But Seriously...

I have no desire to do that, but Greece is a good illustration of how badly that economic model works out in the end. And how did Greece get there? By borrowing billions to pay for its social welfare policies and propping up businesses and wages. And it was unsustainable there, just like it will be here. Not to mention a lot of shenanigans by the central bank to help out its friends in the stock and bond markets.

It's fun to point out that Greece has very high tax rates, by my standards. And the government debt to GDP ratio is very high and the US is making progress to catch up.

 

This argument is predicated on the assumption that corporations and businesses actually pay significant taxes. Adding up local and state tax breaks given to businesses to lure businesses to a locality or keep businesses and jobs in a locality, as well as massive loopholes in the federal taxes, most companies or businesses don't pay nearly enough tax commensurate with the advantages they get developing or running a business in the U.S.

http://esd.ny.gov/BusinessPrograms/Taxes_Incentives.html

http://www.nytimes.com/2014/01/08/b...es-with-revamped-tax-credit-program.html?_r=0


The amount of federal taxes large corporation pay is in debate, as their reporting is less than transparent, and they can claim they have paid substantial taxes, but those sums can be negated by other tax write offs and tax breaks, resulting in a zero sum gain for the U.S. tax coffers.

 

Corporations shouldn't even be taxed. As much as they can, corporations pass the costs of taxes on to the people or companies that purchase their goods. In the end, citizens pay all of the taxes. A company will make whatever profit it can get away with, and everything else is considered a business expense. Taxes are just a business expense. Expenses are paid for by selling goods or services so if tax rates go up the company will either try and sell more goods to cover the expenses or raise prices or cut costs, which usually includes jobs. And it's usually not upper management jobs that go. In some cases these higher priced goods are purchased by very poor people so they have less money.

Misanthropic indeed.

 

Certainly there are arguments for and against taxing corporations, and you have stated one of them from an arguably libertarian point of view. I would argue that corporations receive enormous benefits from developing and operating in the United States, and should help pay the cost of those benefits:

A stable government and monetary system that allow business to thrive
A military that protects the business, its assets and its workers from foreign takeover/invasion/destruction
Education of its work force
Development and maintenance of an infrastructure (transportation, communication, utilities) to allow for commerce
A system to patent discoveries/inventions, and to create and develop corporate entities
Developed banking and trade markets to allow the raising of capital

 

I'm not going to disagree with you but rather ask how much is enough?

Corporations are responsible for all income taxes paid through wages paid to employees.

Through IFTA, regardless of whether they maintain their own fleet or sub out shipping, they pay more in fuel taxes than others based on gallons burned in each state. What's more they pay a fee for that privilege.

And as Robbie Clark mentioned they are going to increase prices to cover whatever tax they are charged. It is a pass through expense, one that when it cannot be recouped by increasing prices will result in a decrease in the workforce and/or wages and income taxes.

A stable government and monetary system that allows businesses to thrive is one that regulates but does not get in the way of business expansion or impede their ability to do business. (I'm speaking from the small business side and admittedly do not have any knowledge of how large corporations are taxed). I have no issue with the points you raise but am just interjecting that we all pay taxes at the pump or through usage if we are exempt to pay for infrastructure (also see taxes on internet, cellular bills ect). Military and police are paid through local, state, federal income taxes and through property taxes. Education, if you mean training is an employer's responsibility but outside of that I'm not so sure.

What I'm saying is that corporations do all of this as well as provide insurance in many cases (for instance my employees pay only 12% of their health insurance) so how much is enough. If I misunderstood your position I apologize and again I don't totally disagree I just think that corporations are already paying for the most part.

 

I don't think you misunderstood at all, and again, I readily agree that this is up for vigorous debate. This isn't a black or white matter. It is reasonable to point to the income taxes paid by employees and feel that this is sufficient. However, given that corporations have long been granted the right of personhood through law, for well over a hundred years, shouldn't the corporation itself be treated as an individual and be held responsible for paying taxes?

And I disagree that "corporations are responsible for all income taxes paid through wages paid to employees." Of course they are responsible for deducting those taxes from the employees salary, but in the end - they do not pay those taxes, the employee does. If my company paid my taxes, I would have much more of my salary as take home pay, not my salary minus federal and state income taxes. Also, to head a logical ancillary argument off at the pass, I think it would be naïve to think that corporations would pay a higher salary to account for those taxes paid by their employees. Corporations will pay "just enough" to ensure they can fill the positions they have open. What happens to that salary after it is paid is of no concern to the corporations. As an employee you can take your paycheck and spend it on a big house, cars, liquor or whores, for all the corporation cares. If you pay taxes with it, fine and dandy.

