News flash: Republicans don't actually believe any of the garbage they spout about how their tax plan will "work" and pay for itself with new economic growth. No sense in bashing them for being stupid and irresponsible, or for lying about everything. It's really very simple: they simply don't care. They are taking care of themselves here and now. They have absolutely no concern about what happens to the lower classes or to the country itself.
4
History of labor shows that the working class people got raises not because the corporate taxes were lowered but because workers form unions and fight to get raises.
6
The lesson we must take away from this, is that it's time to have an independent investigation of our government, including the Supreme Court, Congress, and the President for fraud, racketeering, and treason.
Money is speech, trickle down, . . .
Right.
2
By yelling wolf to often, with their daily, evne hourly bashing of Trump and denying his Presidency at every opportunity, the NYT has lost all credibility to rationally criticize the Republican tax plan. Nobody, except liberal sycophants, is listening.
1
You guessed it, the NYT's suggestion for cutting corporate taxes is actually to raise them. First the NYT indicates that the current effective tax rate is 19%, so when you get rid of all deductions and apply a tax rate of 25% to 28%, surprise you've increased corporate taxes by 6% to 9%. Then the NYT wants to pile on a value added tax, a carbon tax and a financial transactions tax. Who knows what the effective tax rate is after all that nonsense.
The NYT also argues that cutting taxes doesn't increase economic growth or create jobs. That may true. If it is then it is also true that increasing taxes doesn't cause economic growth or create jobs either. You can't have it both ways.
I never read or hear anyone say anything about lower tax rate incentives. What don't these overpaid & over-benefitted senators & congress come up with some corporate & individual tax incentives like hire x number of employees and pay competitive salaries and your corp tax rate goes down. If a couple only conceives a max of 2 kids they get a break, if they have more then 2, no break. Give smokers and overweight people incentives to lose weight by giving them a tax break for getting fit & healthy. Tax incentives would be a great tool. The businesses that don't pay fair competitive salaries & benefits to employees don't get tax breaks. Give big companies evaluations like they do restaurants in NYC. Set a criteria & those that get grades of A or B get tax breaks.
1
To expect the Republican Party to stop being a fierce advocate of wealth moving upward to their donors (AKA, increasing inequality) would be like expecting lions to become vegetarians.
3
This tax cut bill is the first step. When the deficits rise from them, Republicans will go after Social Security, Medicare, and Medicaid, claiming we can't afford them any longer. Paul Ryan admitted as much in his public statements. Republicans have been against any programs that help working people forever, and it has gotten much worse since the 1980's. Their ultimate goal is to get rid of all of those programs. Unfortunately, they have a propaganda machine that has convinced many working people to vote against their interests, especially in red states. The Republican Party is being taken over by the extreme right-wingers, and unless working people wake up, things are going to get a lot worse.
8
If you look at the graph comparing effective and statutory tax rates, you'll notice something interesting. The major European economies and Japan, along with the G-7 average, all have an effective tax rate almost exactly ten percentage points below the statutory level. The US effective tax rate is more than twenty points below statutory. You can compare this difference to our next nearest neighbor, Canada.
You'll find a we're actually right in line with the Canadian standard. Europe and parts of Asia typical have an effective tax rate around 70% of the statutory rate. In North America, the percentage is apparently more like 50%.
However, if you reduce the statutory tax rate from around 40% to around to 20% without closing any loop holes, look how the ratio changes. The US now has only a 10% gap between effective and statutory taxes. Suddenly we look morally superior even though nothing has actually changed.
If anything, the gap will probably widen back out to a ratio consistent with the rest of the world. Effective taxes will most likely drop from 18 percent to 12 or even 9 percent.
In other words: The effective rate as a percentage of the statutory rate is indicative of what companies expect to pay in taxes. The United States is about to get taken to the cleaners under the Republican tax bill. Corporate taxes as a percentage of GDP are likely to go from 1.6% to 0.8% if this legislation passes. That's my guess anyway.
2
By borrowing from future generations (or on the back of higher middle class taxes), the heinous GOP tax scammers want to funnel money from corporations, which are already doing very well.
Why help the well (off) when the “sick” and disabled and retired persons are struggling already?
If the govt wants to borrow money, at the very least it should go for the “general Welfare” (as the Constitution puts it. Rather than for the wealthy, corporations or people or donors.
Rewarding donors financially is a type of bribery!
3
Calling the proposals by Republicans in the House and Senate is....well it's not reform. The goal needs to be paying for what we need and what we want. If we want to fight for another 16 years in the middle east then lets find a way to fully fund our military and what it needs to do so....put another way it comes down to priorities.
That said, starting with eliminating most loopholes. Level the playing field as they say. Flat rate on Corporate profits, no games with "over seas subsidiaries". As for pass throughs etc. nope, they are eliminated. a clear definition on what is a capital gain and again a flat rate...no loopholes.
On the individual side the progressive rate has worked when we were supposedly "great". lets stick with it. As we make more we get to pay alittle more. I know no one who has decided to stop making more because they had to pay a higher percentage.
On the Panama/Paradise papers - yes these things need to be shut down and doing so is beginning to happen - lets keep it up.
A note on corporations moving...good luck, yes you can do this but then what? More difficult to hire and fire, the state gets to take your factory, great uncertainty.
3
Lets not forget that Apple is now worth 900 BILLION dollars, not to mention the 800 million they have offshore. The fact is, most corporations with the exception of brick and mortar pay only 18% in taxes, after they've hidden money, written down, passed through, multi millions, wait, hundreds of millions of dollars. If the corporate tax rate were to be lowered to 20%, corporations would then have an effective rate of zero, or negative tax rate. How is that you say, how can a corporation pay ZERO in income tax, well here are 26 for an example.
https://www.huffingtonpost.com/2014/02/25/corporation-tax-rate_n_4855763...
These corporations want you and me to believe that they not only need lower taxes, but deserve them, after all they contribute more than their share. Or so they say. They will tell you that if they had more money, they could "invest" in RD, and other things, "create high paying jobs. If anyone should get a tax break it's small business. If they have their way, corporations will have an effective tax rate of zero, or negative rates, meaning that the tax break is worth more than the government would collect. The loss of revenue will cause the republicans to cut social programs like oh, Medicaid, Social Security, Education, bit post secondary and K-12, to name a few. We need to tell congress cut corporations taxes, and your're fired, if anything now is the time to raise corporate taxes, not cut them. That revenue has to be replaced.
3
Let's move away from a profit based metric which is infinitely malleable by clever accountants to a corporate sales tax. We tax you simply on sales. We don't care if you make or lose money. If you sell it in the US, you pay tax on it in the US. This could easily be tweaked to add an employee tax credit to incentivize domestic job creation. With all loop holes gone by definition, my bet is the rate would be very low, and the multi-nationals would have no place to run.
1
Tax on gross sales would be bad for high sales, low profit margin companies like grocery stores.
I think a tax credit for each US citizen employed full time in the US would be great.
There are several problems with editors' analysis. First of all, the emphasis on the effective tax rate is misplaced. It is the marginal tax rate that determines decision making. Take a simple example: $100,000 in income and a 50% tax rate. With no deductions or credits your tax is $50,000 and your effective tax rate is 50%. But let's say you have a $25,000 tax deduction (perhaps for investing in wind or solar power.) Now your taxable income is $75,000, you owe $37,500 and your effective tax rate is 37.5%. But that deduction reduced your taxes by $12,500 which is 50% of the deduction (and also the marginal tax rate.)
You can check this out your self when you do your taxes for 2017. Calculate (or have your accountant calculate) your tax before and after deductions and see if it reduces your taxes by the effective or marginal tax rate.
Another issue is the decline in corporate tax revenues as a percent of GDP. The primary reason for this is that many privately held and small business as converted to pass through entities where their income is only taxed once at the shareholder level. Note that individual income taxes have gone up while corporate taxes have gone down. This is why.
And finally, taxing the global income of US corporations whether repatriated or not makes it cost effective for foreign companies to buy US companies. BP only pays US taxes on its US operations. If it were US based, its tax bill would be higher. The Chinese would love this.
2
If corporations want to avoid paying taxes maybe they should get back to spending money on R&D, training and employee incentives like retirement benefits. Or does that take too much work and talent on the part of eadership. Much easier to sit on a pile of cash and flash it at Wall Street.
3
Sorry, Editorial Board, you got it wrong on corporate taxes. They do not need to be cut, they need to be raised. We have a preponderance of evidence that the 1950's corporate tax rates helped fund the interstate highway system, jobs, housing, and college educations for GIs, and allowed a robust middle class to emerge from the devastation of the Great Depression and austerity measures of WW2. I have ZERO empathy or tolerance for corporations getting a tax cut, period.
3
New revenue idea - increase the minimum wage. What ever happened to 'the customer comes first? Who is their customer but the middle class.
5
We have actually aided and abetted the republicans in their claims of high business taxes. As you said, the rate is 39 per cent, BUT it is never the actual rate due to loopholes. However, the fact that it is 39 per cent on paper allows the 'tax-cutter party' to flagrantly throw that figure around like it was one of the ten commandments. Maybe it should be lowered (business taxes) but then rigidly enforced to the letter. And no off-shore escape hatches left open.
1
If lower tax rates were the solution to business sucess, Italy would be the world's global powerhouse! The party of the rich, by the rich and for the rich really needs to come up with a more convincing story.
4
U.S. corporations are sitting on a mountain of cash now. They'll hire when they feel more demand for their product, and therefore have to increase production -- not before, unless they think they can steal market share from a competitor, which competitor will then cut jobs because they lost market share. Nope. This tax cut fraud is part of the Repubs "Starve the Beast" goal of defunding and then eliminating as much "big gubmint" as possible. Drag it into the bathtub and drown it. Still working on it, they are.
5
Before you get too excited about a carbon tax providing a long-term income stream consider this: The point of a carbon tax is to get us to stop using carbon. If it works, 20 or 25 years down the road our carbon use will slow to a trickle and so will the revenue.
Forget about the revenue neutral baloney, too. The revenue should only be used to combat climate change - credits for solar panels, electric vehicles, storage devices, and oh yes, sea walls and relocating people in low-lying areas.
2
Bravo, NYT Editorial Board. The pragmatism of NOT ceding our nation's interest in collecting taxes from the wealthy and corporations IS AN URGENT MATTER.
However, my caveat, my lonely opinion: Don't we need an expanded enforcement vision for Kimberly Clausing's idea? I can conceive of corrupt dictators that would just take a cut to keep off-shore profits hidden. Moreover, in the foreseeable future, is there really any chance for our Congress supporting an augmentation of worldwide corporate taxation? Why hand Republicans a Self Destruct button now?
Also, I know we're talking corporations, but I think the revelation - that 31,000-plus ultra wealthy Americans are already hiding their annual gains off-shore - DEMANDS that any Tax Code Revision RETAIN the Alternative Minimum Tax. My opinion is that our Congress needs to look into any ideas that the IRS has to create a corporate version of the Alternative Minimum Tax for the likes of Apple, Nike, Allergan, Facebook, and Uber. This would serve as a good 'first' message to those American corporations that are thinking of going down that same unpatriotic road.
2
When looking for new revenue to offset a modest corporate tax cut we should consider a wealth tax, as suggested by Thomas Piketty, on all US citizens, regardless of where they shelter their assets.
4
The economy doesn't need a small number of people who can afford 1000 new toilets. It needs thousands who can afford 1 new toilet
5
IT is as old as human beings, the grabbing of it all, by a few rich and powerful, Kings tyrants oligarchs authoritarian dictators...
4
See the pattern. As revenue, jobs, public services are removed from the country to increase profits, the downward living standards, insecurity and instability of the average citizen worsens.
With both parties dependent on big corporate donors to run for office at all levels of govt, the future of exploitive, authoritarian candidates for president will increase. Some of them may be more disguised and benign-seeming than Trump is.
The Democrats just have be somewhat better than the appalling Gop rw radicals to win some elections. That's a very low standard.
The Times and TV news don't even discuss campaign finance and it's poisoning of our democratic process. US media is not living up to their civic duty to inform the public of issues affecting our lives, even as the media is so proud of its 1st amendment protections. The media profits from our campaign finance system with big profits from campaign ads. But it's time to start tracing cause and effect.
If taxes on corporations are simply defined as 'confiscation' by intrusive big govt on the road to tyranny, then US democracy itself is on the road to ruin.
6
This idea of "effective tax rate" is interesting. It's used as if there's an objectively correct definition of income, and then there's tax definitions, and all variances are loopholes.
Actually it's "tax paid as a percent of GAAP income." GAAP is how accountants require us to report our income to our investors. Tax income, a different number, comes from how congress requires us to report income.
Both GAAP and tax are frankly byzantine horrors, but for different reasons.
Tax is a horror of 100 years of political pushme-pullyou. GAAP is a horror caused by impractical pursuit of theoretical philosophical perfection, mixed with hard and fast rules where the philosophers threw up their hands at the impossibility of their dream.
BOTH distort good business decisions and undermine important social policy in hidden ways.
But I'd sign up in a minute if the tax bill said: "Just pay 18.5% of your GAAP income in tax, and be done, regardless of your business type. When you pay a dividend/distribution, your owners will pay taxes on the pre-tax amount, with credit (not below net zero tax) for the 18.5%."
Business would cut accounting costs in half. Socially? Also better. Business likes telling investors they make a lot, and likes telling the tax guy they only make a little. If they have to report the same figure to both - games get cancelled out.
And for a brief shining moment we'd all know what we were talking about.
4
Regarding repatriating money held off shore at a reduced rate, why should corporations be rewarded for past tax-avoidant behavior? I think that taxes on repatriated money should be (a) required and unavoidable, and (b) at a higher rate as a punishment for previous tax shenanigans.
3
This proposal by the editorial board is the best proposal I've ever heard. It follows closely a book I read on the subject: "Treasure Islands," by Nick Shaxson. He had similar recommendations. Another thing we need to do is to punish those "Islands" with banks that hide cash flow of shell companies, shadow banks, the rich (including the Queen of England), drug lords and Putin's thugs. We need transparency in banking just as we have in every other business. Otherwise, your proposal will fail. There's always some sleazy banker or lawyer willing to help the rich avoid support their native country: the USA.
4
World wide combined reporting with formulary apportionment has been proposed as a viable alternative to the current system for many years. It's no panacea -- it may not even create any jobs -- but it's better than what is available now. What is surprising is that it took so many years for the Times editorial staff to "discover" it. To paraphrase John Maynard Lord Keynes, "Practical men of affairs are in the thrall of dead academic scribblers." I suppose all those who support worldwide combined reporting with formulary apportionment will have to die before it is adopted. C'est la vie.
2
"Lawmakers will need to consider new sources of revenue, including a value-added tax, a carbon tax and a financial transactions tax."
The only thing missing from James Bennet & Co.'s list is to repeal the Internet Tax Freedom Act, and institute a tax on email transmissions.
2
The single biggest reason that large corporations are able to lower their effective tax rates is because they structure operations and financial flows to be taxed in the lowest tax rate countries possible. If the tax rate differential between the US and for example, Ireland were not as extreme, there would be less incentive to move taxable activity from the US to Ireland. In my view, the main reason for lower corporate tax rates is not to give the corporations or the wealthy a tax break, but rather to increase the tax base that is subject to US tax rates. The high tax rates give corporations an incentive (and arguably a duty) to move activity from the US to lower tax rate countries where possible.
1
NYT, overall excellent editorial, thanks. Please though drop any VAT tax from consideration. The overall costs are largely hidden, it is a regressive tax on what people need to buy, and it would harm about 70% of the US economy which is consumption driven. Do find away to bring tax on overseas multinational corps profits home, suggested approaches have merit.
Overall, my vote for the present would be essentially to do nothing, really. Economy continuing to grow, stocks at an all time high. No time for a sugar high from an unneeded corporation tax reduction leading to a deeper recession, sooner. US average effective corp tax rate is low among advanced economies, as you point out. Essentially tax cuts are a mistake, add more to the $20 Trillion US debt with ongoing deficits. Do get rid of the "carried interest" loophole.
Tax simplification > as an individual and C corp owner taxpayer, I have often joked with my CPA (it would cut his income but it is true) that the easiest tax simplification would be little or no changes to the code. (There is no way for a short form tax return, if itemized deductions are continued, which I believe overall they should be. Are medical expenses over a reasonable threshold not an appropriate support for extreme circumstances, rather than a loophole, for example?)
