Welcome to the Zerocovery

[Midpack]

A short teaser length article, but it includes a paragraph that says something (specifically in blue) better than I've ever been able to (after several attempts). I fail to see how higher Corp taxes are going to help...

In the aftermath of a financial crisis, families and businesses cut back, and any growth in spending depends on the infusion of new cash. Either exports rake in that dough or the government prints and borrows it. We're not a country that lives and dies by exports, which means that we rely of government to act as a stopgap insurer for an economic conflagration. For two years, the federal government expanded dramatically to help states and families. In the last year, the stimulus has dried up and Congress has spent more time discussing how to cut spending than how to create jobs.

But I don't want to lay this problem at the feet of the House of Representatives. Government represents 20 percent of the economy. That's a big slice, but don't confuse it with the whole pie. What's weighing on the recovery is what has weighed on the economy for the last decade -- perhaps the last four decades. Competition from technology and foreign countries has driven a culture of productivity at most large companies which has led to strong profits at the cost of fewer jobs. This is not evil-doing, just a reality. Corporations have every right to seek higher returns and the cost of labor is relatively high in the U.S. Consumers are enjoying the fruits of cheaper goods. But cheaper information and manufactured goods means fewer dollars to pay the people to produce those goods. Productivity cuts both ways.

Welcome to the Zerocovery - Derek Thompson - Business - The Atlantic

 

[MichaelB]

What do you suggest?

Ten years after - I'd love to change to world - YouTube

 

[Gone4Good]

I fail to see how higher Corp taxes are going to help...

Who's recommending higher Corporate Taxes? If we count the things that people agree on, flattening and simplifying the corporate tax code stands virtually alone.

 

[Midpack]

I've made suggestions in many earlier threads, so briefly:

1. First less spending.
2. Then increasing individual taxes at all levels (not just the "rich"). There is a balance between what we expect government to do for us, and what we are willing to pay for same.

Too often we discuss spending and revenue/taxes independently - a pointless abstraction.

Increasing Corp taxes costs individuals more, might as well just pay more in individual taxes instead of driving jobs offshore even more/faster.

 

[MichaelB]

Too often we discuss spending and revenue/taxes independently - a pointless abstraction.

Are you talking about "we" here at the forum or "we" in DC?

 

[Gone4Good]

I've made suggestions in many earlier threads, so briefly:

1. First less spending.
2. Then increasing individual taxes at all levels (not just the "rich"). There is a balance between what we expect government to do for us, and what we are willing to pay for same.

Can you elaborate a bit on how this helps the 'zerocovery' problem?

 

[Amethyst]

I am afraid I do not know how to solve our economic problems. I do wish the media didn't keep hanging euphemisms on them. We are in a prolonged Depression - why is that so hard to admit? Not a very Great one, either. At least, I don't think it's so great.

Amethyst

 

[73ss454]

1. First less spending.
2. Then increasing individual taxes at all levels (not just the "rich"). There is a balance between what we expect government to do for us, and what we are willing to pay for same.

Too often we discuss spending and revenue/taxes independently - a pointless abstraction.

Increasing Corp taxes costs individuals more, might as well just pay more in individual taxes instead of driving jobs offshore even more/faster.

3. How about charging GE some corp. taxes.

You don't think it's a joke that GE doesn't pay any taxes to the USA? Seems the richer individuals and corporations are the less they pay.

 

[ERD50]

3. How about charging GE some corp. taxes.

You don't think it's a joke that GE doesn't pay any taxes to the USA?

I say make GE the rule, rather than the exception. Eliminate all corp taxes.

What's the point of taxing a Corp? They just pass the cost to the public, and we ALL pay it. Plus, it makes them less competitive worldwide - who does that help? The 'joke' is on us.

This whole 'tax the big evil corps' is just counter-productive class warfare.

-ERD50

 

[flyfishnevada]

It's pretty clear that other countries are more attractive for a variety of reasons. Costs of labor, regulation, environmental laws, unions, etc. Like the article states, you can't blame corporations for seeking a better environment to do business. It benefits the consumer when a business can save money manufacturing a product overseas and sell it for less here. You can't have minimum wages, unions, strict environmental laws and overreaching regulation without impacting the cost of doing business.