 

It's semantics, I pay taxes out of my wages (true) If I had no wages I wouldn't pay taxes (true) my wages come from my employer (true) therefore my employer pays my taxes? Ultimately the money for the taxes come from our employers but you're right that's not really important. Again I cannot speak for large corporations and I'm sure that is different than what I see, but any and all profits left in my company are taxed as personal income on top of my regularly scheduled taxes (sub-s) so I feel that I'm taking care of my portion. Granted that is my money at the end of the day but if I try to keep money in the business I know I'll be writing a hefty check for doing so. You may be referring to larger corporations in which case I have no comment and would love to learn how they are less heavily taxed (or taxed differently as the case may be).

 

I suppose it would be ridiculous to tax the shit out of large, multi-national corporations, and ensure that money goes back to the people that keeps these companies in business. Whether that be through a basic income or tax breaks for the poor and middle class. I'm of the opinion that by bolstering the bottom, you raise the top. Maybe it's just me, but I can't see what real difference it makes if a corporation's profits are $1 billion instead of $1.5 billion. All it seems to do is incentivize a corporation's management to cut every corner possible and make life miserable for those that are forced to buy their products or work for them.

 

That's not how taxes work. You don't have to tax these corporations to pay for tax breaks for lower and middle class people. You can just lower their taxes to lower their taxes.

Any money you take from the corporations will be filtered through hundreds of thousands of bureaucrats in Washington DC and the state level before some pennies get to some poor people. Or you could lower taxes on corporations and businesses and remove some of these licensing requirements and paperwork (some of this is at state and local levels, stupidly) to foster business competition which would lower prices for people buying goods.

You could go even farther and remove mandates on benefit programs, reduce or eliminate tariffs and lower or eliminate the minimum wage to reduce the cost of employment and increase work opportunities for the poor. And that's not even getting to more radical stuff.

We need to remember that the reason jobs get shipped overseas or to Mexico is because jobs cost too much in the US. But the politicians and political hacks like Donald Trump all have solutions that further increase the cost of employment here in the US. So far these methods have not worked to preserve jobs here and there's no reason to think continuing the same policy will change that.

 

If we're going to start talking about convoluted tax breaks, can we use Georgia's electric vehicle policy's as the poster child? There's a Federal $7500 tax credit if you drive an EV. If you lease the vehicle, the dealer will pass the savings on to you, reducing your monthly payment. Then, you can submit your forms to Georgia EPD's Air Quality unit (why is the Environmental Protection Division dealing with taxes? But, whatever.), and get a $5000 credit of your own. You could structure and start with a new lease on the right scheduel, so that you theoretically get the car for free. And, since Ga's electric car driver numbers jumped so much once this went into effect, that reduced the State tax revenue from the gasoline tax. So, now Georgia just eliminated the $5000 tax credit unless you bought you got your EV before today.

 

Well, okay. If corporations are paying less taxes, then doesn't it stand to reason that they'd lower wages? Unless I'm mistaken, lines have been drawn linking wages to taxes.

What happens if there's say, a tax credit on families making less than X dollars, paid for by large corporations? Throw in a rule saying that these tax funds can't be touched by anybody, we're golden, right?

I'm not quite sure eliminating the minimum wage solves much of anything. If Walmart is suddenly paying the entirety of the living expenses of all of its retail employees, they'll need to raise prices to compensate, wouldn't they? While peopleofwalmart.com would immediately go offline, a majority of it's shoppers would suddenly be no longer able to purchase products from there.

As it happens, it's actually cheaper to manufacture in the US than it is in China. It's kinda funny. If this trade pact goes through, Chinese jobs might go to the US. Seriously though, does giving corporations the hands off approach really help the people in this country? When finance companies were allowed to gamble on mortgages, didn't people go homeless?

 

I'm all for reducing costs for start ups. Aside from taxation, the amount of red tape and bullshit you have to go through today is becoming obscene. Starting a company in the 1980s vs today is a different world. There's a huge cost to both the small businesses and the government, much of which is not necessary. I'm not even so sure you really need to reduce taxes in this area (although not a bad idea) so much as you need to peel back unnecessary regulations.

However, this idea that everyone can default, people can decide to not pay back money they borrow, and then we can just keep reducing taxes until everything fixes itself - sorry people, that's not a solution. I can't remember hearing something so absurd from even the most fiscally irresponsible politicians.

Yes, and we just saw it happen, which is why it boggles my mind how people can turn around almost immediately after the fact thinking this is a really neat idea. It's like burning your hand on a frying pan and then taking a face dive on it.