3
The US tax system is indeed complex. If liberals want to regain white middle class voters we will need a rallying cry about taxes as simple as, and more honest than, the Republican "cut taxes". Explaining in depth the effects of tax policy in the NY Times isn't going to sway any Trump voter who would suffer from the Republican proposals, and it will only make wealthy Trump voters titter with glee.
1
Many underdeveloped countries eagerly court multinationals by excusing them from taxes, from unions and rules protecting workers, from regulations which save their lands from becoming toxic wastelands. In order to make this work, there needs to be agreement that it is necessary to impose rules upon international businesses because current practice encourages corporations to avoid paying taxes even though they enjoy the benefits of publically supported infrastructure, courts, and protections from criminal activities against them by states. To do that means convincing big and small countries to stop competing with each other by under taxing and under regulating the operations of multinationals to attract them -- which drives a race to the bottom that produces long term problems for all countries. If that could be arranged, then it would be possible to establish tax policies which are as low as the market will tolerate without allowing multinationals to exploit everyone without regards to anything but their own profits.
US states and even municipalities compete for factories with tax holidays too.
People seem to have very different ideas about when a deduction is a “loophole.”
Here's a hypothetical example. BIGCO Intl has 2 subsidiaries, BIGCOUS and BIGCOLTR. BIGCOUS sells a piece of machinery in the USA for $20,000 which costs it $19,000, for a profit of $1.000. It imports a number of components from BIGCOLTR for which it pays BIGCOLTR $10,000. It costs BIGCOLTR $6,000 to produce these, for a profit of $4000. BIGCO Intl. earns a total profit of $5000. Then the tax rate in the USA drops from 32% to 20% and BIGCO Intl. decides it will have BIGCOUS only pay BIGCOLTR $7000, still selling the product for $20,000, their cost is now $16,000, profit $4,000. BIGCOLTR now made only $1,000 profit, so BIGCO Intl.'s profit is still $5000 per unit. The US taxes went from $320 (32% of $1000) to $800 (20% of $4000) per unit sold. Cut away enough taxes and regulations and BIGCOUS might end up producing more of the components right here in the US, meaning more jobs and even more revenue (20% of the whole $5,000 profit). This was a simplified example, as shipping costs, fixed vs variable costs, etc. weren't even considered, but hopefully it will help someone understand what's going on.
Almost right... BIGCOLTR is actually paying brand and process license fees to BIGCOCI (Cayman Island) of 3500 leaving only 500 to be taxes in BIGCOLTR. Meanwhile BIGCOUS is paying 500 in brand and process license fees to BIGCOCI reducing their US taxable income to $500. BIGCOCI pays an effective tax rate of 4%... guess how much the profit in BIGCOUS will be allowed to increase at a tax rate of 20%? Correct it will stay exactly the sane as it was already as small as they could legally make it.
This is just a simple example to show how these things work.
1
The tax system needs reformation, by people with far more expertise than I. But we can start with the political reform necessary to kickstart the real tax / budget reform with one simple law:
No state shall receive more in combined federal spending than it provides the federal government in tax revenue.
That simple law would put a quick stop to all the Republicans that bring home the federal bacon but never pay for it.
I grew up understanding that we all need to take care of each other; that taking care of each other is core to what it means to be an American. And I still believe strongly in that.
But the current system that allows politicians from net-taker states to cater to super wealthy donors at the policy and personal expense of their home constituents, subsidized by net payer states that generally do vote for the common good, will never be fixed until Mitch McConnell (top 10 net taker state), Paul Ryan (top 15) and their ilk have to face voters that have lost the federal subsidies from the 14 net payer states that keep them afloat. (Numbers based on 2014 WalletHub study).
dont tax income, tax wealth.
the market value of a publicly held corporation includes its income,
so tax its public value.
same for real estate and all other wealth.
as for 2.6 trillion in cash hidden in tax havens like Bermuda
invade Bermuda!
and make it another state of the united states.
same goes for ireland.
1
What Congress needs to do, but refuses and that's across party lines, is eliminate the loopholes. And I'm not sure of the data source here - Canada reduced it's corporate tax to 12% in 2015, and that's their statutory rate. Guess you picked the month before that was reduced? But lying about taxes helps no one.
Europe doesn't collect it's taxes; it is a source of civil pride to avoid taxation, especially at the individual level. Friends that have worked there tell me you are on your honor to report earnings. No idea how the 'dance' works for corporations, but I'm sure of one thing - the stats lie. And yes, the US does have the highest tax rate.
While the NYTimes would like to pretend that rate doesn't hit corporations, I can tell you it hits small businesses not 'protected' under tax law via subsidy or loophole because someone in Congress wanted to tell their constituents back home that they were 'looking out for them.' Congress is willing to give away the farm and then pretend it's the greed of the rich that eats away at revenues, but it is Congress that is eating away at revenues and then looking to blame the rich (Dems), those not working but able (Reps).
Until the Congress eliminates loopholes, small businesses will bear the brunt of a 39% tax rate. But then, we'd need to simplify the code, make it transparent - something Congress is loath to do, especially Dems after the passing of the ACA (before we could read it). That is no reason not to lower the rate.
In addition to rewarding their corporate pals, they set the country up for a fiscal crisis that will end in a collapse of entitlement programs such as social security, medicare, and medicaid. As with Obamacare, if you can't beat it, just defund it.
1
Trump and his billionaire cabinet of corporate insiders are looking to help themselves and no one else;nothing in their plan helps working Americans, but it is full of gifts of tax breaks for themselves and wealth donors. The 35% tax rate is never paid because with loopholes it comes out to 20%;If they reduce the corporate tax rate to 20%, corporations with pay virtually nothing;the GOP are all double-talkers and Ryan is the worst;Corporations have made unheard of profits for years and HAVE NOT CREATED ANY JOBS WITH THEIR EXCESS MONEY, NOR HAVE THEY INCREASED WORKERS WAGES WITH THAT MONEY, NOR HAVE THEY OFFERED BETTER BENEFITS WITH THAT MONEY, SUCH AS A DEFINED PENSION PLAN;corp. have only paid their top execs obscene amounts of money and helped shareholders, not working Americans;no inheritance tax being paid helps the richest of the rich and SHOULD NOT BE ALLOWED, EVER. The GOP plan drives up the deficit drastically, but all of a sudden the GOP stopped screaming about raising the deficit, because they are helping their donors, who help them;AND WHAT'S WORSE, the GOP want to balance the tax give away plan on the backs of the American workers: by limiting the already hideous 401K plans, removing state income tax deductions, and real estate tax deductions, the only options the middle class has. The corporations and their wealth have not created any new jobs; everything ryan says is a lie
1
States license corporations and the feds regulate them. They want access to the rich American market but they don't want to pay taxes here.
Corporations take full advantage of the tax code and offshore tax shelters to shirk their tax obligation for making such large profits in the U.S.
If corporations are people, they should pay their fair share of taxes. As it is, the rest of us are providing the biggest, most reliable, most lucrative market and a secure operating environment and we are paying their way.
I don't think the GOP is interested in balancing the budget or reducing the deficit - at least, not yet. Not until it's mathematically impossible to do so without exploding half (or more) of the government. That's the real objective here.
Home of the ’corporate ‘theif’, land of the ‘wage’ slave.
With respect for WEB DuBois.
So, if I have this right, this tax overhaul can only be about rewarding the donor class ( Koch Brothers, Sheldon, Steve, et. al., Wall Street, etc. ) for all the Citizens United sponsored campaign lucre our so-called "elected" ( or is it selected ) officials "need" in order to keep, or is it, make America "great" again?
K, got it. Thanks!
When will someone blow a hole in the argument that all we have to do is increase growth by .4 percent - "such a small amount." OK. I'll do it. The reality is that we have to increase growth by 20-25% (from 2% to 2.4% - or thereabouts). When you look at it in those terms, it is hardly a small amount/effort. Once again, politicians are playing games with statistics to deceive the public. This spin is truly outrageous.
1
Never mind all the intricacies of the economy, most of which are unnecessary and serve only to confuse the public. The bottom line is that while corporations control their own regulation (and they do), and CEOs/CFOs receive ridiculous "compensation", the average US citizen will carry the load of taxation. Tax reform for the benefit of same must include simplification in general and elimination of loopholes for the corporate world. Easy. (Does that very thick 6-volume stack of "Income Tax Regulations" in the photo not say something? Good grief! Ridiculous!)
1
I recommend skipping all the blather and blarney from the Right, and understanding this stuff very simply: this is a massive theft from massive donors to the GOP.
And, all the yakity-yak about how this'll increase business investment and therefore wages is simply yakity-yak for the suckers, many of whom really do Believe in the moral decency of wealthy people, the mercy of corporations, and the magical alakazaminess of the Laffer Curve.
It's real simple: they're at the trough, and swearing between happy grunts that sure, folks, we'll give you yours, uh, later.
1
“My donors are basically saying, ‘Get it done or don’t ever call me again,'” Rep. Chris Collins (R-N.Y.)
Can we protect this country from thieving oligarchs? the next month will tell.
If the subject is taxes and the information is being put out by the Republican party, then q.e.d. it is guaranteed to be all smoke and mirrors. And pay no attention to the little corporate flunky behind the curtain.
Tax payers are again asked to subsidize poor performance and executive incompetence and greed.
What is truly astonishing is that Republicans are able to sell these plans to minimum wage workers in Red States that rely on social programs to keep their head above water. And I might add live off transfers of federal tax dollars from blue states into their red states.
When I think about about it my head wants to explode at the stupidity of it all. How to reach these people and get them to understand most of what they think they know is wrong and they have been played for fools by the 1 percent for decades is the million dollar question. I guess Trump is right if you can fit it on a red cap made in China you can win with that.
Putting Republicans in charge of government finance is like putting vampires in charge of the blood bank.
The GOP has but one goal, make the rich richer, while soaking the middle class and cutting them off from needed services like healthcare. My sincere belief is that the GOP wants an elite class uncluttered by the masses of middle class and poor. They get to live in their world and starve the rest of us out. After all when you are rich and you die you win, right? You get more points for a mink lined coffin and I might add, the gold-plated bathrooms and toilets(you know who has the toilets right?). The one with more money when they die wins! Just like Steve Mnuchin's wife, wins because she spent more money on her clothes. Here is a hint to her, she could get them cheaper but then she would not have bragging rights. I see this whole thing as pretty much just that, bragging rights. The rich are rich, so they get to brag and look down their collective noses at the rest of us. They get to be beneficent and pass along a little money to the poor folks at Christmas and maybe some other times. Do not kid yourself, everyone of those people in the Congress and Senate are rich people. They would not be there if they weren't, AND they have healthcare. Most of us out here in America land have neither of those things. This my friends is the government of the people, by the people and for the people????? Yeah.
Since all the vaccuous talking-head TV media pundits and all the deceitful politicians of both these Vichy Parties working for this Disguised Global Capitalist Empire, merely 'posing' as our former country, love and continue to spout the word 'Transparency' let me tell you some real 'Transparency':
Tax Reform will ever so slowly do exactly nothing for 'we the 99% people'.
However 'Wealth Reform' --- like 'Land Reform' on that other older, looted, hoarded, monopolized, and taken-out-of productive use 'asset-class' of Land --- will very very quickly do wonders for 'we the 99% people' of America, and for 'our' (not their) economic democracy in breaking up the hoarded, monopolized, and taken-out-of productive use 'asset-class' of Wealth/Capital.
Your use of the words fairy tale are appropriate. You really think the NYT has more pull on Congress then a single lobbyist from a Big Donor, let alone their army. Please.
I do object to the use of your term "expensive lawyers." It will be the associates at those firms that do the grunt work, and they are not that expensive.
The RNC has never, NEVER, proposed anything different than what the DNC has proposed. Both Corporate Organizations have the same goal.....the preservation for eternity of an Industrial Age Tax Code.....central govt taxation of "income" to provide a central govt with revenues to promote and CONTROL a "private sector" economy, that simply grows and grows, and grows....
Call it New Deal, Great Society, Morning in America, Trickle-Down, Supply Side, 1000 Points of Light....whatever.....its all the same thing in a different package.
....
The Industrial Age has passed on......Incomes are shrinking. no matter how much denial there is from the top 10% who coincidently benefit from all this and write the rules. Golden Rule? remember? He with the Gold....makes the Rules.
...
We now live in the Electornic Age.....digital, global, instantaneous. Wall Street, despite all the nonsense shovelled in public, does little to increase productivity. Wall Street, always a gambling parlor, has devolved into an unregulated ELECTRONIC gambling parlor, gaming the local US system versus time zones and instant financial transfers of puts and calls, hedges, offshore bank accounts, etc, etc.........And THIS is where the economy is growing, exponentially .... Tax Free.
...
The Senate is PROHIBITED by our constitution from writing Tax Code....the Senate is the PROBLEM....not the solution.
Meanwhile, the House and its wet behind the ears, cub scout leadership....has shirked its responsibilities..
[With apologies to Carolyn Lee & Johnny Rodgers, and Frank Sinatra]
Fairy tales can come true
It can happen to you if you're Republican at heart
For it's hard, you will find
To be broad of mind if you're Republican at heart
You can go to extremes with impossible schemes
You can laugh when your dreams fall apart at the seams
And life gets more exciting with each passing day
And money is either in your bank or on it's way
Don't you know that it's worth
Every treasure on earth to be Republican at heart
For as rich as you are
It's much better by far to be Republican at heart
And if you should survive to a hundred and five
Look at all you'll spend out of bein' alive
And here is the best part, you have a head start
If you are among the very Republican at heart
Note that expensing new equipment, rather than depreciating it over years, makes it cheaper and more attractive for companies to replace people with machines.
The Republican's "plan" would thus hurt employment (relative to what would happen without immediate expensing). That doesn't seem to fit with their promises of wage growth, as the supply of labor will rise while the demand for labor will fall.
It's hard to decide whether to call the "plan" misguided, deceptive, stupid, or just plain greedy.
2
I am saddened to see American Citizens reduced to posting ineffectual complaints in this and other forums. And even the ballot box has become tainted with Russian hacking and Trump's "fake-news".
...
It is sad indeed to see this once great country -- A Shining City On A Hill --
but no more. A last hurrah and salute to the once and future king.
Once again, Trump and the Republicans robbing American people in broad daylight. How have we allowed it to come to this? Where are America’s “checks and balances?” Democrats, where are you?
17
Better yet, what is preventing the Democrats from proposing this? Take the leadership role and make a case.
1
Marie Antoinette: "Let them eat cake."
Donald Trump: "Let them eat a postcard-sized tax form."
The republican tax strategy has been the same beginning with Ronald Reagan.
Starve the federal government of revenues needed to administer social programs and maintain a consistent level of social freedoms across the country in order to strengthen state political power. See Texas.
Trickle down economics is a farce and always has been a farce. Republicans don't care and neither does most of the economically illiterate electorate. See Kansas.
Fiscal policy is a bit like climate science. Politicians and illiterate people can gratify their immediate and very short term benefits while damning their grandchildren with the burdens of paying for today's self aggrandizement.
1
Just for once it would be awesome if Congress would actually tell the true story about the source of the justification for their tax cut sound bites that describe what they want Americans to believe. Instead they spout lies that every single Republican will believe because Democrats and all other critics of the plan are liars. In fact everyone that disagrees in any way at at all is a liar and purveyor of fake news.
1
The Republicans are the party of unmitigated greed. Their warm Christian hearts can't get their hands on enough money. What a conflicted group of souls.
What a valuable information you just gave us, clear and concise, so much different from the fraud republicans are trying to shovel down our throats, by lying and painting a rosy picture that any savings will be channeled for a boost in labor's salary and re-investment to enhance the economy. Do they take us for stupids? And the hypocrisy of these deficit hawks, now willing to convert the U.S. in a debt-ridden country, so they can appease their rich donors...and keep their miserable seats in congress? How low will they go, in mimicking our fraudster in chief? Don't take it the wrong way, tax reform is an urgent matter, and so is the need to close tax loopholes; but the current proposal is a sick joke on us.
If you watch FOX you will find that the people who crafted this bill are happy to go on air to tell you how everything the NYTimes has printed here is false. They see only what they want to see and insist that the average person will benefit.
Well, I know zero about economics, but you don't have to be a financial wizard to see how this bill won't work. I understand that if we are trillions of dollars in debt, if corporations and rich people can bury most of their money off shore so they pay very little, if we foster bigger and faster growth of big multi-national corporations with the idea that this will bring secure factory jobs back to the USA, then we are a pathetic lot indeed. The people who lose are the ones who voted for the GOP representatives in congress.
