The U.S. is not a high-tax country. Our wages are low. We have extreme income inequality. And, our infrastructure is crumbling. Yet, we keep voting dipshits into office whom continue to cut taxes for the wealthy and big corporations.
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Showing posts with label income taxes. Show all posts
Showing posts with label income taxes. Show all posts
Tuesday, February 4, 2020
Friday, March 25, 2016
Who Will Save The Hedge Funds?
It's great to offer two sides to a story, broadly speaking. But some stories just aren't true. For some odd reason, the Journal Sentinel thinks these stories still need to be told. Myth making at its worst; great job Journal!
I'm referring here to a recent opinion piece in the Journal from Brett Healy, president of the MacIver Institute, and Patrick Gleason, director of state affairs of Americans for Tax Reform - Bipartisan push for higher taxes trouble for Wisconsin companies.
They are particularly upset over the possibility of "raising taxes on capital gains, particularly capital gains earned by private equity fund managers, commonly referred to as carried interest."
Who will save the hedge funds?!
They make unsubstantiated and dubious claims about the economic impact of private equity firms, followed by the well-worn double-taxation whine.
Capital gains taxes are a type of double taxation, and investment income taxes are among the most economically damaging forms of taxation.Yes, taxing people for making money off of other money is so mean.
Also, the attempt to raise taxes on carried interest is the first step toward the long-held progressive goal of taxing investment income at the higher rates at which wages are taxed.So, inherited wealth, which is often simply reinvested to achieve capital gains, should be taxed at a lower rate than income earned by people whom are actually working, building and doing something?
Proponents of raising taxes on carried interest often talk about tax parity and fairness, but note they never want to reduce wage income tax rates to the lower capital gains rate in order to achieve this. That's because the goal for most of those targeting private equity is to raise taxes on net in order to grow the size of government.No. You can't reduce income taxes to lower the capital gains rate because we wouldn't be able to fund government. It's not about growing the size of government. It's about living in a civilized society with a working and equitable infrastructure. We need Social Security, Medicare, roads, bridges, trains, airports, fire fighters, police, parks, museums, universities, a military, and on and on. It's about paying the bills to assure our quality of life.
President Obama has reduced deficits and decreased the number of federal employees. That's leaner and meaner, not growing.
Yet, for this conservative, pro-business cabal, taxes can never be low enough on the wealthy, and the working masses should just get used to going without.
The belief that keeping the tax burden as low as possible promotes economic growth is supported by a large body of research.Again. NO! Research, and the U.S.'s experience since the 80s, indicates the exact opposite of what the authors claim. Low rates have lead to slower growth, increasing income inequality and rising deficits.
As Dean Baker discusses:
...the desire to lower the tax rate on capital income as stemming from a desire to reduce "double taxation." The logic of this argument is that profits are taxed at the corporate level, so when they are taxed again at the individual level when they are paid out as dividends or lead to capital gains, this amounts to "double taxation."
The problem with this logic is that the government gives individuals something of enormous value when it allows them to create a corporation as a legal entity. A corporation enjoys a wide range of privileges that these people would not have as individuals, most importantly that it allows them limited liability. This means that the individuals who own shares in the corporation are not liable for any harm the corporation may do beyond the value of their shares.
We know that limited liability and other benefits of corporate status have great value because people choose to incorporate. They would not do so, and save themselves from having to pay the corporate income tax, if they didn't think the value of corporate status exceeded the burden of the tax. In this sense, the corporate income tax is a 100 percent voluntary tax, people opt to pay it in order to get the benefits of limited liability.
There is one other point that would have been useful to include in this discussion. Taxes affect the before-tax distribution of income insofar as they allow for a lucrative tax avoidance industry. To a large extent the private equity industry, which has created rich people like Mitt Romney and Peter Peterson, is about devising ways to raise corporate profits through tax avoidance. This is an important cost associated with having an excessively complex tax code. That is an important point that is always necessary to keep in mind in any discussion of the tax code.The economic havoc that has been the Scott Walker administration is in part due to the fact that they have followed the playbook of the Healys and Gleasons of the world. Political apparatchiks whose proclamations have been debunked long ago. They can keep repeating their dead ideas (which has been going on for decades now), but we don't have to keep listening to it.
