Jeff Carter:
Jack Lew and President Obama are talking a lot about tax inversions. Mark Cuban (probably no fan of the current administration) tweeted:
I disagreed with him. I don’t think that US companies should be held up to a lynch mob for moving. I guess the alternative would be to set up a foreign holding company and park every bit of profit overseas to avoid tax. A friend of mine is one of the world experts in inversion.
I do agree with Mr. Cuban that there are great investment choices in the US. It’s the most innovative country in the history of mankind. There are great large companies here, and great small startups. Plenty of ways to make money.
But the broader point is that currently, the administration is using corporate tax rates as a “MacGuffin”. This is all something designed to get people to focus on something other than the administrations total failure in virtually every policy. It’s economic stimulus, total fail. It’s foreign policy, looks like a total fail. It’s regulatory policy, total fail. It’s tax policy, total fail.
It’s worth reminding people that corporations only pay 9% of the total tax receipts. It’s individuals that make up the bulk. It’s really the top 5% of tax payers that carry the water for the rest of America.
If we are serious about reforming the corporate tax code, I am all for it. Currently, the way we tax people in the US is by enforcing normative economic theory by gerrymandering the tax code. This creates an incentive for corporations to hire lobbyists to talk to government officials about special breaks.
Want to get money out of government? Reform the tax code. The tax code is a huge driver of crony capitalism. When politicians pass a tax, they immediately turn around and hold out their hand to see “what they can do to help”.
It’s also worth noting that corporations don’t pay taxes. They are tax aggregators. Economist Robert Barro makes a great point when he says,
Much more focus should be on incentives for people and businesses to invest, produce and work. On the tax side, we should avoid programs that throw money at people and emphasize instead reductions in marginal income-tax rates — especially where these rates are already high and fall on capital income. Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.
Eliminating the corporate tax rate would eliminate the lobbying for all kinds of things that go along with it. At the same time, all subsidies for corporations and special write offs should be eliminated too. Dropping the rate to 0% isn’t done in a vacuum. If we totaled up all the subsidies we pay corporations, it’s a lot larger than the 9% revenue we’d be losing.
When the ”works of the flesh,” are listed in the Bible, it is NOT so a politician can use them all as wedges between voters.
But that is what Obama has done.
He creates jealousy where none should exist then uses that jealousy as a wedge to divide voters.
He creates strife where none should exist then uses that strife as a wedge to divide voters.
He creates greed where none should exist then uses that greed as a wedge to divide voters.
There was a time when all Americans hoped to one day live the American Dream.
When all who wished to take the risks could reach out for it.
When some could achieve it.
But Obama has replaced that with a resignation on government dependence.
So many people don’t even consider trying for more.
They just want those who did so to lose what they worked hard for, so they, themselves might get a little bit more.
Obama certainly has transformed America.
Here’s Obama on corporate tax inversions:
And WHY????
Nice graph of how these inversions have happened since Obama’s economic policies took effect at that link above.