What working people want is simple: Tax the rich fairly and keep the tax system transparent. Tax the rich with higher rates. Make it illegal to hide money off shore anywhere. Make it illegal for the POTUS to not reveal his tax returns. Give tax breaks to those corporations who do all their manufacturing on American soil (ha!)
The GOP will pass a bill that the "Trump base" will think is great. Four years from now when things are much worse all the way around, everywhere, they will blame Obama and Hillary, carry a few more guns, go to church to complain about "homos" and feel victimized, all the while not knowing they created the victimization themselves.
1
Help! If the effective tax rate (US and State) is 18%, why cannot the tax rate be lowered to 20% and have the new law be revenue neutral???? Instead it seems to be blowing a big hole in the debt and deficit. Someone.. NYT? Help me understand.
A 39% nominal rate is the foundation for the 18% effective rate after various deductions and tax credits. If the new nominal rate is made to be 20%, the effective rate will be even lower unless all loopholes are eliminated.
1
Right on!
But Donald John Trump will not disclose his personal and family income tax returns and business records so we the American people know how this looming Republican Party Congressional corporate tax scam impacts him and his family. Having failed to divest all of his assets and put them in a blind-trust we need to know how much Trump's temporary occupation of the Oval Office of our White House is being converted into a profitable outpost of his House of Trump.
Moreover, the Republican Party is being misled by the tiny tinny toy poodle puppy Speaker of the House Paul Davis Ryan. Ryan has been on the government benefits and employment welfare dole since his father died when he was a teen. Yet Ryan was never bravely, honorable and unpatriotic to ever wear an American military uniform. Nor has Ryan ever been humble, humane and empathetic to ever volunteer to serve in any community human civil rights capacity. Ryan's parading prancing preening pretension that he is a deeply intellectual policy wonk has been exposed as a farce.
While Senate Republican Party majority leader Addison Mitchell McConnell, Jr. has been working hard to make Barack Hussein Obama a one-term President. Confederate Mitch is still trying to reverse the outcomes of the Civil War and Civil Rights eras.
The triumvirate of Trump, Ryan and McConnell will dismiss this as more "Fake News" from "the failing New York Times." And await further orders from Vladimir Vladimirovich Putin.
1
The Republicans are irresponsible thieves. Their ridiculous posturing about the national debt during the Obama administration is now, once again, proven to be a sordid lie. They will bankrupt the nation and kill people if they can sneak another blow to the ACA into their heinous tax legislation.
We are being doomed by these destructo-political hacks.
1
"the United States and other countries ought to tax profits that corporations earn from sales inside their borders"
This makes so much sense to me. If the profits are earned in the US, then the corporations should pay taxes on those profits in the US (same for other countries as well). It is the Country's economy and population who enable those profits, the corporations should in turn pay taxes to support those economies and population.
actually, the U.S. taxes corporation on worldwide income, so that includes sales outside the U.S. borders. Does this make as much sense to you?
Most Americans realize that the Oligarchs are running our country, and see the country as only as a means of increasing their wealth.
Th Oligarchs know that we know, but feel secure that there is nothing thing that we can do.
They control all branches of government.
The conservative Supreme Court says that "money talks", when they say that "money is speech". It's sort of $1 equals 1 vote.
We truly need to move beyond rhetoric at some point if there is going to be change.
We need solutions.
But, are there any?
Editorial Board, get to the heart of the matter. Greed, how do we control the human penchant for greed? It's hard-wired into us and can be a boon, yet it can also destroy us when it is allowed to run amok.
Capitalism is a good thing but there is human nature to contend with like Marx's not realizing that if you give a poor man (a Communist) money he will turn into a capitalist.
We allow that corporations are people, yet if a person is caught with two sets of books cooking his profits will end up in jail in a heartbeat - well, not always, look at Trump when he was a private citizen. Our system of the worship of money allows for this hypocrisy.
Nothing will change until we acknowledge that human nature is imperfect, but what imperfect human is going to fix the imperfection? We try, but the smell of green is just too powerful an aphrodisiac.
Maybe, if we had a more equitable society where the average person is not panicked about surviving retirement (or even finding a decent paying job) and financial devastation due to illness - (or college loans!) the pressure cooker that is America today would ease up a bit and greed would be a more balanced trait? But we need to acknowledge the disease before we look for a cure of having to deal with a gazillion page tax code.
1
All good ideas. Many economists, former legislators, etc, have been pitching similar ideas.
Problem is, the House and Senate Repubs and their twisted ideas about tax reform and how they cling to the old Trickle down myth. They cling to their myths like barnacles. Trump thinks its real because when he got his breaks, or maybe earned more - he gave himself a raise. Maybe even gave a little to his kids and wife. But should we expect him to know the facts based realities? I know I dont, he's never cared for them, ain't gonna happen now.
This is all compounded by the Repubs rush to a 2017 legislative win. Their desperation means they will not consider that which isnt already in their playbook. Better ideas dont appeal to those who dont know they're stuck in the mud of their of mythologies.
9
Why not tax the owners & executives at 1950s tax rates? Taxing corporations just leads to tax avoidance sceams ala Panama papers
1
Carte Blanche corporate tax cuts are akin to shooting darts in every direction in hopes of striking a target. The US is competing with nations that can—and do—plan their economies in ways that are anathema to pure free marketers. We need to extract value from profit produced in the US, enabled by our education and infrastructure, which we all have paid for. Our parties must work together to make this happen. Shame on all of our politicians for allowing this situation to exist in the first place! We need a combination of carrots and sticks, as with most behavioral change. Let’s get on with it, while we still have a consumer base to protect!
1
Great article, it should be read out loud to all, esp congress and POTUS. The percent of income, payroll and corporate taxes by GDP is quite telling of imbalance. There is no way corporations will ever self correct FOR social needs. I really love the Kimberly Clausing idea of ALL countries taxing corporations profits from within their borders. Everything else within the tax cuts is noise and services no greater needs of society - which is what taxes are meant to uphold.
I ageee that the Corporate tax rate should be around 25%, but the effective tax rate will always be lower due to R&D credits. I believe that carried interest should be compensation taxed at ordinary tax rates. This would be true tax reform.
The corporate tax rate is 35%, but the effective tax rate is 18.5%, which just about half the stated rate. This reminds me of weight loss efforts; there's the target caloric intake and then there's the actual caloric intake. These two intakes are often very different; one is real, the other can be fantasy.
So the editors recommend lowering the corporate tax rate from 35% to 25-28%. Recommend all you want, but what will corporations really pay? If past practice holds, the effective rate would be some 15%, which is even less than the 20% in a version of the Republican corporate tax plan.
So there is an accompanying recommendation of closing loopholes, such as those described in the Panama Papers and the Paradise Papers. How about lowering the stated corporate tax rate as corporations give up their their tax avoidance schemes? Back to the weight loss analogy; dieters can have more generous caloric goals if they work out regularly. Fair enough, but it's iffy to indulge first, with promises to work out later.
1
It is the same old same old at the Times. You are the queens of corporate tax loopholes.
You repeat the tired old claim about how, because of loopholes, the effective tax on corporations is far lower than the nominal rate.
But here's what you fail to tell your readers: (1) To take advantage of all of those loopholes corporations have to twist themselves into pretzels and do lots of economically stupid things that hurt their efficiency, and (2) the GOP plan begins to dismantle those loopholes (not enough, but tomorrow is another day).
The system of corporate tax loopholes is corrupt, inefficient and stupid. Meanwhile the US corporate income tax rate is absurdly high and does real damage to our economy. The GOP tax bills propose to do something about that.
It is time for the Times to stand up and be counted on the right side for a change.
2
The problem of taxes will not be solved until we have a public banking system and return to a sovereign currency. People forget that money has been turned into a fraudulent commodity itself, distorting the true value of goods and services, as well as how we perceive ourselves and others. There was a time when usury, speculation, and the imposition of debt-peonage were considered high-crimes; now they are the foundation of most of the international monetary-system and all of market-society. We need to deal with that as of yesterday...
Trump claims that the object of reducing corporate taxes is to return offshore money to the US and increase investment in American jobs. This is a good objective, but Trump and the Republicans are entirely disingenuous. The plan in fact is simply a huge tax cut for the wealthy.
The solution is simple, although there is no chance of it coming to pass.
If the G8 countries all got together and agreed that if a company earns a profit in any country, they pay taxes in that country, no matter where is their mythical head office.
Fair and simple.
"A 35% tax rate makes it hard for Americans to compete with foreign companies and ends up driving American businesses overseas."
I thought it was low wages overseas that American businesses were exploiting to fatten profits at the expense of their unemployed American customers who used to be able to afford to pay their own taxes. The exec-suite will keep the $3 to $7,000, that would have gone to higher wages, as bonuses for adding tax cut money to their bottom line for doing absolutely nothing.
The exec-suite and owners live an expense free life where everything - lunch, dinners at fancy restaurants, travel and hotel and thus vacations - are business expenses that are also tax deductible. So the tax payer employee gets to subsidize the high-life of their bosses!
If corporations brought home more jobs and increased wages (and therefore payroll taxes), kept their profits and assets on-shore we could afford to reduce corporate taxes. We could rebuild the infrastructure businesses depend on and profit from. Unfortunately businesses will fatten their obese bottom lines, pay higher bonuses to the exec-suite and maybe invest in another factory overseas.
I do not understand why powerful countries do not blockade, boycott or punish these tiny tax evasion enabling countries that threaten our economic national security.
Maximize profits means, trickle-down leaks of wealth from the top are verboten, or a sign of business incompetence. Only taxes get trickled down to the rest of us.
1
As a corollary of all that, we need the 12:1 CEO:serf pay ratio. Switzerland held a vote on that, where it failed; their loss could be our gain once we have a president again.
This article contains many good ideas. Its logical thinking using real numbers. It supports many contructive ways to spread fairness, reduce the financial burdens of the non-rich, and make all equally accountable. However, its these points that Republicans will never embrace. They have no desire to be fair to the majority of Americans in any shape or form.
"If Republicans worked with Democrats, they could reach a compromise to lower the top corporate tax rate to between 25 percent and 28 percent"
Wait, why? So they can keep offshoring anyway? Nope.
"The Right Way to Cut Corporate Taxes" is to raise them to Eisenhower levels, and punish offshorers (corporate and not) by invalidating their trademarks, trade secrets, and copyrights until they commit to staying and hiring in the US. Then all our new tax money can pay for free college, SPMFA, and even basic income, which (combined with ending the patent) means less out of corporate pockets and fuller individual ones. That in turn will yield an explosion, unhindered by personal poverty or corporate patent-defense worries, of labor, business, artistry, invention, and prosperity The Likes Of Which We've Never Seen Before.
Here is a "modest proposal." Eliminate corporate taxes as they now exist, and pass a constitutional amendment to deny corporations the ludicrous status of "persons," thus removing their protection under the 14th amendment and elsewhere. Then, start again on how corporations are to be regulated.
To think that a United States Congress that is as hopelessly and shamelessly captured by corporate interests as our current one is would do anything of real meaning for the working classes is pure fantasy.
There are two things happening here:
1. The continuing trend of wage, job, benefit, and wealth theft from the working classes by the corporation and their shareholders;
2. The starving of the federal government to eliminate government and the services and infrastructure benefits provided by government to the working classes and those that are without employment;
This “Tax Cut” is a massive theft from civil society by the corporation and the high net worth individual.
It’s a wealth transfer from the poor and working classes to the elites of our nation.
It is also a theft from the future by indebting the future with additional government debt.
That’s it, that’s all: Governance at its worst.
To think otherwise is the make-believe of the willingly ignorant, the lobbyist, and Libertarian.
If Congress really thinks this Tax Cut will put money in the pockets of the working classes, they should back the proposition with their personal fortunes.
Michael Bain
Glorieta, New Mexico
1
We need for Congress to repay the SS dedicated fund that they have been collecting the increasing payroll taxes for then spending (not saving as is the deal with the people for collecting them) them on giving away tax cuts and subsidies to corporations. That money has to come from corporations. We cannot continue with SS existing with a bank account full of IOU's especially since Congress has been threatening to end SS with the false pretense that it is broke instead of repaying the money they stole from it/us. As for Corporate behavior here at home the simplest fix is to re-regulate as we used to through the tax code require that they invest in creating long term living wage jobs here in the US and building factories here etc. That is how we were able to afford building the great society after WWII. Avoiding these duties to your country is not only not morally right it is in the long run self destructive. Note that this greed based drive is what has made Communist China our #1 danger and competitor. How is that greed driven result in anyway right? Making them rich did not make them democratic, why would it? We need corporations and financial entities all of whom are "small enough to drown in a bathtub" to paraphrase the traitor Grover Norquist. We are a nation not a loose group of people looking to variously cooperate then prey on one another. We need to have our Congress act in all of our best interests and that means profits will be limited by the needs of the Nation.
Oh, so corporations get to deduct tax money paid to other countries but I won't be able to deduct the tax money I pay to state and local governments? Yeah, that's fair.
The elephant in the room is the AMT, the alternative minimum tax. Discussions of tax rates and corporate taxes divert attention from the elimination of the AMT, which is estimated to cost from $80 billion dollars per year up to as much as $150 billion dollars per year. At the lower estimate, elimination of the AMT will be more than 50% of the 150 trillion deficit allowance.
All the hand waving about rates and corporate taxes and loopholes is classic magician diversion. The AMT is where the meat is.
I would be in favor of a corporate rate of 20 percent if it were a flat rate with no deductions possible. That would increase the money received by the government. I also like Clausing's idea that profits are taxed where sales take place rather than where one has a P.O. box. And, finally, perhaps one way of reducing the 1.7 trillion dollar hit would be to cut the military by 40 or 50 percent.
The GOP wants to tax corporations at 7%. They would reduce it to zero if they could. But, when it come to illegal immigrants they want them out of the country. One hundred percent. No compromises. They want to protect the tax cheats but are unwilling to budge on immigration. Again, the GOP shows it real self. Protection for the privileged wealthy, while the worker gets crumbs. GOP voters; the Republican doesn't care about your future, only theirs. Business only expands when there's business. The GOP is morally bankrupt.
November 13, 2017
Awesome Editorial for the Tax plan that is understood and clarified to all in the game of economic politics. The more we give counsel to the very nature of the social participation the better hold the legislative process to honest justifications that surely are way beyond formulaic intention but more for personalities that seek to be identified for personal / district powers politics -as always horse trading on many, many levels but the essence is beyond reasonable economic theory and projections that are deliverable for the record - except for having the NY Times diligently giving its expected and needed voice that is best to give ear.
jja Manhattan, N.Y.
1
Why is it so incredibly difficult to create a fair tax system that taxes all income at a fair and progressive series of tax rates, regardless of whether income comes from wages, investments, inheritance, corporate profits, or other? This is what American working men and women need and want, can understand, and would approve-------but this is what our cynically dishonest and beholden Congress will never deliver because they have no interest whatsoever in fulfilling their sworn responsibility to voters.
This might boil down to who spins information better.
The GOP portray their tax cuts as a means of boosting the economy and that US firms are currently taxed higher than in other developed countries. They are trying hard to justify the tax cuts as being beneficial to the middle classes whereas the real beneficiaries are the well-off and corporations. It's no coincidence that the latter are lobbying hard for tax cuts. I feel that most of the reasons given in favour of the tax cuts don't hold any water. Instead, they will result in much hardship as many welfare tax incentives will be sacrificed to enable the tax cuts. I get the impression that they are cutting taxes merely for the sake of doing so; because they need to be seen to be able to pass some major legislation.
Are Trump's base of supporters aware of the current effective corporate rate being comparable to other developed countries (as mentioned in this article)? I doubt it. They will probably only hear the misleading spiel being put out by the GOP, which is a pity.
Perhaps the GOP, instead of standing for the 'Grand Old Party', should stand for 'Group of Patricians' or 'Party of the Rich, By the Rich, For the Rich'. Across the pond they might be referred to as the 'Group of Plonkers'...
Regardless of what corporate tax rates are capital has only one goal and that is to chase cheap labor. These corporations will not return to the US and provide higher paying jobs.
For me with no kids, a $1.7 trillion tax break in the next few years with future generations having to worry about the debt is not a problem, but I still think it is a ridiculous idea that the corporate part of the tax break will be passed on to workers and not the stockholders or executives, the ones who have who pocketed all the recent productivity gains while doing all they can to lower wages thru union-busting, relocating to cheap labor locales, and profiting from massive immigration. Of course the stock market agrees with me, the runup obviously assumes the tax beaks will be used to increase profits.
