tax rate than the rest of the industrial world?

Freeman:

So the clearly shows that corporations that do business globally need not be concerned about high US corporate tax rates. They can easily avoid them. You complained about smaller US corporations being affected and that they cannot hire tax accountants. Those corporations are pretty much stuck here so that is not going to affect the economy.

This is just not correct. It is not easy at all. They have to hire high priced lawyers and accountants. They then have to locate certain people overseas. They have to rearrange their activities in all sorts of ways to legally avoid these high U.S. tax rates. They do it because the sums involved are so large, but it is a drain on our economy. And it is a lot of effort in unproductive activity.

Are you saying accountants are not productive

Doctor Fate wrote:
If this is true, why do corporations work so hard at keeping their money overseas? Do they hate the US?

Cost of Labor

bbauska wrote:

Doctor Fate wrote:
If this is true, why do corporations work so hard at keeping their money overseas? Do they hate the US?

Cost of Labor

Often it is tax policy.

freeman3 wrote:Are you saying accountants are not productive

cute. An accountant who helps you figure out a personal budget is creating value because he is providing information to help you sensibly live your life. An accountant who spends his time rearranging your corporate structure so that you find the lowest tax jurisdiction is not really creating economic value in the same way as someone who fixes your car or assembles your I-phone.

What other evidence does do you need me to show, RJ? Large US corporations are paying a 12.6% rate and overall corporate tax collection as a percentage of GDP is relatively low compared to other advanced countries. But you want further tax cuts for corporations? perhaps you could provide actual evidence why this would be a good thing, particularly for the country as a whole.

I don't get the whole US companies holding money overseas argument. That money was supposedly made overseas and determined not to be taxable in the US, right? So if they wanted to make investments they can transfer that money to the US and deduct that money off their US taxes if it is spent on investments, hiring workers, etc. If they make more money because of it they will probably figure a way to allocate that money to a foreign subsidiary. This is a completely made up issue by corporate lobbyists. Are we that gullible? I don't understand how money determined to be made overseas is subject to taxation just because it gets transferred to US soil.

Corporate tax cuts will simply lead to more wealth stratification in the US--we have enough of that already. If Republicans want to trade a trillion in tax relief for a trillion dollars in lower taxes for those making under a hundred grand, maybe we could make a deal. No way are we doing that unilaterally.

And Brad is right-- companies, particularly smaller ones, relocate overseas for lower labor costs so they can make money. Corporations making relatively small amounts of money can use various ways to avoid getting zapped with the top rate (e.g if a corporation made $75k they could pay that in salaries or bonuses to individuals who would pay a lower rate). As I am sure you know.

The US tax code is maintained as is because it generally works to the benefit of the large corporations. They spend millions rewriting tax laws for their congressmen and senators through AEC and through other organizations. The corporate tax rate is advertised as 35% but the effective rate is what matters. Simplifying the code like Sweden (damn socialists) would require lowering the rate as well. But the current situation suits them fine. They get to complain about the rate without revealing their true tax burden.

It is true that a lot of money is over seas. But an awful lot is in tax havens not supporting factories. So the answer for over seas capital is not cheaper labor. Its poor international regulation of financial institutions and deliberate policy to attract the money by small nations.

Most of America’s largest corporations maintain subsidiaries in offshore tax havens,” the report said. “At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014.”
The study also found that in five of the commonly used tax haven countries — Bermuda, the Cayman Islands, British Virgin Island, Bahamas and Luxembourg — the reported profits of subsidiaries of U.S. companies were more than GDPs of the countries in which the firms were registered.

While not all companies voluntarily disclose how much they would pay in U.S. taxes if it were not for operating in foreign tax havens, the 57 that did, expected they would pay a combined $184.4 billion extra, meaning they were effectively paying on that money a 6 percent tax rate, far lower than the 35 percent corporate tax rate in the U.S.

“Congress has created loopholes in our tax code that allow offshore tax avoidance, which forces ordinary Americans to make up the difference,” the report said. “The practice of shifting corporate income to tax haven subsidiaries reduces federal revenue by an estimated $90 billion annually

.”
http://america.aljazeera.com/articles/2 ... broad.html

We are agreed that corporations are overseas. If the current economic rules are so great for businesses, and the businesses follow the greatest money intake model, explain what can be done to bring them back if that is what is desired.

If it takes tax breaks, make it happen.
If it takes deregulation, make it happen.

If you are not willing to make the environment better for a business so it is more beneficial for them to be here, then kindly quit belly aching without a solution.

http://www.huffingtonpost.com/entry/hillary-clinton-death-penalty_56310eb4e4b00aa54a4c48c9

Mrs. Clinton is pro-death penalty. Any changes in peoples perceptions of the front runner?

bbauska wrote:We are agreed that corporations are overseas. If the current economic rules are so great for businesses, and the businesses follow the greatest money intake model, explain what can be done to bring them back if that is what is desired.

If it takes tax breaks, make it happen.
If it takes deregulation, make it happen.

If you are not willing to make the environment better for a business so it is more beneficial for them to be here, then kindly quit belly aching without a solution.

Apparently, if I'm reading correctly, the Democratic/socialist approach to increasing business in the US is raise taxes, raise the minimum wage, and increase regulation. None of those things, according to our liberals here have any negative impact on businesses. I find that a remarkable approach, completely counter-intuitive, but this is the same party that says deficits don't matter, the Debt doesn't matter, and there is no end to the number of free programs the government can fund.

The following articles gets into what liberals are concerned about. Even though workers are far more productive than they used to be they are getting an ever shrinking piece of the economic pie . The reasons are various--globalization, growth of the financial sector, etc-- but the explanation proffered in one article seems the most compelling--with the collapse of Communism there was no competing ideology for capitalism and no reason for economic elites to restrain their greed.

http://www.washingtonmonthly.com/politi ... 045174.php
http://conversableeconomist.blogspot.co ... e.html?m=1


And you guys--Brad, RJ, and DF--are essentially talking about ways for capital to wrest more money from labor. A 5% drop in labor share of GDP in the US economy is 850 billion dollars. Now THAT is a redistribution of wealth.