A bit of an aside: in the article, Healy and Gleason use $68 billion for the amount invested in Wisconsin by private equity since 2003, they claim this is an economic windfall for the state. Yet, later in the article, "Obama's budget indicates that this damaging tax increase would raise just over $2 billion per year in additional tax revenue, which is basically a rounding error in a more than $3 trillion federal budget." So, Obama's increase would raise $2 billion, which is just a rounding error. But private equity's roughly $5 billion per year investment in Wisconsin is an economic game-changer.
For Further Reading:
Warren Buffett Is Right, the Wall Street Journal Is Wrong
Raise Capital Gains To Lower Income Inequality
From Investopedia:
Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be claimed on income taxes. A capital loss is incurred when there is a decrease in the capital asset value compared to an asset's purchase price. 2. Profit that results when the price of a security held by a mutual fund rises above its purchase price and the security is sold (realized gain). If the security continues to be held, the gain is unrealized. A capital loss would occur when the opposite takes place.
Sunday, February 16, 2014
No Relationship Between Cutting Tax Rates On Corporate Profits And Job Growth
The Corporate Tax Rate Debate: Lower Taxes on Corporate Profits Not Linked to Job Creation
The American corporate tax system is badly broken. Some corporations pay more than a third of their profits in federal income taxes, while other equally profitable firms pay nothing at all. On average, corporations pay just 12.6 percent of their profits in federal income taxes, according to a recent study by the U.S. Government Accountability Office.
Corporate and political leaders keep telling us that cutting corporate tax rates will create jobs.
Our examination of the evidence found no relationship between cutting tax rates on corporate profits and job growth.
We examined the job creation track record of 60 large, profitable U.S. corporations (from a list of 280 Fortune 500 companies) with the highest and lowest effective tax rates between 2008 and 2010 and found:
• 22 of the 30 corporations that paid the highest tax rates (30 percent or more) on their reported profits created almost 200,000 jobs between 2008 and 2012. Only eight of the 30 firms paying high tax rates reported reducing the number of employees between 2008 and 2012.
• The 30 profitable corporations that paid little or no taxes over three years collectively shed 51,289 jobs; half of these low-tax firms created some jobs, and half shed jobs between 2008 and 2012.
• Lowe’s, the nation’s second-largest home improvement store, paid over 36 percent in taxes on reported profits of $9 billion between 2008 and 2010, and hired an additional 28,820 employees between 2008 and 2012.
• Verizon, the nation’s largest wireless provider, reported $32 billion in U.S. profits between 2008 and 2010, yet received tax refunds totaling $951 million and reduced the number of employees by almost 56,000 between 2008 and 2012.
In 2004, when a temporary “tax holiday” on offshore profits was put in place, 58 firms brought $218 billion in profits back to the U.S. under the program, for a savings of $64 billion on their taxes. In the following two years, those 58 firms eliminated 600,000 jobs.
In 2012, U.S. corporations reported earning nearly $1.8 trillion in profits. Had they paid the 35 percent tax rate on those profits, total corporate tax receipts would have been $630 billion (rather than the $242 billion they actually paid), and the deficit would have been reduced by nearly a third.
Today, large U.S. corporations report more than $1 trillion in cash or liquid assets. They have the funds to invest in new jobs, should they choose to do so. We found no evidence that cutting the tax rate on corporate profits induces firms to create new jobs in the United States. However, several legal loopholes and deductions do discourage job creation in the U.S. and should be eliminated. This would raise significant revenue and make the tax code fairer.
Tuesday, August 27, 2013
Saturday, April 13, 2013
Saturday, April 6, 2013
Weekend Reading
The Gold Standard Is Still A Really, Really Terrible Idea
["Recession bars in GREY...The "golden" years were actually the greyest years, the worst years. The economy was in recession 52 percent of the time between 1874 and 1933. We've been in recession just 16 percent of the time thereafter. ]
Sunday, March 3, 2013
The Odd Couple: Scott Walker & Public Policy
The playbook is still the same, Scott Walker's Budget To Lower Income Tax Rates, Freeze Local Aid.
As suspected, Much Of The Savings From Scott Walker's Proposed Cut Would Go To The Top 20%.
How does Scott Walker plan on paying for this? Walker's Massive Borrowing Scheme.