The idea that this is good for workers is just a story to tell the suckers. We all know the Republicans are doing this because they believe in giving everything to the rich and/or they want to please their donors.
21
Just to clarify, you think a 1.1 trillion dollar tax break is okay because future generations having to worry about the debt, is not a problem, what makes you think it won't effect you in your lifetime, it will....The massive debt is a problem, because the 1.1 trillion is just the start, by 2024 it will be 5 trillion. And that,s just what the GOP is willing to add to it through these tax breaks for the rich. It will be much higher, because congress wants another 1.0 trillion to upgrade nuclear weapons. Where is the money for the people who fund government operations. Money will be taken out of any social program the GOP deems an entitlement, the fact is Medicaid is paid for out of my paycheck, as it is every US worker regardless of how much money we make.
Education, roads, bridges, our electrical grid, the list goes on, the big problem I have is corporations pay on average 18% income tax, if you lower the rate to 20%, corporations essentially get a free ride on the backs of US workers. Corporations aren't going to move any production lines back here, the labor is too expensive. They want a world where they pocket 99% of what they make, they get to enjoy a lifestyle most of will never get to see or experience. They want the comfort of calling the US their home base but they don't want to pay the cost to be here. Any member of congress that votes to lower corporate taxes, or to give well over a trillion dollars in tax breaks to the rich and uber rich, we should vote them out.
In the past this country has influenced elections in other countries in order to assure the election of foreign leaders sympathetic to American interests. You would think that with this kind of experience we would be able to prevent another country from influencing our elections to assure the election of leaders in this country sympathetic to another country’s interests. You would think. But now the shoe is on the other foot. I wonder if the globalization of this country’s major corporations, and the control those corporations (and those made rich by those corporations) have over our plutocracy helps explain these shenanigans.
The Republicans plan on exploding the deficit with this tax "reform" - Then will demand cuts to Social Security, Medicare, Medicaid, education and as many other programs that benefit the middle class and lower income workers. This is their playbook going back to Mr. Reagan.
2
Here is another suggestion that will eliminate all the difficulties with todays tax structure:
Eliminate taxes for Corporations.
Tax ALL INCOME to individuals at a standard rate based on a graduated scale.
Set the threshold to pay taxes at the living wage for that persons location.
Increase the tax rate in increments of income such that the expectation is to balance the budget.
Every quarter reevaluate these rates to assure the budget will be balanced.
By ALL INCOME I mean income from labor, investments and gifts from any source including from deceased family members.
This will totally simplify tax returns, free up a few million people from the tax service business, including the IRS, and allow corporations to do what they do best.....invest their earnings in growth.
2
This is precisely analogous to thinking you can train a chimp to run a nuclear reactor by tying bananas to the control rods.
You live in a complex, technologically-advanced society. All "it's real simple, you just..." solutions are dangerous.
Corporate tax rates should be zero. That way corporations would have no financial incentive to corrupt our political process. We would easily replace the lost tax revenues, less than 10% of our total revenues, when those non taxed profits flow through to stockholders and business owners and are then taxed at their current tax rates.
As far as cutting taxes to help workers and businesses. We need to eliminate the loopholes on FICA taxes and lower the rates from 15.6% to 9%, with half the savings going to workers and half to employers. That would be a $3,000 cut for an employee earning $100 K per year and another $3,000 cut for his/her employer.
That would be a tax cut that would directly reduce the cost of goods and services making American products and services less costly for American consumers and make them more competitive abroad while reducing the cost for hiring more workers. That change would also make medicare and social security solvent for the next 75 years and eliminate our annual budget deficit.
1
There is no right way to cut corporate taxes. Corporate taxes need to raised and the loopholes closed. Corporations need to pay more, a lot more.
1
GOP Tax Policy always starts with cutting tax revenues and kicks the can down the road on real spending reform. The GOP used to brand the Democrats as the party of "Tax and Spend." Time to brand the GOP as the party of simply SPENDING, they never manage to collect enough tax revenues to make lower taxes possible, and decades later people forget how we managed in 2000 to go from reducing total debt to now running up a $20 trillion debt. Tax policies that reduce revenues in the number one culprit and the tax cuts were all done by the GOP in the past 20 years.
1
You left out a crucial tax dodge. Consider the case of Amazon. For two decades it lost money quarter after quarter, yet grew into the powerhouse it is today, not by taking on debt in the conventional sense and paying interest instead of taxes. Instead, the wizardry of Jeff Bezos was to raise capital through stock sales and similar means, with no taxes due on investment. Investors took increasing stock price instead of earnings and dividends as Amazon's share sky-rocketed.
Many tech companies follow this strategy of making fortunes by losing money now, but none has done so with Bezos's panache. Even as its retail group became profitable, it has branches into areas like Amazon Prime which lose money for years while building customer habitual loyalty. Even I go to Amazon before Google or the store when shopping.
Investors are taxed when/if they sell AMZN stock, as they would with any other stock, but Amazon ducked the tax on profits for decades by netting losses. This suggests that the need at the federal level is for a revenue tax or VAT, not a tax on manipulatable quarterly profits.
Bezos is now reported to be worth $94.8 billion (2017) by Forbes. He lost money soooooo good!
1
So...no more tax credit for hiring veterans...no more subsidizing local school boards by allowing teachers to expense necessary instructional equipment and materials they've had to buy themselves...no more SALT... and on and on. When we know that the principal motivators behind this "reform" is being able to trot out a legislative win and benefit the most wealthy rather than enact good law and good policy, how is it that the Republicans just can't seem to give birth to anything that isn't so obviously punishing. How is it they can't stop hurting people? Is this Trump thing a communicable social disease? The concept of style becoming content couldn't be more apparent. We will deal with it in 2018.
1
Trumps claims that the US needs to become more competitive in the world. I thought that the USA was number one on the list of "best economies", followed by China and Japan. Does he know or feel (?) that we need to change the way we compete in order to become NUMBER ONE? We need to change the way we tax regular pay check earners, so that THEY become more competitive. We need to continue imposing high taxes on corporations and closing tax loops that go to benefit them further. We twist and churn discussing tax plans and their impact on large corporations. We need to address the little worker that is trying to do his/her best to survive under a system that is rigged by laws that the powerful have imposed on them. Who is watching out for the worker???
People, corporations are legal documents. Legal documents don't pay tax, we the people do.
Yeah, the corp tax may only be 18% AFTER they hire a small army of lawyers and accountants to eek out those deductions. Smaller businesses can't afford that and are already at a competitive disadvantage.
Anyway, as corps can't actually pay taxes, those taxes are REGRESSIVE. That means that people with lower wages are paying them. When you buy a tube of toothpaste (or anything else), part of that cost is going to pay the corporate tax.
Corporate taxation is also double taxation. Not only does the corp have to pay taxes directly out of its taxes, the owners pay again on dividends and capital gains. Liberals might want to dream those are only rich people, but a lot of people in the US who want to retire own 401ks that own stocks.
Corporations can hire people, give people raises and bonuses, lower prices, provide dividend income to retirees...or they can give the money to the gov't to buy more missiles.
The "right way" to implement corp taxes is to eliminate them entirely and raise the personal top marginal rates back where they were prior to Raygun. This would be a disincentive for the executives to run off with all the loot and bring back a more equitable distribution of the pie.
1
"Corporations can hire people, give people raises and bonuses, lower prices, provide dividend income to retirees...or they can give the money to the gov't to buy more missiles."
Do you really believe this? What incentive does a corporation have to raise wages or lower prices? Competition causes these not tax cuts. Competition is business at record lows. Workers only got raises with strong unions. Companies are in business to make money and return it to share holders. They don't care about your two cents in a 401k. They are concerned with the Carl Icahns of the world who own more than a fraction of a percent of a company. All of this tax spending will go to stock buy backs and the c-suite.
Yes, I agree I don't want my tax money going to buy more missiles and tax rates should go back to 1977 rates. If they really wanted to create jobs they would tax wages...
Thanks to The Times Editorial Board for a thoughtful, appropriately analytic, and well-written editorial. This is the very kind of understandable fact that needs to be on the table to guide us. I strongly encourage The Times to promulgate this piece far and wide across multiple media and platforms.
How might real solutions to real problems, along with a picture of what's really going on, be conveyed to Americans so we can understand? Money matters and international politics are not our forte.
1
And, what is really heinous here is that the R's, in their zeal to get something/anything done in a hurry, are attacking the individual side of the tax Code in order to "justify"/offset the corporate cut side, e.g., calling the deduction of state and local taxes (SALT), mortgage interest, medical expenses, etc. "loopholes,"which is absurd.
Just the elimination of SALT will have far reaching effects on states and localities that should be carefully studied, rather than tossed in just to justify business tax cuts.
BTW, reducing the corporate rate will reduce the actual, lower effective rate that most large companies pay, unless there somehow is a magic correlation in the reduction of corporate deductions, which there obviously isn't.
Trump, etc. should slow down and work on a stand-alone corporation tax bill. They won't. They are obsessed with getting something passed, and with accounting tricks/offsets that ostensibly avoid filibuster.
1
The Times is happy to offer up a host of ideas for new taxes. But there isn't a word about cutting spending. It is absurd to think America can simply tax it's way out of all it's problems. And to object to a 20% corporate tax rate because some of our largest companies currently use loopholes to get even lower rates is letting the tail wag the dog. A lower rate with far fewer loopholes gets the government our of the business of picking winners and losers, and hopefully puts a few lobbyists out of work.
2
I like the Australian franking credits system. A company paying corporate taxes passes those credits on, so dividends paid to shareholders do not attract tax a second time. Dividends paid by a company that does not pay tax will be taxed fully (at full income tax level).
2
The editorial says "A plausible compromise would let businesses repatriate all past profits accumulated overseas at a somewhat discounted rate, say 15 percent to 16 percent. All of this money could be used to rebuild America’s dilapidated infrastructure."
The rebuilding America's dilapidated infrastructure assumes no special-interest competition for the 15 percent to 16 percent of revenues. Foremost will be the defense contractors. Special interests and moneyed elites will quickly grab portions until nothing remains for the produce truck dodging potholes and rolling over deficient bridges on a farm to market road.
Our dilapidated infrastructure is sinking into the congressional swamp, pulled down in the grip of special interests. Abandon all hope of plausible compromise.
1
The chart in the editorial supports the opposite of what the editorial is advocating: the higher the tax rates, the greater the disparity between statutory tax rates and effective tax rates. If the effective corporate tax rate is 18% in the US, it hardly seems aggressive to lower the statutory rate to 20% and eliminate the loopholes that serve only to create deadweight loss and economic inefficiency, not to mention less investment in the United States. This is not that complex.
2
Good timing and good direction on the so called tax reform. I liked the thinking of the EB and there are some very good comments.
I would add to your recommendations, elimination of the "cap" on payroll taxes. This would make a dent in the huge income inequality in this country. Several of our Billionaires, notably Mr. Buffet, have questioned the need for the cap. Eliminating the cap on the large social insurance program funded by payroll taxes would boost the security of the Social Security Trust Fund and help it weather the surge in aging baby boomers. Eventually, as the reserves mount in the Trust Fund, we may be able to reduce the current tax rate that would help employed individuals and businesses or increase the payments to those that depend of SS as their only source of income.
The goal of any of our fiscal policy actions should be to increase the wages of working Americans, which are too low, and continue to make our society more egalitarian.
The US economy is amazingly strong and can be made even stronger by investment in infrastructure/public works,, improving the environment and hardening our distribution systems for electric power and communications against the certain ravages of global warming.
Eventually, the US will power its transportation and electric power with non-fossil energy sources simply because the fossil fuels are finite and what we have left is just too valuable to burn and blow out our tailpipes and smokestacks.
4
If Congress genuinely wanted to reform the tax code, it would oppose its use for making policy. Taxes should be used to raise revenue, and that is all. If Congress wants to support a particular policy, it should do so through legislation and appropriation. Of course if they did that, there would not be all the loopholes and credit favors to grant to potential campaign contributors. In addition, they would have to vote on policies and, thus, be put in a position to be held politically accountable.
Most Americans resent the tax system because they view it as unfair. Make it just about raising revenue, treat all income the same with progressive brackets, and everyone can fill out a 1040 in minutes rather than hours. If Congress wants to subsidize mortgage-holding homeowners, people with children, users of solar power, tobacco growers, 501 c3s, or any others as is currently done through the tax code, let them go on record and pass legislation granting the money. They should not be able to hide behind a pork-laden tax code so long and complex that I would bet not a single Member of Congress has actually read the whole thing.
Much of the discontent voters made evident in the last election resulted from a justified feeling "the system" is both unfair and unaccountable. Making taxes solely about raising revenue and forcing politicians to take a stand by having to vote on functional subsidies would be a good start to reawakening Americans' faith in "the system."
4
Of course we've set tax policies to encourage some things and discourage others since about 1776, but then it's a little hard to see how you decide what to spend the dough on without in any way considering policy.
The conceit that lowering corporate tax rates will increase workers’ wages and thereby increase GDP is not true. As economists such as Robert J. Gordon, the author of “The Rise and Fall of American Growth,” have pointed out, achieving greater productivity in order to reach 3 percent or more, per year, will face many systemic headwinds. Among these factors is an aging population, low birth rates in a number of states, Maine among these, lack of investment in infrastructure, income inequality, and a lack of innovation broad enough in scope to aid the entire economy. We certainly have great innovators, but none of these modern inventions and concepts equal the effect that was felt by inventions like electric light, the radio, mass transportation, and others.
The preposterous ideas of trickle-down economics have been proven to be empty promises and failed policy. It’s time for realism.
5
What I find fascinating about much of the discussion surrounding so-called loopholes, especially tax credits, is that there is no recognition that most of these credits are intended as a means of incentivizing behavior in furtherance of public policy.
The R&D credit incentivizes research and development. The low-income housing tax credit incentivizes institutional investors to invest in development affordable housing. The New Markets Tax credit incentivizes banks to invest in loans to businesses in low-income communities that create jobs and make goods and services available to residents of those communities. The Rehabilitation Tax Credit incentivizes investment in architecturally significant buildings, most of which are located in low income communities, both as a tool of preservation and as a means of generating economic activity in the communities in which these buildings are located.
By supporting these programs we are encouraging capital to be deployed where it is needed in a manner that is much more efficient and effective than if the investors claiming these credits (i.e., large corporations) paid more in taxes and then we relied on a government bureaucracy to do the same work. These programs are the epitome of "public-private partnership" and should be supported.
1
As another refer pointed out taxes should be about raising revenue and not hiding spending items inside the tax code. If lawmakers wanted to subsidize homeowners or clean energy they should do so explicitly and not bundle these in a Byzantine tax code.
1
These rational discussions of the "right way" to do tax cuts or anything else are based on the faulty premise that Republicans care about the economy or average citizens. Nothing we have seen since 1980--maybe 1960--supports that idea. Republicans have been running the country for the benefit of the rich. That explains all their efforts regardless of what they say. The tax rate on corporations is too high, and 20% is not a bad guess for the right rate, but none of that matters much as long as big corporations are allowed to dodge taxes so effectively. (It appears that many small business actually pay taxes.) The statistic that this piece does not report, that I think is even more revealing, is the sharp drop in the percentage of government revenue coming from corporate sources. It fell from around a third in the '50s to below 10% in the Reagan years. The actual tax take from business as a percent of GDP is close to the bottom for the developed world. The last thing this country needs right now is a tax cut. We need to get tax revenue back up to about 20% of GDP where it was when Clinton left office. To achieve that, the people--and remember corporations are people--who actually have money are going to have to pay, and that is not going to happen as long as Republicans run things.
2
The Republican tax cut proposals are frauds. The only winners are, like Trump’s family, the heirs of the very, very wealthy. American businesses and more than 90% of individual taxpayers will benefit not at all. In fact, a large number of ordinary individual tax payers will lose more in disposable income than they will gain from the proposed personal deduction increase.
Actually, the federal government needs more revenue, not less. Unless the states increase the often-not-progressive taxes they impose, without more federal revenue we won't be able to repair our infrastructure or to improve our educational system or to help people who suffer from hurricanes, earthquakes and unquenchionable fires or to prepare for climate change catastrophes.
The only way to correct our federal income tax code is to close all the loop holes provided for corporations and fund managers.
6
Taxing profits is a problematic strategy.
Profits can be manipulated.
