Wednesday, October 13, 2004

"How Tax Bill Gave Business More and More" 

A 'giveaway', according to the New York Times, is when a company is allowed to not give the government more money. The recently passed bill will "shower $137 billion in tax breaks" on numerous corporations.

It was their money to begin with and now will continue to be, and they will choose to allocate it in a far more efficient manner than the government. It most certainly isn't 'given' by the government. Save urgent needs which would not be done well, or at all, by the private sector, such as the military or the courts, I really fail to see how the rhetoric can be supported.

Rhetoric this steep really annoys me, like efforts to garner the "redistribution of wealth': wealth isn't distributed, it's earned!

Tax cuts "for the rich": the top 10% of wage earners pay 68% of all income tax!

Attacking "Benedict Arnold CEOs” who outsource: that's right, you've been betrayed because Dell can service your computers for less money, AND has sold more computers to India than the entire value of American call centers there combined!

'Fair Trade": the jobs we provide abroad are pay usually 2-4 times the local average!

These numbers just can't be ignored.

Of course, this is an election year, and I shouldn't be surprised at all if a candidate commits an "Economic Illiteracy Quadrifecta". Quite impressive.

UPDATE: Cato has some ideas on how to reform corporate tax structure. I remember Milton Friedman had a great idea: account for corporate profits on a per owner basis. Whatever is reinvested in the company is not personal income, what ever is paid in dividends is. The owners then pay on an income tax basis. Not only would this make America the best place in the world to do business, even more so than now, but it would also make the income tax more fair. Currently people complain that most rich folks don't really earn a salary, so it's hard for them to pay an income tax. As a result, the rate graduation is huge. A more fair scheme would be to account for corporations in this way, and then make an income tax associated.

Of course, a government under a constitutional limit on spending at a percentage of the previous year's GDP could simply NOT collect taxes, and it could pass an implicit tax through inflation. This would remove most the dead-weight costs of tax collection (even those associated with inflation, because the rate could be predicted). In addition, anyone with money gets taxed at an unavoidable flat rate, i.e. the inflation rate. I haven't seen a serious economic analysis of this idea, because it is my own, but I hope to hand it off.

One potential problem is the ability of governments to spend more than they collect, i.e. to make inflation too high. Considering unfunded spending usually occurs because there is no stipulation of a funding source, I wouldn’t be surprised if the single source of taxation, which would affect everyone equally, would keep the government in greater check than today.
You have to admit that granting breaks to only a few businesses is meddling. If our government was interested in letting companies spend money more efficiently, the cuts would be across the board. As is, they're favors.
They also convolude the tax code. 650 MORE pages added.

I would agree to an extent, but it is the right direction.

I gave an update with a across-the-board suggestion, as Cato does as well.
I look forward to the day when the NYT becomes less of a source of biased tripe passing for news, and more of a nuisance, much like prostitution and gambling is today.
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