 

An untamed market will lead to abuses. Thats why during the industrial revolution we had child labor, obscenely unsafe work conditions and starvation wages. Unchecked business can lead to practices that are harmful to the consumer. This is where the government should have a role. The government should be the monitor ensuring that the business doesn't unfairly disadvantage the consumer and does not abuse the people who work for it. IMO (leave it alone, anyone who quotes this I will ignore and not reply), the government should not be there to decide what fair taxes are for businesses or create little wrinkles which allow some businesses some advantages and others not and so on. The government can tax whatever they'd like really, but be prepared to see businesses respond. Higher minimum wage means higher prices of goods, especially if we bump it up to $15/hr at McD's. If everyone gets paid at least $15/hr there I promise they will hire fewer staff, make them work more, and increase how much they charge. If they must pay that wage I can see chicken nuggets, which apparently people love (and so do I), charging $10 for the combo. Small price to pay right for social justice? If it happens, let see the reaction from the rest of the country. If we double the minimum wage at these places their total costs increases and the company responds by raising prices to maintain a certain profit margin. The government can not say what profit margins are and are not acceptable. The government can't say McD's must take the loss and operate at a lower margin and not increase their prices. If they minimum wage is increased, price of goods increases to maintain margins and fewer people are hired. This I can promise. Why? Look at the effect of unions. Union workers on average make around %30 more than non-union labor, however because of the increased cost, people are willing to hire far fewer people for the same job if they must use unions. Look at what happened to Ford, GM, etc, competitive labor practices must be in place in order for industry to be successful. With the car companies, the unions got what they wanted and more, and it cost the car industry more than they expected, especially with pensions, and it became unsustainable and in part caused the American auto industry to collapse.

So my point with the unions is that if people demand wages that are higher than the market can sustain, be prepared for negative results. Back to the main point, the government assuming it knows what the market can bare in terms of wages is a very dangerous propositions. It puts a lot of faith in ordinary people to determine what companies can and will tolerate. Expand this into taxation. If the government assumes it knows what businesses can and will tolerate in terms of increased taxation, they will get it wrong at some level (because nothing is perfect) and there will be consequences. The government can tax businesses how they want, I've said that, but no taxation policy is perfect and much like anything new there will be unforeseen consequences (not saying dire world ending btw)

Now that I've said that, don't object to it on principle or hyperbole, read into it and decide for yourself.

There is this assumption going around that the government can manipulate businesses just so in order to obtain greater social welfare. That if we just slightly pull the right levers, if we push the right buttons, businesses won't react negatively and social welfare will increase. Given the nature of government this is an amazing amount of faith in an institution that Americans have historically, and now have an historically high distrust of.

 

I'm not suggesting people default on their legitimate debts at all. That's a very bad thing for someone to do.

What I'm suggesting is that illegitimate debt piled up by governments without permission that has no possibility of being paid back without hyperinflating the currency should be defaulted on. The taxpayers should not be fleeced to send $225 billion per year overseas for interest alone.

What happens is a bubble is created by the Federal Reserve and government in housing through low interest rates and guaranteed loans, and people that can't otherwise afford these homes get large but cheap loans from banks and get a house. Then after several consecutive years of a gangbusters housing market, the bubble reveals itself for what it is and confidence evaporates, as it should. Then the housing bubble pops and construction falls off which means job losses. Housing values drop which means people are underwater in houses they can't afford in the first place. The stock market plummets because all of that money tied up in home loans cannot be repaid, thus making the loans worthless. Lending companies go under. Etc.

I'm merely suggesting we stop inflating these bubbles. It's not crazy. A bubble the size of that in 2007 cannot form in a free market. There must be assistance from the monetary authority.

 

Ok, kids. Here's how money works.

You make money producing something. You spend that money. You buy the thing someone (maybe you) produced. Money circulates, all is well.
When the thing you want/need to spend money on is too big, you borrow money and pay it off in small increments. You throw some extra on top. All is well. Problem #1 is that when credit is available, people can satisfy wants and needs without a lot of income. They still produce the same (or more), but they are paid less, but who cares because what they want/need is so much bigger/better/more complex, it's worth paying it off in installments. No one pays cash for a new car anymore, but they are so much better quality than 30 years ago, so it's worth it. Easy credit erodes the real hard need for cash, opens the buyer up for negotiation, and if you're a lender, creates huge pools of money.

The thing about economics before this level is that no one, except maybe the government has accumulated vast pools of money. When vast pools of money are accumulated by a private entity, sometimes it's awesome (see Lockheed Martin, SpaceX, etc). However, sometimes vast pools of money that don't circulate....stagnate. They go bad. This can mean a bubble, speculation, or just outright stupid wastes of money. Typically, those huge pools of money were reinvested in long-term things, or socked away into pensions. But, it really doesn't make sense to pay a pension if wages are going down, does it? They need the money now, not in 30 years. So, the pools of money got deeper, but with fewer people better off. Those huge pools of money represent a structural risk to the entire economy: if a deep one stagnates and is unusable, everyone attached to it is fucked.