Suggest a relatively small tax rate should be implemented on Income. (Income as defined by Fortune 500, that is sales or income derived via deposits). No deductions. No loopholes. No credits. No depreciation.
Current Federal Corporate Tax revenue can be generated on a 3% Tax on two-thirds of corporate income.
1
If we tax anything other than total income less the expenses of doing business or of being employed, we will be weakening the productivity of our economy.
1
"They would address this by slashing the rate to 20 percent, claiming that this would not only help companies but would also raise household income by $3,000 to $7,000, mainly in the form of higher wages."
Only the republicans would claim that a tax cut for corporations would result in much higher wages to their employees. That is so far fetched it's beyond belief. If the corporations did get that tax cut, it's a sure bet it would result in the corporations chief executives getting a huge bonus and the stockholders getting the rest in the form of a bonus stock dividend.
2
Successful salespeople stand in awe of the Republican capacity to completely ignore how corporations compete primarily through pricing, which is why labor will not get raises from corporate tax cuts unless or until a shortage of labor impedes meeting demand.
3
Finally someone mentions how the portion of corporate tax revenue has gone from 4% to 1.6% of GDP. Please also point out that corporations used to pay more than 30% of all the tax revenue collected in the 1950s and only contribute less than 10% today. The last thing we need is to reduce their share further.
8
Worse yet they benefit financially from a huge taxpayer funded Infrastructure and Technology development that we the people pay for via government agency investments. DOD, NASA, NIH-NCI- etc.
Think Epipen, key technology behind Apple products, internet, the passenger jets, even modern fracking technology, CRISPR technology, etc. All, by law given away to universities paid to do the work so they can spinoff to small firm and be bought at a handsome profit by Corporations.
Read "The Entrepreneurial Nation:....". Short snd informative about corporations, foreign included, are ripping us off.
How about a financial transactions tax as suggested? Why do I pay tax on socks but not on stocks?
43
It's not a bug, it's a feature desired by our for-corporate legal persons capitalist societal system.
I guess because socks will wear out and stocks should only get better with age?
Because everyone in the rest of the world would have to agree to it for it to be effective...
...and we can't even convince them to stop murdering each other.
Nobody is ever going to make rich people and rich corporations pay very much more -- if any more -- in taxes. They have Republicans, lawyers and accountants to see to that.
Nobody is ever going to make poor people pay very much more in taxes. You can’t get money out of a stone.
The people who will pay more will be us in the middle. That is the iron law of nature.
4
If middle class working families pay more, it is a corrupt political system not a law of nature.
Nobody is ever going to make poor people pay very much more
-- if anything -- in taxes. You can’t get money out of a stone.
1
Set he tax rate at 10 percent and the shady tax avoidance tricks will tend to disappear. Those who want the tax system to punish their political enemies should reconsider why they even want to live in a capitalist free country.
You raise taxes when the economy is growing too fast. Should we even tax companies? That's because we will still tax money when a person receives it, and corporate taxation means even the poorest mother buying diapers and formula is helping that corporation pay its taxes/ How can progressives sleep at night knowing that?
1
I think you have made a narcissistic religion out of the basic process of creating and sustaining fiat currencies, L'Osservatore. All competitive economies in the world are "mixed", with private sectors where spending is optional, and public sectors, where spending is mandatory.
The Republican party is in pretty bad shape when the purpose of their legislation is not to achieve a specific social goal, but the need for a win at any cost, in order to protect their electoral prospects. Do they really believe that corporations are going to give the money they save from the tax cuts to workers? Of course not, they are just trying to fool the people.
4
You can fool all of the people some of the time and some of the people all of the time. It is the latter group who believe in supply side economics.
Businesses operating in states like Tennessee and Texas already get a break from low state and property taxes. Their employees benefit from lower taxes than those in the Blue states and coastal metro areas. Yet instead of paying their workers more, they appear to let the lower taxes compensate, while still not paying them equivalent wages.
Yet in blue states, respectable companies (the ones that haven't run off to lower cost areas) do not appear to take issue with their own taxes or with paying their employees more to cover their employees increased costs.
Why should we expect this hand out to the low tax states to be any different?
4
The notorious "commerce clause" that obsesses so many "Federalist Society" lawyers empowers Congress to level the economic playing field between all states, should the people elect a Congress and Senate to deliver equal protection of the law nationwide.
The point about the difference between statutory rates and effective rates is excellent. It not only shows the politicians are talking out of ignorance or cynicism when they quote the statutory rate, it also shows the relative amount of loopholes when the difference between the statutory and effective rates is large.
2
Every Congresscritter spend hours per day dialing for campaign dollars and listening to demands for tax loopholes.
Former President (man do I miss him) Obama said it best while stumping for Clinton:
"He spent 70 years working for himself. What makes you think he's going to start working for you?"
8
Cutting the corporate tax rate to something in the mid-20's is sensible, provided loopholes are eliminated. What makes no sense is eliminating the estate tax and the AMT. These are taxes aimed at the very rich and removing them will do nothing to advance economic growth. The AMT, in particular, may need some tinkering, but certainly not elimination. The provisions regarding pass through income are also designed for the very rich and surely have no growth effects. The idea that cutting these taxes will have trickle down effects is simple nonsense.
3
The simplest, unavoidable way to tax corporations is to require they donate N% of stock to the federal government, where N is whatever level of taxation is deemed appropriate. N would appear to be about 19, even if corporations and their Republican lackeys prefer 0.
Instead of a cat-and-mouse game of chasing income, the government would receive proceeds in direct proportion to the stockholders.
What could be simpler or fairer?
1
So in five years the federal government would own the whole corporation? You do understand that we are talking about Income Tax not Equity Tax?
The corruption, rising inequality and frivolity of luxury goods all helped to destroy Rome. The GOP is merely hastening the decline and the inevitable belief that the republic is not worth saving.
2
This Republican tax plan just shows how greed and callousness can stunt people’s vision.
Republicans seem to believe that since the collapse of Soviet communism, they no longer have to fear a popular upheaval. That they can therefore squeeze the average taxpayer as hard as they like, for the benefit of their donors, and that those average taxpayers will just tug their forelocks.
Personally, I wouldn’t be so insouciant.
1
Tax Reform is needed but this GOP bill is not it. Corporations don't need a tax cut. As you point out they already pay tax at a very low effective rate. Business has moved overseas because of cheap labor not because of taxes.
The GOP bills close no loopholes, just eliminate every deduction an ordinary person currently has.
The real goal is transparent - to make the rich, richer and create a big deficit hole that will need to be filled by slashing every social program, Social Security, Medicare, Medicaid, etc. If they get their way there will be only rich and poor in this country, no more middle class. We may just end up with reverse immigration with a flood of economic refugees fleeing the U.S.
1
Republicans still believe in the Laffer Curve, a phony economic theory that sells asserthigh coing that statistical correlation implies causal relationship. It states that cutting taxes will increase tax revenue to the government. This was the well known trickle down theory. Trump government asserts high American corporate tax rate compared with the other industrial nations creates trade imbalance. This is possibly true. But the industrial states with lower tax rates also have a high value added tax (VAT) which is paid by all residents. Will the Congress create a VAT. Other countries with no VAT and lwer corporate taxes should be assessed an "equalization" import tax. It looks like Republicans do not like its employers (rich donors) paying any tax. Also, we are supposed to declare all our assets in other countries. Nt doing so is a federal crime. Now with Panama Papers and Paradise Papers, we know a lot of rich people who have broken the law. As Flynn would say "LOCk THEM UP!"
1
Yes - Lauffer helped Brownback in Kansas. Experiment was a failure so disastrous that tax cuts were rescinded by Republicans and Brownback's veto overridden by 2/3 majority. You can find articles on this in Forbes, WSJ, NYT, Bloomberg Businessweek to name 4 sources I have read.
Plus Kansas in-laws (all in 90's) were disgusted by Brownback and they are all republicans.
The proposed tax cuts are a cruel hoax perpetrated on working families. US corporations distributed $7.1 trillion dollars to shareholders over the past decade in the form of dividends and stock buybacks and they are sitting on trillions more hidden offshore. The idea that they would share any of their tax cut proceeds with workers is poppycock.
But, even more important is where the funds will be raised to pay for these cuts. The House has already told us that they will be cutting $1.5 trillion out of Medicare and Medicaid which will hurt retirees and the poor. The rest will damage already stressed working families.
Here in Sarasota County, 30% of the families skip one or more meals each month to make ends meet. A corporate tax cut of an additional $1 trillion spread over our 100 million full-time workers means that a family with two full workers would need to cough up another $20,000. How many times must our families go hungry to pay for corporate tax cuts? And are we surprised that demagogues are gaining traction and anarchy is just around the corner. Putin, Bannon and Mercer are smiling.
3
One thing for me stands out very clearly. The wealthy and corporations will do anything to avoid paying taxes. No matter what the tax rate is. They feel no obligation now to do what is required. Instead they helped create a system, a shell game, that allows them to lower their tax responsibility. The notion being promoted by Republicans is: if the corporate tax rate is lowered, and the taxes on wealth are decreased, they will stop trying to hide their income, pay their fair share (that which was "unfair" would now be fair, yes?"), and reward their employees. The reality will be that these individuals and corporations will keep right on pursuing a zero tax endgame. Because it's not about their fellow citizens. It's not about patriotism. It's not about raising the standard of living. It's not about doing the right thing just like everyone else does. This is about greed and money. Trump so much as stated being able to avoid taxes was "smart". These folks are not about to dummy up.
2
This article is just too complex. Conservative economists and Trump voters realize it is just simpler to believe Trump and Paul Ryan than think.
Dynamic scoring is wishful thinking. Trickle down is a lie. Conservatives believe both with all their hearts and decades of facts are not going to change their minds.
1
I swear I heard talk about huge infrastructure projects during the 2016 campaign. Maybe it was an auditory hallucination. Now the Republicans want to blow a 1.5 trillion dollar hole in the budget - and we're not buying anything? And I believed them when they said we had to stop borrowing from our grandkids (just kidding). Let's increase taxes on the rich by 1.5 trillion and use the money to build things - like roads, bridges, mass transit, rural hospitals, etc. I know - I sound like a communist.
4
If there is any place to demonstrate the alleged virtues of flat taxation at a uniform rate for all, it is the tax on corporate profits.
The Republicans really are foolish not to proceed incrementally on tax reform. They should apply their flat rate zero deduction concept to corporate income taxes first, and leave tinkering with individual taxes for later.
Correct me if I am wrong. I don't think critics got the entire picture right. US will embrace a new wave of growth mostly from the efforts of the dealmaker in chief. Trump is a genius! He played the Asian card brilliantly and Asian countries will buy A LOT from US. China will invest on natural gas and oil in this country and they will buy A LOT! Japan and Korea will buy advanced military equipment from US A LOT. China alone can send tens of millions of tourists and students to US. Oh, because US now has cheaper energy and land, more foreign manufacturers are coming. Foxxcon is very cautious and it is coming. It says it all! With the right combination of automation, energy, land and market, Foxxcon can now call US home!
Asian countries will compete against each other to win the heart of Trump. Of course Trump only wants bilateral deals. This will create insecurities among Asian countries so they will need to try harder to please Trump. Indeed, Trump will make America great once again (before China catches up). However, sooner or later Asian countries will wise up. But it will be after Trump's second term!
Finally, don't underestimate Trump. He may win two Nobel Peace Prize (NK and Middle East). Lucky man!
"Shareholders" will be the biggest beneficiaries of this scheme? Which shareholders? If you are a typical shareholder with stock held in mutual funds in your IRA, these tax cuts are not designed with you in mind. Publicly held corporations operate as the private piggy banks of their top 10 or so executives. They skim off $10s of millions, sometimes $100s of millions (no exaggeration) before the board votes whether to pay a dividend. In fact, a lot of executive compensation consists of stock grants and options -- literally millions of shares at a time-- so when the dividend is paid, they make a fortune there, too. For example, when your dividend is $6, the CEO's is $6 million. Ever read a shareholder's proxy statement? They're 98% about the executive compensation package for that year. And the board always recommends a "yes" vote on it!
2
This is just Trump's gift to himself. Enough. He shows his returns or nothing should be approved.
2
It’s never enough for the government. No matter how much they collect, they always spend more. Starving the beast of the revenue is the only way...
2
. "Starving the beast of the revenue is the only way..."......to end up being a third world country.
5
We need for Congress to repay the SS dedicated fund that they have been collecting the increasing payroll taxes for then spending (not saving as is the deal with the people for collecting them) them on giving away tax cuts and subsidies to corporations. That money has to come from corporations. We cannot continue with SS existing with a bank account full of IOU's especially since Congress has been threatening to end SS with the false pretense that it is broke instead of repaying the money they stole from it/us.
As for Corporate behavior here at home the simplest fix is to re-regulate as we used to through the tax code require that they invest in creating long term living wage jobs here in the US and building factories here etc. That is how we were able to afford building the great society after WWII. Avoiding these duties to your country is not only not morally right it is in the long run self destructive. Note that this greed based drive is what has made Communist China our #1 danger and competitor. How is that greed driven result in anyway right? Making them rich did not make them democratic, why would it?
We need corporations and financial entities all of whom are "small enough to drown in a bathtub" to paraphrase the traitor Grover Norquist.
We are a nation not a loose group of people looking to variously cooperate then prey on one another. We need to have our Congress act in all of our best interests and that means profits will be limited by the needs of the Nation.
2
All taxes are immoral and confiscatory. But, as long as they exist and people can be led to be shorn to the ante-penultimate millimeter of their financial fur, the graph in the article shows how the numerous loopholes make the tax burden lighter. As a Russian proverb says, "The Devil is not as frightening as one paints it".
A better approach to corporate taxes – I would guesstimate that a one or two percent tax on corporate gross revenue (essentially “sales”) would raise about the same amount as the current corporate income tax with a lot less fuss. Tax revenue would hold steady, but the effective marginal tax on profits would be only that one or two percent – a big incentive for investment and growth. This would be a win-win for supply-siders, deficit hawks and even progressives who want to collect a lot of taxes from business.
A gross revenue tax would also get the IRS out of the murky business of determining taxable income. What is the correct depreciation rate for a welding machine? Is jet fuel for the CEO’s Gulfstream a “legitimate” expense? Who knows? Who cares? Like a movie star suspicious of Hollywood accountants, the government would simply be getting a “percentage of the gross”.
A downside might be that a money-losing company would still have to pay the tax. But I think that is actually fair. Even if your business did not earn a profit, you still expect the fire department to show up when you dial 911 and you expect the courts to enforce your contracts. The revenue tax would be just another cost of doing business.
Enough with the working middle class carrying the burden and coddling corporations. They want to be treated as a person, they should start acting like one. If Republicans were serious about tax reform, they would close those corporate loopholes and repatriate all the cash sitting in offshore accounts and include a stipulation that if they want to do business here in America, those profits remain here to be taxed. Just like a working middle class person.
1
Yes, the corporate tax reform is a joke, but the real joke is on us--the middle- and lower-class tax payers who are seeing important tax deductions whittled way like a cap of $10,000 on real estate that is a killer in states like mine (New York) and me personally, and adds to the carnage by eliminating state and local taxes as well. Meanwhile the wealthy get real relief and huge benefits from the elimination of the AMT (Alternative Minimum Tax) and the estate tax. As you note, corporate America is already doing great not only with a tax that already averages 18 percent, but also is benefiting from record high stock prices and profits. So, the real question is: Why is this corporate tax cut necessary, especially when it's the very consumers they need who will end up paying for it? OK, you know the answer: It's a Trojan horse for another "massive" income shift to the wealthy corporate political donor class that owns the Republican Party. We can only hope that there are three Republican senators who are also not fooled (are you listening Bob Corker, Jeff Flake, and Rand Paul?).
Remember Trump's campaign? I don't ever remember the throngs of his supporters shouting, "LOWER CORPORATE TAXES! LOWER CORPORATE TAXES!".
Wake up Trump supporters, Congress is giving the rich a cut at your expense. And yes, that includes the wealthy elites you dislike so very much. You may have delivered them a (political) poke in the eye, but you've also delivered them each a big check in the mail.
Republicans love private businesses. Democrats either tolerate them, distrust them or hate them. The Board's proposal to lower corporate taxes and close loopholes results, more or less, in no change of the effective corporate tax rate. The Board also calls for a series of new business-related taxes, so that corporations would end up paying at a higher overall tax rate.