I actually agree with taxing everyone more. When the average citizen has low taxes and a high level of services they are disconnected. They see everything as affordable. Their taxes aren't high, if they pay any at all, and they still get all the goodies. If our tax rates reflected the spending in Washington I would bet a lot more folks would be crying foul.

And by the way, everyone whines about corporations that pay little or no taxes, but it's our elected officials that made it that way. They write the tax code. Furthermore, almost half of us (individuals) don't pay taxes for one reason or another, also by law. Slightly hypocritical. We elected those clowns. Even more so when you aren't paying federal income tax yourself due to deductions, credits and loopholes.

 

[Ed_The_Gypsy]

I've made suggestions in many earlier threads, so briefly:

1. First less spending.
2. Then increasing individual taxes at all levels (not just the "rich"). There is a balance between what we expect government to do for us, and what we are willing to pay for same.

Too often we discuss spending and revenue/taxes independently - a pointless abstraction.

Increasing Corp taxes costs individuals more, might as well just pay more in individual taxes instead of driving jobs offshore even more/faster.

I agree!

Industry creates jobs. If taxes on businesses were eliminated, they would be inclined to take on lower margin projects and employ people with more marginal skills. Employment would go through the roof. Capital would rush to the United States. No more off-shore headquarters.

I, for one, would be willing to pay higher individual income tax if things went this way.

I would also be more inclined to start a business. I have several in mind.

None of this is possible, of course. It goes against conventional wisdom.

 

[Midpack]

Wow, I'd answer the challenges posed to me (presumably as OP), but others have done some more effectively than I could.

 

[MichaelB]

Business creates jobs is a truism. This just identifies the source, not the underlying dynamics, of employment. Jobs are created to satisfy demand. If aggregate demand is insufficient, as is the case in the US, jobs will decline.

Companies shouldn’t be taxed because they only pass that along to the consumer isn’t even a truism, it’s an unsubstantiated assertion. Any tax takes away funds from one source that might be used differently if left untouched.

The US taxes transfers, and exempting one beneficiary over another disrupts and creates distortions in the economy. Online (sales tax exempt) vs brick and mortar (pays sales tax) is one example.

Simplify taxes – by all means. Do away for some – that just makes things worse.

 

[Midpack]

Companies shouldn’t be taxed because they only pass that along to the consumer isn’t even a truism, it’s an unsubstantiated assertion. Any tax takes away funds from one source that might be used differently isfleft untouched.

Simplify taxes – by all means. Do away for some – that just makes things worse.

The first sentence above is where we probably begin to part ways. But I don't understand the next sentence, esp 'is left untouched.' Could you reword or elaborate by any chance?

 

[MichaelB]

The first sentence above is where we probably begin to part ways. But I don't understand the next sentence, esp 'is left untouched.' Could you reword or elaborate by any chance?

typo.

 

[Midpack]

typo.

I wasn't highlighting a typo, I'm probably just dense but what does 'Any tax takes away funds from one source that might be used differently if left untouched' mean?

 

[MichaelB]

I wasn't highlighting a typo, I'm probably just dense but what does 'Any tax takes away funds from one source that might be used differently if left untouched' mean?

This

Companies shouldn’t be taxed because they only pass that along to the consumer isn’t even a truism, it’s an unsubstantiated assertion.

means some people say this as if it were true but it has not been proven.

This

Any tax takes away funds from one source that might be used differently if left untouched.

means every tax levied is money that could be used for something else. Tax on business is no different than any other.

 

[73ss454]

I say make GE the rule, rather than the exception. Eliminate all corp taxes.

What's the point of taxing a Corp? They just pass the cost to the public, and we ALL pay it. Plus, it makes them less competitive worldwide - who does that help? The 'joke' is on us.

This whole 'tax the big evil corps' is just counter-productive class warfare.

-ERD50

I'm with you except the only ones getting away with beating the USA are the large corps. The small ones don't have the resources to get it done. Till it's fair for all GE should be taxed.

 

[chinaco]

I think corporations are experiencing low taxes (historically) and getting many advantages.

Much bailout and stimulus money has flowed their way over the last several years (perhaps all of it if indirect sources are considered ... from consumers).

They also are refinancing their debt for historically low interest rates. Investors are paying for that.

They have been handed several huge advantage.