Large tax cuts for the wealthy don't improve economic growth nor do they cause these same rich people to move to avoid such taxation. The Myth Of The Rich Who Flee From Taxes.
In fact, austerity - cutting budgets and spending, especially during our present sluggish economy- tends to make matters worse. Budget Cuts Seen As Risk To Growth Of The U.S. Economy.
So, what do we get for all this austerity, cutting, slashing, and freezing. Average Income Tax Cut Under Governor Walker Budget: $83.
Are these measures, at least, creating jobs? States' Private Sector Job-Creation Slowed, Census Data Shows.
As suspected, Much Of The Savings From Scott Walker's Proposed Cut Would Go To The Top 20%.
How does Scott Walker plan on paying for this? Walker's Massive Borrowing Scheme.
Large tax cuts for the wealthy don't improve economic growth nor do they cause these same rich people to move to avoid such taxation. The Myth Of The Rich Who Flee From Taxes.
In fact, austerity - cutting budgets and spending, especially during our present sluggish economy- tends to make matters worse. Budget Cuts Seen As Risk To Growth Of The U.S. Economy.
So, what do we get for all this austerity, cutting, slashing, and freezing. Average Income Tax Cut Under Governor Walker Budget: $83.
Are these measures, at least, creating jobs? States' Private Sector Job-Creation Slowed, Census Data Shows.
Saturday, January 12, 2013
The Great Pretender
Confirming my belief that Republicans are out of ideas:
Gov. Scott Walker Proposes Cutting Income Taxes
As much as Republicans would like to forget George W. Bush's entire time in office, his two terms were recent historical proof of the fact that tax cuts do not spark the economy.
"In Bush’s first term, the economy shed 913,000 private sector jobs! 913,000! The only thing that saved Bush’s first term from being a complete economic disaster, in terms of employment, was robust public sector growth: The economy added 900,000 government jobs," recalls Andrew Leonard.
Ronald Brownstein adds, "On every major measurement, the Census Bureau report shows that the country lost ground during Bush's two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. By contrast, the country's condition improved on each of those measures during Bill Clinton's two terms, often substantially."
Do Republicans believe in any policies that actually work in reality?
Gov. Scott Walker Proposes Cutting Income Taxes
Gov. Scott Walker pledged Thursday to cut income taxes in the state budget he signs this summer, calling it the best way to spark the economy. But he also said the reduction would be phased in over a number of years.Tax cuts, the best way to stimulate the economy?
As much as Republicans would like to forget George W. Bush's entire time in office, his two terms were recent historical proof of the fact that tax cuts do not spark the economy.
"In Bush’s first term, the economy shed 913,000 private sector jobs! 913,000! The only thing that saved Bush’s first term from being a complete economic disaster, in terms of employment, was robust public sector growth: The economy added 900,000 government jobs," recalls Andrew Leonard.
Ronald Brownstein adds, "On every major measurement, the Census Bureau report shows that the country lost ground during Bush's two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. By contrast, the country's condition improved on each of those measures during Bill Clinton's two terms, often substantially."
Do Republicans believe in any policies that actually work in reality?
Monday, September 17, 2012
Sunday, September 16, 2012
Saturday, April 21, 2012
Weekend Reading
Do Small Businesses Create Jobs?
Fiscal Therapy
Fix Income Inequality With $10 Million Loans For Everyone!
Romneys Were Able To Give Sons $100 Million Tax Free
Social Security in U.S. Less Generous Than Other Countries
The Rich Are Different Than You & Me...They Pay Lower Taxes
Why Do Half Of All Americans Pay No Federal Income Taxes?
Why You Should Care That 70% Of Antibiotics Go Into Animal Feed
Will The Exurbs Ever Make A Comeback?
Fiscal Therapy
Fix Income Inequality With $10 Million Loans For Everyone!
Romneys Were Able To Give Sons $100 Million Tax Free
Social Security in U.S. Less Generous Than Other Countries
The Rich Are Different Than You & Me...They Pay Lower Taxes
Why Do Half Of All Americans Pay No Federal Income Taxes?
Why You Should Care That 70% Of Antibiotics Go Into Animal Feed
Will The Exurbs Ever Make A Comeback?
Friday, July 1, 2011
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