The tax increase the Board calls for is obvious from a reading of this piece but is not disclosed explicitly by the Board. Do they think they can get this past the entire business community without their noticing? The Board pretends to tolerate big business but reading between the lines, they clearly distrust it and maybe even hate it. They should just say that, but I think they are afraid that they can only attack businesses surreptitiously. I can think of a lot of reasons for that, none of them that reflect well on the Board.
As my mother used to say, honesty is the best policy.
There are no parts that eliminate corporate tax breaks which are enormous including allowing firms to deduct all foreign paid corporate income taxes as incone tax credits from domestic revenues even with out repatriating taxed cash,
Does that really make any sense?
Only the mathematically illiterate and logically impaired people would cut the taxes at the moment we face the colossal budget deficits while saddled with enormous national debt.
Only the fools think it’s possible not to pay the bills.
We aren’t allowed to saddle the future generations with the debt.
If you need cash to reinvigorate economy, print the money if you can’t increase the taxes due to politics.
Those who believe that the chronic national debt is the long-term sustainable alternative do believe in the fairy tales.
The same people failed to predict the housing bubble.
Every bank and every nation have the credit limit.
Once we reach it the bubble bursts and the entire system collapses.
The sooner we realize that we cannot turn the hobbies in the jobs or the jobs into the hobbies and relegate them to the third world countries, the shorter we will stay on the wrong course and less hurt we will be.
The bubble burst is unavoidable! The only thing we can do is to minimize the damages. We need the controlled demolition of the faulty structural system capable of destroying the world economy.
No politician can avoid the significant reduction of our income and life style. The objective is to prevent the entire system from collapsing.
Avoiding the loss of 20%-30% of our individual income is impossible. That’s the true consequence of the colossal national debt we recklessly accrued…
It is difficult to comprehend how it has come to pass in this nation that one political party can steadfastly get away with ignoring the wellbeing of three hundred and fifty million citizens minus three million five hundred thousand citizens while dispensing a multitude of favors too the one percent of the citizens who are in financial positions to take very good care of themselves without government help. The idea is absurd. The reality is that in our democracy corporations and businesses managed to convince three hundred forty six million five hundred thousand citizens that our government should be run by the people who have the least to lose. It is a naked triumph of propaganda and politics that swamps and distorts the all of the accumulated ideas about social and economic development over ten thousand years of civilization. We might just as well be back at the beginnings of civilization where greed was protected by the manufacture of clubs, swords, and bows and arrows along with empty promises that killing the enemy and/or sacrifice for the king is the key to survival.
The Republican Party's obsession with slashing taxes has done nothing for the economy, for improving how government functions, or for individual Americans.
On the contrary, it has made the deficit and the debt soar, crippled what we can accomplish as a country, and done nothing to create jobs or increase wages.
Republicans have been at the anti-government, anti-tax propaganda for so long that it is eating away at our democracy, made it impossible to maintain what we already have in place that works, like infrastructure and Social Security, endangered our position at the forefront of innovation, without actually doing anything substantive to either improve working class prospects or prevent the government from intruding in our lives where it doesn't belong.
The American people continue to buy into the idea that electing Republicans to funnel money to big corporations will bring the working class good paying jobs and economic security, when it has been demonstrated time after time that their economic policies only benefit the rich, wreck the economy, and do nothing whatever to bring the working class economic prosperity and security.
How many recessions will it take? How many years of stagnant wages, declining benefits, rising income inequality, rising housing and education costs will it take? When will the American people stop buying into the Republican Party's failed economic and tax polices, it's democracy-killing anti-government propaganda, and its populist hypocrisy?
1
“In fact, there was no such surge in income after Congress slashed the corporate tax rate in the 1980s”
What did surge was the 1981-82 recession; at the time the worst recession since the Great Depression. What surged was massive unemployment capping at over 10%. Another surge, in an effort to tame inflation drag since the 70s oil crisis, was the Fed policies leading to mortgage interest rates of up to 18%. Meanwhile, defense spending soared at the expense of social spending massive cuts, and “benign neglect” became a thing.
But the Cheerful Gipper got out of his initial Reaganomics fiasco by, you guessed it: massive government spending of the GOP kind. So, “there you go again!”
Same for Bush43 and then there is Brownback's Ryanomics experiment in Kansas. Disaster so big republicans revolted, tax cuts were rescinded this year and Brownback's veto overridden by 2/3 majority.
But as Trump said to a crowd at a campaign event - he loved uneducated voters. This campaign attendees whooped and cheered at being named uneducated.
Sigh.
How much will Donald J. Trump save on his taxes as a result of this scheme? Anybody see an obvious conflict of interest here?
"How much will Donald J. Trump save on his taxes as a result of this scheme?"....He doesn't pay taxes.
As the owner of five small businesses (>$50,000,000) I pay the full share of the 39% tax rate - as do literally millions of other American small business owners. The 18.1% rate noted in this article is ridiculous, because, as mentioned, lobbiest for big corps have riddled our tax code with so many loop holes Boeing can literally fly a 747 through them. Here’s what we need to do: 1. Level the playing field. Get rid of all the most eggregious tax loop holes that are allowing big corps to hide money overseas so everyone pays the same rates. I know big corps will figure out ways around this over time, but at least we can start fresh. 2. Tax corp profits where they are earned. This seems like a fair and simple idea. Why don’t we follow it? 3. Index the tax tables to inflation. If a 15% tax on the first $150K of profits was a fair rate in 1977, how can it possibly be fair in 2017? It can’t and it isn’t and it makes it extremely difficult for small businessmen like me to build my retained earnings which are critical to growing my company. Oh, yeah, one more thing. The idea that cutting corporate taxes will create a bunch of jobs is one of the dumbest things I’ve ever heard. If my rate drops from 39% to 20% will I suddenly hire a bunch of people? No way. I’ll keep more profit in the company which will enable me to invest in more ways to grow the business which will eventually - down the road - lead to more jobs. Its a very slow process.
87
Indexing is a great idea. It could be the way to address many of these uneven loopholes and the 'right' way to fix our broken tax system. If the politicians were clever enough to use big data for completing re-districting in record time, why are they blind to the potential it could provide to tax structure.
For example, the allowable deductions could be set based on a equal ratio of home price to income from which 'big data' could automatically review tax returns to access property and income data for a specific area code, and adjust for regional or urban disparities to calculate the allowable deductions. You could create a truly progressive system that would begin to phase out deductions over a percentage range of an areas relative income. This could be applied to all types of deductions while balancing for those areas where housing costs take a much higher chunk of a family's income.
Indexing would create fairness for all while the current plan creates winners and losers based on where you live. That's totally unfair.
Too bad politicians don't listen to business owners except those who directly subsidize their hold on "power." Those who spend their lives in gov't but do so only to enrich themselves and their friends are killing our country
1
You have just articulated what the Reps are saying about how a reduction in corporate taxes will increase jobs and wages.
Seriously, you think you can tackle the corporate lawyers, tax accountants all in one column? The fact remains our lawmakers do not work for American citizens. They work for corporate and big money, whoever funds and finances their elections and re elections. If we can wrap our collective brains around the fact that our lawmakers, these elected officials DO NOT work for us, they are answerable, maniputable by those who are the wealthiest in our nation, for whom rules and regulations just do not apply.
Kindly accept this truth.
1
Sorry, but the way practically all of you folks think about taxes, spending, & money in general is all wrong. If you haven't yet read Stephanie Kelton's column on 10/5 on the NYT, please do it NOW!
For example, everyone seems to believe that the main purpose of taxes is to raise money for government operations. To see this is wrong, just ask yourself the simple question:
Where do you get the money to pay your taxes?
You can then see you are putting the cart before the horse.
FIRST, you can't create the money, the government does.
SECOND, the government gets the money to us by spending for government operations, roads, bridges, an army, research, education, etc, etc., etc.
THIRD, it usually turns out that the government must spend more money for stuff than the economy needs to conduct commerce. So it taxes some of it back, The main purpose of taxes is to adjust the amount of money in the economy.
Even if the government taxed all the money back (balanced the budget), the good stuff I mentioned above, would still get paid for.
But the government should only tax all the money back if there is another source for it, say a positive trade balance, because as the economy grows, & the dollar loses value, we need more money to conduct commerce.
The deficit tells us how much money is left in the economy net.
Also the money must be well spent, It must be useful for commerce. If it sits in the vaults of banks or the Rich or corps or is used to speculate, it is NOT useful.
The NYT has clearly not understood the problem, which is this: the gap in the effective and published tax rate has become, over the years, an unintended, though real, incentive for companies to stockpile money abroad. That gap will largely disappear with Trump’s plan, and with it, the incentive to hoard money abroad.
Not too different from Obamacare sponsoring money for contraceptives, in effect a wink and nudge by the government, to the electorate, for unlimited, irresponsible sex. Thankfully, also on way out.
That’s also true of effective tax rates having no connection to reality. On both sides. Companies with trucked cash abroad are actually *losing* money because they’ve self-locked themselves out of the booming U.S. economy. All that money, no return, just payouts to foreign lawyers and accountants to concoct new schemes to hoard more cash in secret. Also now, P.R. companies to spin positively.
You can be sure it’s driving them up the wall. These companies need the relief more badly than the government.
Get behind Trump’s plan. Never mind the messenger(s). The message is really, really, very, very, incredibly good stuff. It’s huuugggee. Really.
1
This just has to stop and now. Corporations must be taxed on all their income no matter where it is made. These so called American companies have to start being decent citizens and stop hiding income overseas. Let them become Chinese companies or German companies and see how they are taxed. These companies are acting to thwart their obligations to our country by using tax
Loop holes. If they wish not to be an American Company, then they can seek to go elsewhere and we should close their access to our markets. We the people must take this Country back! Shame on all these people who put company or party over country.
1
If you want to reform corporate taxes, fine. There are many ways to do it, as the editorial outlines. But why does it have to be a tax cut? Why not make it revenue neutral? I suspect it's because, for Republicans, a $1.5 trillion debt increase isn't a bug, it's a feature. Hasn't Grover Norquist said he doesn't want to destroy government, he just wants to make it small enough to drown in the bath tub?
Could the Republicans sell this abomination if they were calling it a revenue cut instead of a tax cut? Of course not. Our infrastructure needs the revenue. Education needs the revenue. The old, sick and disabled need the revenue. The underemployed need the revenue. But the Republicans want to give it away, leaving everyone who needs the revenue to fight with each other over what's left.
2
Right now our corporate tax system arrives at an ETR close to the global average by a roundabout, stupid method: A very high statutory rate paired with a sieve of loopholes and exemptions.
The result? Billions parked overseas instead of repatriated. Companies spending millions not into the tax coffers, but instead on the lawyers and consultants who manage the loopholes.
So yes, lower the statutory rate to something closer to the global standard. But tighten the exemptions and loopholes so companies actually pay it. If only a fraction of the tax-refuge assets abroad today were to be repatriated, taxed, and put to use, the positive effects could not help but be significant.
There is no global standard corporate income tax. One can say there is a mean, or an average corporate income tax, but governments are pitted against each other to lower it, and some will charge almost nothing.
There's nothing to discuss here until fully-funded universal healthcare system is in place. Until then, these tax cuts are simply another way the rules are gamed by those who own corporate shares or manage them. The distribution of wealth and income, no matter what libertarians purists imagine, isn't some God-given moral allocation of resources to those who "earn" them. The rules are what make tax lawyers wealthy, and "private" equity shops profitable as they chop up companies and ship their jobs elsewhere. Bannon is a creep, and Trump is a fake, but the critique of efficient markets and Ricardian rightness is what's expanded the pie over the past 40 years, but left many treadfully insecure.
"There's nothing to discuss here until fully-funded universal healthcare system is in place."....I agree. And because universal healthcare would reduce the amount we are presently paying for healthcare by at least 15%, we would have both universal coverage and what amounts to a $400 billion dollar annual tax cut. Heck, with the extra money we could even balance the budget if we wanted to.
What a ludicrous headline. There is no "right" way to cut one of the lowest -effective- corporate tax rates in the West, which in 2015 was a paltry 12.6% for corporations with revenues over 10 million dollars, so on all but mom and pop corporations, who pay 16.6%. So much for 40 years of D.C. "helping" small businesses, by the way.
The Times won't even honestly state the federal corporate tax rate, instead adding state rates to it to inflate the number.
It's long past time to return tax rates to where they were under Ike, when our economy was the healthiest it has ever been, and when the effective top marginal tax rate was 54%.
Today the rich effectively borrow against our national and international infrastructure, the value of which is around 37 trillion dollars, but falling.
The rich use the political process they bought their way into ownership of, to cut their taxes to third world rates, wrecking the public school system (which they rarely use), wrecking the inner cities (which they have decided to have no involvement with), and causing so much harm generally the excuse is now that things have to be privatized, because "we just don't have the money" to sustain the public parks system and the like.
This is fraud all the way around. Current income disparities have surpassed levels during the Gilded Age, and the Times plays along. Even discussing significantly **raising** taxes on the rich is something right-wing media, including the Times, no longer permits.
1
Give them $1.05 back for every $1.00 they put into their lowest paid workers' paychecks without cutting any existing benefits.
An old chestnut: no tax changes until Trump releases his tax returns.
"But because of copious loopholes — not least the ability of large multinationals to shift profits to low-tax countries — few businesses pay the sticker price; in fact, American companies pay an average effective federal-state rate of 18.1 percent"
================
Yeah, that's why we want to cut it to 20%, so they can keep the money here, rather than offshore. Get it?
Exactly. US multinationals pay 35-39 % on their US income but their effective worldwide rate is lower. By making the US rate 20%, the US multinationals' worldwide effective rate won't change much but more of its profits will be taxed here.
1
By ignoring Value Added Tax (VAT) the principal form of taxation in our peer nations, these editors supremely understate their case. Compared to the 35 nation Organisation for Economic Co-operation and Development (OECD), our tax burden is among the lightest. We are the fifth least taxed among 35.
Far from fearing a tax monster, we should be concerned that our nation is undertaxed if we hope to project military might and to support a healthy, educated, well-employed population.
Read for yourself the brief and clear report of the OECD
https://www.oecd.org/tax/revenue-statistics-united-states.pdf
1
Want real middle class tax relief? Real tax reform?
A good starting point would be ZERO Federal income tax on individual incomes up to $100,000.
And as an added benefit, if the Dems adopted that as a core of their platform, they'd wipe the floor with the GOP and put the lie to their 'tax relief' for the rich!!
3
With its high nominal tax rate and plentiful loopholes, the American corporate tax system is the worst of both worlds. High top line tax rates pressure corporations into engaging in distortive, unproductive behavior to relieve the tax burden, but the fact that they are able to do so so effectively means the US government raises little revenue this way.
Either lower the tax rate by closing loopholes, setting corporations free to drive top-line GDP growth without costing the government anything, or close loopholes in order to generate revenues that the government needs elsewhere. Lowering the tax rate without closing loopholes is simply foolish - even many shareholders would rather see loopholes closed so that they can focus on their core businesses instead of hunting for the best tax lawyers.
Could it be that in this era of globalization, there actually is a global capital market? So why focus on repatriation of money held in foreign accounts? Think about it for a few minutes and you'll realize that repatriation is a red herring.
Imagine that you are a CEO of a corporation needing capital to build a new plant, expand your product line and hire more workers. You meet with a hedge fund manager and show the manager your balance sheet. The manager will examine your financial statements and ask about subsidiaries in China and the EU, where you company headquarters is located, where you bank and your cash balance in each bank. Do you think the hedge fund manager will really care where your cash is located or where your headquarters is located? Will you care where the hedge fund keeps its cash, where its headquarters is located?
The answer is that neither the CEO nor the hedge fund manager cares where the money is located except to the extent that such knowledge is needed to structure the details of the transaction.
11
if they really want to drop $1.7 trillion help business, spend it on infrastructure. isn't that a core role for government?
1
Corporate income tax generated under $300 billion of revenue for fiscal 2017. Businesses spend billions to comply with the regulations and minimize their liabilities. What a waste of time and resources. The current business tax scheme ought to be abolished and replaced with a simple sakes tax. US business revenues from the sale of products and services exceed $35 trillion. A 1% sales tax would yield greater revenue than the current system. (Separately, we are now spending $4 trillion annually up $1 trillion from 2008. Is there no opportunity for reductions?)
2
if corporations get the big tax break will the U.S. stop paying for overseas advertising and providing State Department help in dealing with other countries and their laws? Are we going to cut all corporate welfare programs?