You can see it.... They have huge profits and a massive cash hoard.


Their major concern is the economy and that political stalemate might harm it further.

Many CEOs made that clear recently.


IMO - The Global economic situation with comparative advantages in labor and certain industries is a different (and more complex) issue.

 

[harley]

I'm not a big fan of increasing taxes, corporate or personal. But if the tax increases would improve anything I could be convinced. But in these conversations about taxes one thing always seems to be ignored. Governments are incredibly wasteful and inefficient, more so than most people or corporations. For any value added from increased taxes, we'd be paying a huge premium. I just don't see this as a good solution. If the money would be used in an efficient and effective manner, then yes, increase taxes and get the country out of debt and trouble. But it wouldn't be.

 

[ERD50]

I'm with you except the only ones getting away with beating the USA are the large corps. The small ones don't have the resources to get it done. Till it's fair for all GE should be taxed.

OK, but I can't imagine Congress getting the corp tax code simplified to the point that a big corp with armies of experts wouldn't have an advantage over the little guy. And the consumer ends up paying for those armies on top of the tax.

We've seen plenty of debate here on what should be considered personal income. Just look at the back-forth on LT cap gains - is it 'advantaged' because it is capped at 15%, or is it 'disadvantaged' because it doesn't account for inflation ( a 1 year old $100 cap gain is taxed the same as a 50 year old $100 cap gain).

So eliminate corp tax. It's just a needless complexity that will never be 'fair', but it can be equal (at zero for all).

Companies shouldn’t be taxed because they only pass that along to the consumer isn’t even a truism, it’s an unsubstantiated assertion.

It's seems to argue against basic economics to say that in general, in a relatively free market, that an on-going business does not pass its costs on to consumers. How can it be otherwise? IIRC, former poster 'Emeritus' tried to make this argument, and it seemed to get more and more convoluted the further he got into it. Can you show how it would not be the case?

If I say that if the price of beef goes up, shoppers will choose relatively more chicken or other alternatives - that can be called out as an 'unsubstantiated assertion', as I can't directly prove that it will happen. But it is based on sound, well understood economic principles, and is very, very likely to be true in practice, whether I collect the data to substantiate it or not.

Taxes are just another expense to a business and it affects their COGS.

-ERD50

 

[devans0]

I watch local MegaCorps use their economic muscle to get sweetheart deals that shift their costs to taxpayers. For example, MegaCorp A uses more water than the rest of the city, but pays the lowest cost for water and sewage to make up for it and no local taxes. The city needed to completely rebuild water works, water towers, underground lines as well as sewage lines and sewage treatment. New four lane roads are put in to handle the extra load. If MegaCorp A didn't get what it wanted, it would expand out of state/country. "Its" politicians get voted out and are given cushy advisory jobs that ensure that they do not have to work again. Taxpayers see their water and sewage rates skyrocket by 50 times to pay for it.

MegaCorps are legally considered people too, but blind adherence to political philosophy is blind to their welfare benefits.

 

[Midpack]

This means every tax levied is money that could be used for something else. Tax on business is no different than any other.

Taxes are just another cost to business "no different than any other." As with any added cost, business will seek a way to avoid the cost, or pass it on to consumers. They won't just eat the cost, it's naive to think so. The taxes levied will indeed be used for something else, but that doesn't mean the impact is all the same.

Seems we can reduce government spending and/or increase revenues/taxes. On the revenue side we can pay higher individual taxes, or we can increase Corp taxes. But again, the latter will cost us in higher prices for the same goods and services or help hasten moving jobs offshore (acknowledging there are other causes, labor costs). Why not just pay more directly and not risk more jobs, wages, profits going offshore sooner?

The GE tax question is another issue. Like it or not, that's our tax code...

 

[Midpack]

Taxpayers see their water and sewage rates skyrocket by 50 times to pay for it.

Incredible, literally...

 

[devans0]

Incredible, literally...

Granted, it was over many years, and the incremental costs also include inflation adjustment, but for fixed income retirees, this is essentially welfare that robs from the poor to pay the rich. MegaCorps have "GNP"s that are larger than most countries in the world (and most states). Why is the actual and I emphasize actual tax rate so low compared to middle class working people?

For the record, I am a fan of smaller government AND smaller corporations.