So, is the economy better off if 100 people buy a home and circulate $10M, or if one guy buys a $10M home? The numbers are the same, so for a long time it didn't matter. Seriously, this shit wasn't even calculated. This is part of the problem with measuring GDP...a brick through a window is seen as an increase in GDP. There also wasn't enough of the $10M market and he didn't have the time/clout/money/ability to leverage his cash to influence the market, so it wasn't relevant.

Which is more stable? The 100 people with homes for any number of obvious reasons. However, they demand, collectively, more of the public goods: roads, police, infrastructure, etc. The one guy,somewhat logically, is saying that he owes less in taxes, because he consumes fewer public goods: he has private security, installed solar panels, etc. He also has a much higher ability to leverage his money into things like accountants, lobbyists, and financial wizardry that have a much higher return on investment than paying taxes. The trick with those things is that the more you have, the more you can make.....

All of this was well and good when the gates were closed to foreigners. With no foreign trade, you could charge taxes at a high rate because you essentially have a captive audience. With trade agreements, it's a sort of economics arms race. If we don't rope in the "right" countries into our agreements, we'll have markets shut out from underneath us. Also, the number of guys in the $10M bracket just increased exponentially higher, but their money is like a passport: it stays with them, because it's the only thing that guarantees their status. We were cool with it being other "western" countries until very recently (see the Japanese management fetish in the 1990's, and every mention of electronics in the 1980's having racist undertones towards the Japanese). Now, we WANT the $10M to park their money in things like real estate in San Francisco or Sydney, Tesla stocks and Iphones. Those things are taxed, otherwise they just flirt and spend their money elsewhere.

Back in the day, Japan pioneered this "monetary manipulation/export heavy" market. Try and import INTO Japan, and you'll face a bureaucracy that's ludicrously unfriendly and a market with some oddly entrenched cultural resistance, while the government is nursing along industries. This worked splendidly and it was technically unfair, but so what? It took damn near 4 decades for it to really matter to us, and by that time the monetary manipulation caught up to them and bit them in the ass (Japan's Lost Decade). Korea saw this and is pulling the exact same set of tricks, just a lot faster. Again, so what? It's not big enough to really matter...hell, most of it comes from 2-3 companies (Samsung, Hyundai, LG). If it becomes a problem, we can deal with THEM, right (See Apple vs. Samsung's lawsuit)?

This shit is reaching a tipping point with China, because they are automatically big enough to matter. And they don't obey us the way the Koreans and Japanese did militarily. The issue with TPP is that if we don't write this shit, the Chinese will and there's a massive risk they will be more successful at it (see the Chinese in Africa). They don't like us, they don't like dealing with us/the Aussies/the Europeans and would love to give us orders rather than the other way around.

There's no real, true, World War 3 threat here, but if this balance of power shifts, we will hurt in the adjustment period. Bad.

 

Ahem. The government did not issue bad loans in 2007, or any year before or after. Those were banks acting in "the free market". A bubble, as in a set of highly over-valued assets that are doomed to dramatically lose value can ONLY happen in a "free market" where regulation doesn't exist or is powerless to oppose speculative pricing (aka gambling that the pot will always get bigger, or the last fool in principle). We have learned a few of these lessons in the 1920's, one of them is that a "leviathan" is the only entity that can stop the downward spiral before society fucking collapses and we go back to a barter economy. I know we learned that lesson, because we repealed the laws that we slapped up to prevent it from happening again. That leviathan in 2007, by the way, was the US government, and they got a nice return on their investment.

Government debt does not work like credit card debt or household debt. Namely, because it isn't related to assets and the government can adjust it's own income.

Debt that is defaulted on adds instability to the system. That instability is bad. For everyone. Especially the taxpayer.

 

So since the Greeks defaulted the Germans get Athens and one of the desirable vacation islands right? If I default on my mortgage the bank gets my house, since the Greeks defaulted on their debts clearly Germany gets something in return, and btw I'm kidding so I'm not sure how they'll get their money back.

 

What I find hilarious about the whole debacle is the Greeks who are crying about the Germans being bullies. These dip shits are getting precisely what they deserve.

I wonder if the Golden Dawn is going to gain more support as the country collapses. They aren't really a threat to anyone outside of Greece, but it's crazy that their membership is already approaching almost 10% of the Greek parliament. Even their party flag is basically a swastika rip off.

 

Banking works just fine without inflation. What we have today is fractional reserve banking, which is not a necessity for a good economy. It is actually a part of a free economy, but a harmful one kept in check by fun stuff like bank runs. Banking is a necessary industry, but it's not a special one that needs its own rules. Banks should rise and fall just like other businesses.

And I consider all government debt illegitimate, since I consider the government illegitimate. That word wasn't a key part of my point.