Corporate welfare programs???? Yes, there are a few, passed by specific congressmen and congresswomen,, for the benefit of a corporation in their district, pork barrel, quid pro quo form campaign support,, and often to address an inequity in the law. But in general,, there are huge amounts spent on taxes, accountants, lawyers, strategists,,, just to stay in business. Consider,,, a corporation does not eat, or sleep,,, does not need to be hot or cold,,, and every dime,, every penny,, will eventually be someone's income.
Corporations are not the bad guys,,, and certainly not cash cows to support and run a government. Tax the wages, tax the stock dividend pay out. It all will be income,,, tax the income.
1
The Editorial Board may want to add more lines to the graph depicting income, payroll and corporate taxes as a percentage of GDP--a couple depicting the rise and fall of employment levels and real wages commensurate with tax rates and a straight one across the bottom of the chart depicting the flat learning curve of the American people.
One gets the impression there is no effective corporate tax rate too small for the GOP, much less any effective income tax rate too small for the wealthiest among us, the top one percent who just happen also to be the prime beneficiaries of low corporate tax rates. And one gets the even stronger impression there is no amount of trickle-down dribble the American public won't lap up.
What will it take for Americans to understand that the flip side of taxes is government services and benefits, that when the tax side gets smaller, the other does too--especially when we're trillions in debt? Do we have to wait until the GOP turns the entire country into Kansas with an economy in free fall--where those great, Koch-inspired Americans now home school their kids through college, proudly drive on now-dirt roads and turn their sick and their seniors to the prairie wind? Or will the GOP convince the public to beat their righteous chests even then, proclaiming we are not like those supposed lazy, entitled folks in Puerto Rico, just wanting government handouts for infrastructure and hardship?
Will the tax scales never fall from American eyes?
2
II'm lost. Since the corporations pay such a small fraction of the overall taxes, why will cutting their rate create such a big deficit? Seems we should be raising their taxes anyway to make them pay their fair share for operating in our country.
1
No. What is not addressed is, yes, they are trying to cut corporation taxes,,, but consider,, those additional profits can be passed to investors, owners, as 'passive income'. Passive income is taxed at a much lower rate than your paycheck. The stock holders,, make more money, keep more money,,, and they want health care, mortgages, college tuition, no deductions for state taxes paid, property taxes paid, we,,us,,to pick up the slack. Passive income rates are not being discussed,,, but that IS where the corporate cuts will benefit first.
What is not being discussed is passive income is
1
Time after time we are told "few businesses pay the sticker price", averaging 18% and so on. No doubt this data is based on "C" corporations, that is the large and often multi-national. You know, the ones with armies of tax accountants, paid big bucks to find those tax havens and other dodges to ensure that 18% rate. And what about the smaller businesses, especially in manufacturing, shockingly the ones that employ over 70% of all Americans? They pay sticker price! I own one, and yes it is a pass-through, but I pay close to 40% tax on every dollar of profit. I have no "dodges", no offshore accounts. The answer for democrats; offer tax incentives to corporations that use US labor and materials, keep all profits in US, and come up with a plan that favors smaller business. And to avoid any accusations of dumping funds into owner's pockets, restrict the use to working capital. Say less than 200 employees is "small". If that group gets the largest break you would instantly see investment in JOBS, EQUIPMENT and MARKETING. I would do it in a heartbeat.
4
Over the past month I can’t count the number of CEOs and business owners who have told me the first thing they will do when Congress lowers their corporate tax rate by 15 percentage points is laugh, I mean go out and give all their employees raises.
1
I’m for Trickle Up economics. Give massive tax cuts to the middle class and do nothing for business and the wealthy. The increased amount of disposable income will flow to businesses and increase profits. The direct benefits will flow to the middle class and indirect benefits flow to businesses, the converse of what is being proposed.
1
The editorial board and most people commenting seem to all be employees and never run a business. The businesses that Trump administration is targeting is small business with less than 10 Million sales per year. That’s the employer than needs the Break. And that’s who will be paying higher wages.
Creating off shore companies works for companies with over 50 Million per year in revenue between setup costs and cash flow needs. Yes this is a common practice for large corporations, but not your normal manufacturer or trading company.
So, most businesses are worried about their tax bill so they are always thinking of ways to hide their profits inside their books (not off shore accounts). Create a nominal tax rate and small businesses can show their true profits, pay the taxes, use the money to invest and expand.
There is no economic data that cutting corporate taxes translates into higher wages or increases employment. Most corporate tax cuts go to stock holders, who are a minority and/or owners pockets. This is the great myth that Republicans keep trying to sell to an uninformed public who understand little the effects of corporate tax cuts other than what is sold to them by the lobbyists in Washington.
There is no trickle down, there is only more money in the pockets of corporations and the 1%. As China builds a 21st century infrastructure, it makes me sad to see how greed has devoured our nation and has eaten away our desire to lead the world to a better future. We are a divided nation with a divided government all working against the other side. This cannot go on or lead us to a better place. The world moves on a lightening speed with or without us and all of divided America will end up on the losing end.
The problem with these recommendations is that they makes sense are are an actual benefit to the middle class. Current bills are just playing lip service to this fact when really it is racking up still more debt for us to pay.
1
Tax cuts are always sold on the basis of ‘it will pay for itself’. Has ANY tax cut ever reduced the federal deficit?
It seems obvious that corporations would use the money saved on taxes to raise worker's wages, rather than increase executive compensation.
Doesn't it?
The endgame is in sight: Serfdom for the American Worker. These are great days for the American Corporate and Political Nomenklatura. But these days are numbered.
1
There is rational tax policy and then there are Tax baiting policies designed to get votes. If you promise to cut taxes, which everyone hates, you get votes. The trouble is that a large percentage of people pay very little income tax and a lot of payroll tax but still hate taxes. Your graph points out that payroll tax is 6% of revenue while income tax is 8% of revenue. Payroll tax is not progressive. The con is that you get a reduction in rate and it only affects the rich. The shockingly low amount of tax revenue from corporate tax is revealing.
There is a class struggle here, that isworse because unions are weak. But there is a limit to how much Robin Hood tactics will help. For me it is about fairness not accounting.
Honor and fairness (what's that?) should dictate that a reasonable contribution to our common goals should make us proud not angry. Trump and the moneyed class complain about taxes and live quite comfortably, thank you very much. Pay more and be honored to do so! Corporate taxes are an extension of the moneyed class, so clearly if they want a cut it must land in their pockets, so you are right that a bipartisan compromise would be best, even though many workers now vote for the moneyed class.
"In 1967, corporate tax revenue totaled more than 4 percent of the gross domestic product. Last year, it totaled just 1.6 percent."
If corporate tax revenue is just 1.6% of GDP, then is it even worth the debate? I say cut it to zero and really simplify the system.
At the end of the day, it is ultimately the individual who pays the taxes. Corporations & organizations just happen to be the means by which money travels and is collected indirectly. Cut out the middle and go directly to the individual and simplify !!!
Disagree. The Right Way to address our economic problems is have businesses pay a living wage to their full time workers.
1
Thank you for a straight talking demonstration of the effective corporate tax complete with clear graphics. This I can share with others easily.
Still, why no mention of carried interest or that broker's pay a 15% rate? I'd also like to see corporations that aren't paying workers enough to save while also taking away ability to retire, make them pay into social security for workers. As it stands now, a whole generation of people will need to work until they die.
1
Until Congress reforms entitlement programs and puts them ON BUDGET, it's just whistling past the fiscal graveyard. Both Medicare (Medical Welfare) and Social Security (Senior Welfare) should be means-tested. They do it with Roth IRA contributions, why not those two programs? We need to stop adding to the Federal Debt. It's just too darn big. People forget that when LBJ was pursuing "victory" in Vietnam, we paid a 10% tax surcharge to pay for the war rather than going into debt. The citizenry has completely lost touch with the impact of Federal spending. I don't need a tax cut, frankly. Yeah, it would be nice but we've been living on borrowed time with our infrastructure. Take away the corporate tax loopholes, then lower the rate. Then get government out of the way!
Corporations ought to pay enough taxes so that we can have decent infrastructure, education, and other benefits that accrue to the common good of their employees, customers, stakeholders as well as shareholders.
How can We the People at least shame these companies into doing the right thing as we work to elect lawmakers who will pass laws to that effect?
We get the government we deserve.
I can remember when the corporate tax rate was 52%, and the economy was doing fine. But realistically we have to join the race to the bottom as lower(ing) rates in other countries practically FORCE American corporations to go to firms like Appleby to legally cheat on their taxes.
But note this is just one more way globalization puts strictly American companies at an enormous disadvantage. Global companies like GE pay ZERO in corporate taxes, while a corporation without overseas branches it can pretend earned all its profits has to pay 39%. (Though after reading all the Paradise Papers articles maybe those strictly local companies will open branches housed in the desk drawers of shady Bahamian law firms, too.)
We need to tax corporations on what they sell in this country; not on how much they pretend they earned.
1
If you look at figure 2 you see quite clearly what your problem is: payroll taxes. Regardless of whom is paying them (employers or employees), they are bound to depress hiring and/or real (post-payroll tax) wages. You need to cut 'em payroll taxes, shift the burden cleanly to corporate, and you'll be shinny and new in no time.
But, please, make sure to keep in mind that taxes are just that, taxing. So minimize 'em, and stop discussing taxes as if they are some way to punish corporations for trying to make a profit.
1
There are two fundamental Republican assumptions, both flawed -- (1) that the economy is sputtering and needs the boost of tons of cash from a massive tax cut, and (2) that the people with this additional cash from tax cuts will use the money to employ others.
Truth is, most indicators are that our economy is doing great -- very high stock market indicators, very low interest rates, and very low unemployment.
Everything that the Republicans are proposing is inconsistent with where we already are -- companies have ready access to more capital than they seem to want already, even at an historically low cost, making cash from tax breaks unnecessary, elimination of job-oriented incentives in the Tax Code removes the incentive to create jobs under current law, and rapid expensing (instead of depreciation) will encourage equipment purchases to replace jobs, not vice versa.
More and better jobs would come as a result of leaving tax rates largely alone, but keeping and improving targeted tax incentives, like the new markets tax credit (which encourages construction and new jobs in poor areas) and similar programs like historic and renewable credits, which the House would end. Even Mr. Trump's infrastructure credit, if it could be properly structured, would simultaneously create new skilled jobs and improve our bridges and roadways.
Sadly, tax cuts and the elimination of targeted incentives that both employ people and improve our country run in the opposite direction.
A VAT would harm most Americans because most Americans earn wages at rates that do not buy offshore accounts sheltering income not needed to pay the bills. Companies that go overseas do so not only to pay less taxes but to pay workers less in wages and benefits. I don't think my wages are going up if the corporate tax rate goes down. However, when my cost of living goes down I'll be happy to earn less. Until then I need every tax write-off I can get.
Much of this article is right, much is wrong. The Ohio River Valley air pollution has largely cleaned itself up. But not because the individual businesses have added pollution controls,,, but because those businesses have left. Exactly the same, the decline of corporate tax as a percentage of over all revenue,,, 4.1% to 1.6% is not a reflection of tax avoidance,, but is a certain evidence of fewer corporations.
One area of the article is absolutely perfect, spot on, the 39% maximum rate is not paid by large corporations who can afford to hire the best, lawyers, strategists, accountants. It is the little guy,,, the budding corporate start up that is crippled by tax, insurance requirements, unemployment requirements, workman's compensation requirements. Much of that is required to be paid a year in advance, before the business has seen its customers, a guess of what may be. And if over charged, will come back to you 1.5 years later,, maybe.
No, I am in substantial disagreement with the entirety of this opinion.
What should happen. Firstly, corporations are not an individual, they may well be a legal entity, but they should not, never be accorded the rights of the Bill of Rights. Secondly, corporations should not be taxed at all, zero. but,, and Thirdly, all profits are distributed and all personal income treated at the same rate as any income. Everyone, the same rate,, and no loop holes. Everyone, everyone,, and if I have done my math (?), 12% No deductions.
2
There is NO right way to cut corporate taxes. No matter which way the taxes are cut, the corporations will still manage to finagle ways to make the cuts, offshore accounts, expenses, corporate write-downs even more. Corporations are NEVER happy to pay any tax-period!
I agree except you omit the impact on startups and middle market businesses that can’t access the park-the-profit-overseas plans. Lower the tax rate on them and you’ll see faster growth and more jobs.
1
No one is going to create one single job they do not have to. They will rather over work someone they can then later deny Work Comp to for the injury inflicted by that over work to have them do 2 or 3 peoples jobs.
1
under the bill as proposed, all US companies would be taxed on US earnings at a 20% rate. As such, the effective tax rates of US multinationals will probably not change much, however, a greater proportion of their profits will be subject to US tax( i.e., they will be encouraged to locate their operations here instead of some other jurisdiction for the reasons I mentioned earlier). Meanwhile, US companies with only US operations will see a corporate tax rate of 20% which addresses your point vis a vis start-ups etc).
1
Look at Kansas - they did exactly what Ryan is proposing. Medium and small businesses did not expand, grow, start-up, hire or increase pay.
The only thing that will work is upping frdersl minimum wage and shut down stashing by applying corporate income tax to all cash raised by borrowing, selling assets, issuing stock or bonds. The cash that these mechanisms raise are really proxies for stashed cash and should be taxed as such.
Oh, businesses can already deduct sny foreign corp. income taxes paid as Income Tax Credits from domestic taxex owed
Good analysis. But we are not asking one important question. That is, would the Republican tax plan bring on another depression? After all, it will create a massive transfer of income to the upper 1% at the expense of the rest of us. We will all spend less as a result, reducing demands for goods and services in our economy. Wasn't insufficient demand the cause of the last depression?
6
What happened under Reagan and Bush43. Yep in a couple of years - just like Kansas, economy crashes again.
So the argument against lowering corporates tax rates to 20% is that is the “effective” rate they pay now.
But you concede that the low current effective tax rate is largely due to corporations shifting their revenues abroad.
Isn’t that result what we are trying to avoid? Don’t we want all revenues to stay here and taxes at the 20% rate?
Your answer is to find penalties and other taxes to give corporations a disincentive to shift revenue abroad.
I disagree. Corporations should pay the same rate they would pay in other countries. So they keep their business here.
While I disagree with many aspects of the new tax plan, this isn’t one of them
2
Yes, a US multinational's tax rate is below the US statutory rate of 35% because they are doing business in places where the tax rates are lower than 35%.... and yes, there is certainly tax planning involved around sourcing these operations abroad. However, most multinationals are audited annually and the IRS and other taxing authorities are intimately familiar with the various profit "shifting" methods; they're not doing anything that congress hasn't allowed them to do.
Again, this bill would encourage US multinationals to move operations back to the US but will discourage US multinationals from transferring high-valued intangibles developed here to foreign jurisdictions where the income from those intangibles is and would be taxed at a low local rate(this is what Apple, Google, etc do routinely in e.g., Ireland) . This is because under the proposed legislation, those earnings would be taxed currently in the US, therefore, there would be no incentive in transferring those intangibles offshore in the first place.
1
They won't keep their businesses here. Apple agreed to pay Ireland's 12% and then didn't abide by their contract. Their goal is never to do what the tax law expects them to do. You cannot enforce values they lack at the core.
I'm not sure which corporate tax reform proposal the NY Times editorial board is reading. As a corporate tax lawyer of almost 40 years, here's what I'm seeing:
First, while it is true that US multinationals' effective tax rate is generally < 35-39%, this is because it represents the average of all the jurisdictions around the world where they are doing business-and since the US has the highest corporate tax rate in the world, a US multinational is likely to have a rate < 35-39%. However, a US company only doing business here would indeed suffer a 35-39% rate.
Anyway, the tax proposal uses a carrot and stick approach to induce US multinationals to locate their operations here: First, it reduces the corporate tax rate to 20%. This is 5 percentage points lower than China's current rate which is where much US manufacturing went when China's rate was close to zero. Second, it would subject a substantial portion of the earnings of US-owned foreign subsidiaries to current US taxation. This would go a long towards the migration of US-developed intangibles to such places like Ireland.
2
A few points.
First--the figure for the "effective" tax rate being paid by corporations of 18.6% isn't based on what multinational corporations are paying--that is the average rate for ALL corporate filings.
Second, the current 35% rate is the maximum tariff--I am hard pressed to see how your corporate clients would be paying more than the maximum.
Last, but not least, the notion that wide swaths of the American job base were exported to China because the Chinese tax rate is lower is specious nonsense without foundation in fact.
The truth is there were/are a number of factors driving corporate location/relocation decisions--the fact that tax rates are one of the factors on that list overlooks the reality that it is not anywhere close to the top of the list.
If you are a tax sttorney you know thst foreign corp. income taxes are deductible as income tax credits from fomestiv taxes owed. Further, most stashers - use borrowing, sale of assets, etc. to raise cash even when cash is stashed. And all of the expenses from such mechanisms ate deductible.
Better accept that this cash raising is a proxy for stashed cssh and tax accordingly.
One can argue about details, but it is good that the NYT has finally said something positive instead of just negative.
But when is it going to lead the way towards some bipartisanship? Obama had enormous power with his 61 Senators and the expiration of the Bush tax cuts. Yet, he did nothing at all of this and didn't try to. Because Soros bought the party with his huge donations, Obama didn't even go after the carried interest scam on hedge funds. And Hillary, who is more conservative than Obama, proposed nothing on these matters. I seriously doubt if the New Democrats would cooperate with Trump on this.
1
Mr. Hough, repeating the same lie about President Obama--that he could have easily done (fill in the blank) during the ten whole months (not uears) he had that super-majority don't impress.
Especially since you personally howled when the man got rid of those Bush tax cuts, and added taxes on the wealthiest to support the PPACA.
When will we stop with the dragging in of Obama and Hillary? The deflective arguments play both sides. If Obama didn't do it then why are Democrats proposing it? If Obama DID do it then it must be bad and we gotta undo it. Geez, do you people know that Trump is president? Oh, I forgot- that's his thing too.
Corporations should be taxed as people. The supreme court agreed corporations are people so they should be taxed as such, and meet their obligations to society. No deductions for depreciation or for legal fees. Limit interest deduction to the same amount as people get. Tax profit on sale of property, but disallow loss on sales, etc.
If corporations or all types were taxed a people, there would be no more gaming of the system, at least no more than humans do now. Just a thought.
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Corporations should also be held accountable like people if they do harm to the public, such as mass poisoning the entire population with PCBs.
Most businesses are taxed as people, and then some. Readers here seem to think that it's only big corporations that exist in this country and employ people. However, most are employed by small businesses that are getting killed with the current rates, unless their industry has been somehow blessed with lobbyists that get them a loophole. Or worse, a subsidy!
Here is the right way to RAISE taxes.
You make ( with actual enforcement ) people and corporations alike pay their fair share of taxes progressively. If you make more, then you should be paying more and not less.
It s a simple premise ~ fairness .
20
That is exactly what our current system is - a progressive system. Both the House and Senate versions of tax reform maintain the progressive structure of the tax code. You're wrong to believe the current talking points that this is just a cut in taxes for the wealthy.
C. Murphy:
No, our current is not progressive at all, if one counts ALL taxes, including sales taxes, car registration, gasoline, etc. Local Property taxes are usually regressive, larger properties and businesses, are charged less per sq ft than smaller homes.
In fact, if one counts all taxes, our system is undeniably regressive, It is historical, documented fact, for many decades.
2
This issue is impossibly complex. Only attorneys and accountants specializing in corporate tax matters can make sense of it all. My only takeaway: reduce the rate, but simplify the tax code, close loopholes, and try to keep it revenue neutral.
2
"Revenue Neutral"?
Our annual National Deficit is about $3 Tril, and you want "Revenue Neutral"?
Personally, I would like to see the deficit reduced, thus reducing the rate at which our National Debt is growing.
One line: "In addition, they would create a 25 percent tax rate for owners of pass-through businesses like partnerships and sole proprietorships." Deserves greater analysis and thoughtful explanation of effect this would have. There are lots of these small businesses, and they DO have the vote. Our House representative is meeting with them, extolling the benefits, and urging them to voice their support for the overall plan, pandering to their self interest.
I agree with other commenters that Democrats need to make a better proposal and not be silent.
1
Building equity as a S Corp is very difficult at higher personal tax rate ( Especially in CA) which forces a company to take on more debt than necessary. S Corps are an afterthought
Big Corporations get all the attention and have enough lawyers an accountants to influence the laws where as smaller companies continue to pay at much higher rates. Or go offshore and game the system. I agree we should probably propose a surtax on border runners
Basic fact is politicians do not understand how business people think and focus on all the wrong stuff.
Corporate tax reform should have little too do with personal tax rate reform.
Fixing it would require the government to have a strategy and be able to hold onto strategy over multiple election cycles....not in the cards
Frustrated in CA
One observation about companies with extra cash: they tend to buy other companies, consolidate, reduce the total workforce, and raise prices because they acquire dominance in market share. So the money is not spent on wages, it is not even given to its own shareholder, it flows to the owners of other companies.
17
Why aren’t we talking about this for what it truly is and that is a gift to their donors? Why aren’t we talking about this in the light of the post Citizens United world where money is speech and corporations are people?
Where are the democratic leaders that should be on every television talking about how this plan is a gift to the wealthy?
24
Hello Fire Captain.
Gift? - I would call it paying off a debt - they make promises to their donors - if you donate to my fundraising, I'll see you right when I get in. OK I got in, now - out with the EPA in with my buddy, I'll see you at the club.
aka a Quid Pro Quo - a "this for that' to the donor. We know what the this and the that are - corruption/bribes.
Where are the police? the FBI?
While the gap between the megarich and the poor ever widens. Ten cents used to get you a cup of coffee - in my lifetime; Now it's $4. How can the poor even afford a cup of coffee? Perhaps they get a cup of hot water, if they provide the cup.
Now I'm angry.
"All of this money could be used to rebuild America's dilapidated infrastructure."
Not true. All of the money repatriated will belong to the corporations that earned it. Only the taxes on that money could be used to rebuild America's dilapidated infrastructure.
3
The Republican plan is just so Walmart in its vision, as we might expected from the star of the Apprentice.
America holds a monopoly on being America and it is a pretty good place to do business. So rather than cut prices, why not improve the brand: create better distribution channels, increase the domestic market through higher wages, provide a more flexible workforce through a focus on education and training, invest in R&D for new technologies.
Make America better, then charge more for access to that business opportunity.
7
What is it with people that they don't see that VAT (Value Added Tax) is just a hidden sales tax? We do sales taxes, although they're regressive, because people won't accept rational taxes charged on those who can most easily afford them. Just because they're unfamiliar doesn't mean they are some kind of magic wand.
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Sure, let's go with the mythical pay raise of $4k per year (median, so it isn't the CEO and other brass that get a billion bucks aggregate, and the worker bees zip) as a consequence of a corporate rate drop. But it must be demonstrated the following tax year that it has been implemented or else the decrease is rescinded retroactively and a 15 per cent penalty assessed.
7
There is one word in this article which stands out: "loopholes." Accountants get paid a log of money to find these loopholes and make use of them to avoid to pay taxes. Take them all away.
8
The way to attract more business into the U.S. is to return to our ability to provide a sound infrastructure of laws and transportation and a base of well trained and stable employees. When companies look at moving manufacturing off shore they have to consider the stability of the government, the ability to ensure the safety of their assets and products, and the risks posed by uneducated and poor employees. Seizure of assets, theft of intellectual property and data and the cost of graft to get production accomplished add costs and have to be factored into the profit analysis. And add the costs of transportation. There is a reason many off-shore car companies have opened manufacturing plants in the U.S. The tax schemes discussed in this article will not change these factors, but the transfer of wealth to corporations and a few oligarchs will. American companies are doing just fine, we need to focus on preserving and building our intangible and tangible infrastructure.
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Only poor people pay hefty taxes, the little folk who can't afford fancy accountants and loopholes.
So let's help the powerful and oppress the weak. Sounds like a plan (not).
20
An important issue that I don't see mentioned is the tax law and accounting industry. I haven't located revenue statistics on that sector, but the "Big 4" accounting firms alone are over $50 billion in U.S. revenue. Tax lawyers and accountants have years of education and experience that pays a very nice wage. Will a simplified tax code destroy that industry? Will they stand aside and let Congress do it?
14
Infrastructure is just one element of government services harmed by inadequate revenue. Without the revenue, government cannot keep infrastructure in an optimal functional state. Corporations and businesses are paying less than their fair share. Further cuts will make it even harder on infrastructure. This would seem to be counterproductive for corporations. In essence there are no winners when insufficient tax revenue is collected from those benefitting from the infrastructure, security and other advantages of doing business in the USA.
17
Where are the Democrats’ counter proposals? Why are we hearing about better alternatives to the Republican plan from economists but not from legislators? The Dems have to do more than just vote no. We do need tax reform but that involves more than cuts in revenue, offset by cuts in government services. Some alternatives, like a carbon tax to help fund infrastructure repairs should be an easy sell. Come on, Democrats, show us what you can do! There must be some of you with expertise in this area. Get Paul Krugman to advise you.
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It's not so much as to whether or not the Democrats have an alternative; it's whether the Republicans in Congress would listen, let alone implement them.
PSS-- The GOP has plainly made it clear that Dem. input was not welcome. They did not seek Dem. input. They have held no hearings. They are using the Reconciliation process to avoid debate in the Senate. They are ramming it through as fast and as opaquely as they can. The GOP no longer is concerned about the "Common Good" nor the "General Welfare" of our nation.
1
Just wondering, will Donald Trump be sharing his increased income with all the employees he hired from out of the country to run his hotels and Golf courses? I think not- so why does he claim other businesses will increase the wages of their employees.
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.....like father like daughter: Ivanka exploits foreign sweatshop workers to produce her knockoffs off shore, not made in the USA....so she can pretend to be working mom. She knows nothing about being a working mom. That is insulting to every working mother on Earth.
The arguments against the corporate tax cut the Republican Congress is proposing are all valid. But I had a difficult time getting through such a dry subject matter. Kind of like watching grass grow. Taxes are not one of my favorite reads.
That graph though stuck in the middle of the editorial is quite telling. In simple terms it says that John Q Public taxpayer contributes 9 times more in tax dollars than corporations.
Another way of arguing the point would be, big business contributes $1.60 of every tax dollar the IRS collects, while little ole taxpayer pays in $14.50.
So why cut their taxes further?
19
Corporations don't pay taxes, people do. The subject is indeed dry and complicated but the New York Times Editorial Board is out of its depth on the subject of the tax code..
Look at the effective corporate tax rate in Canada. Only two thirds ours. The country runs a more than first class health care system and other government funded benefits we can't afford. They do, however, encourage business profits and the resulting wealth accumulation in the productive sector. Canadian governments know where their bread is buttered.
I'm thinking sending an email to my CEO and asking him if the Republicans bill passes exactly how much of the tax savings he is planning on adding to my pay check and when that will go into effect. Maybe we need a national movement of working stiffs at corporations emailing their respective CEO,s that question.
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What you are talking about is collective bargaining. Part of the wage problem is the fact the gop has been successful in eliminating union representation.
These used to be callled labor unions.
Few want to see a new tax, but reducing corporate taxes, which is a smart idea for making the US more competitive, should be mated to a VAT, whose proceeds are dedicated to social costs. An 8% MIVAT, Medical Insurance VAT, would cover the costs of a basic Medicare For All policy, removing the burden of health care from our domestic manufacturers and forcing imports to pay an equal share. Our major trading partners figured this out long ago. The Employer Provide Health Care is a WWII legacy and should be scrapped. #MIVAT
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Fine observation, but unfortunately Value Added TAxes are hidden and sooner or later such a tax will be paying for more than health insurance and adding to government waste, all without the taxpayers realizing what is happening.
3
VAT is just a sneaky sales tax. Just because it's hidden doesn't mean it's not regressive.
8
You mean like how they have been spending our FICA and payroll taxes as if it were cash on hand rather than placing them in the dedicated funds they are supposed to be?
3
Don't cut corporate taxes at all, at least right now.
At the moment there's $1.7 - $2.2 trillion on the tax cut table over the next ten years. Divided proportionally among personal income tax filers, that's $1,000 a year, every year, every filer.
Yet, under the GOP plan these individual filers get less than ⅓ of total tax cut dollars. By 2027, those in the lower four quintiles get cuts - bottom to top, respectively - of $10, $40, $320, and $710. The top 20% get $3,860. The top 1 percent get $52,780; the top 0.1 percent, $278,370.
Democrats’ best, only, and last hope is their own tax cut counter proposal to capture the attention of the working and middle-class with $10,000/monthly household income.
Happily, right now there's one that fits that bill: an easy to understand and compare, tax credit that maximizes cuts in personal income taxes, maintains necessary deductions, and reduces or eliminates corporate cuts and gimmicks.
We'll finally see (as with the foiled repeal of the ACA) what the electorate prefers and, as a bonus, whether they share the same lack of sympathy, as most experts, for the “burden” of corporate tax rates.)
6
According to a 2016 Economic Policy Institute paper (Bivens & Blair), annual "gross revenues from a well-designed FTT (Financial Transaction Tax) would likely range from $110 billion to $403 billion." It's an efficient and progressive way to raise revenue. If that revenue were earmarked for infrastructure projects, we could rebuild America over the next 10-20 years without having to borrow a dime.
Talk about making America Great Again.
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But the Supreme Court declared that corporations are people. Seems they should be taxed like people.
22
Taxes are complicated and difficult conservatives do neither well. And don't get me started on Trump! How any of this can end well for America is a mystery to me.
7
"...similiar to the way American states now tax corporate profits." The way that most American states tax corporate profits is deeply flawed and discriminatory. That state method is called water's edge combined reporting which excludes the profits of foreign subsidiaries from a state's tax base. The far better method is worldwide combined reporting that includes the profits of foreign subsidiaries in a state's tax base - approved by the US Supreme Court three times, in 1983 (Container case) and again in 1994 (Barclays Bank and Colgate-Palmolive cases) by increasing majorities. However, only one state, Alaska, uses this method today on its oil & gas industry.
Why only one state? Margaret Thatcher. Yes, the reason that American states adopted the water's edge method is because of the influence of a foreign leader protecting her country's tax haven industry...Britain controls more tax havens than any other. Go to www.margaretthatcher.org and search there for unitary taxation (Thatcher's term for worldwide combined reporting).
America's "special relationship" with Britain is costing America billions in lost revenues. Ironically, tax avoidance by multinationals is harming British citizens too. Watch the video The Town that Took on the Taxman on YouTube - a BBC documentary about small business owners in a small town in Wales that show how simple and easy it is for multinationals to shift profits to tax havens.
6
I really have no idea what the "Right" tax plan should look like. What I do know is the GOP should sit down with the DEMs , some tax lawyers and accountants and hammer out a plan with no consideration of the lobbyists and party donors.
12
As this article and others point out multi-nationals stash much of their profits in tax havens around the world. The U.S. has traditionally taxed only the profits remitted back to the States. The current proposals before Congress want to tax at a substantially lower rate all income even if not remitted. That's not nearly enough as it still encourages foreign investment rather than U.S. reinvestment. That is not to say that a multi-national shouldn't be allowed to grow foreign affiliate businesses but billions are finding their way into investments in those tax havens every year.
What should happen is that incidence of a U.S. tax should be based where the income is earned rather where the profit winds up. Let me explain. If a multi-national's third party sales or services are say 50% in the U.S. and 50% outside the U.S. it makes sense that their profits be taxed 50% in the U.S. However if their foreign affiliate sells into the U.S. the product to be sold to the public at a price that allows for only a small portion of the profit to be earned in the U.S. with the balance overseas in a tax haven then the U.S. tax collector is being short changed.
How to fix this: The starting point for taxation should be world-wide third party profit. The U.S. portion should be based such factors as the incidence of third party sales, the location of world wide manufacturing assets, the location of manufacturing labor ect. This is not a secret. It's the basis of multi-state taxation.
26
What you have proposed is meant to be addressed by international transfer pricing rules which dictate that transfers of assets should be priced among related affiliates at levels that are roughly commensurate with how adverse 3rd parties would. This is known as the "Arm's length" standard; it is almost universally embraced by the tax authorities around the world as a way to most fairly allocate taxable income among countries. It ain't perfect but it is the prevailing law now.
Psst. The money is really in NY and London banks.
Much of this stashed money goes into international crime. Without a clear record of what went where a whole criminal banking network has grown and thrived. So, in fact, the rich are funding the drug business, drug lords, and the rich corrupt elite who take US dollars while letting their people starve.
If Republicans think that simplifying the tax code so that individuals can file their taxes on a postcard is a good idea, why not do the same for corporations. The statutory tax rate for corporate income is 35% but most experts agree that the effective rate (what corporations actually pay) is closer to 18.5%. This is a result of all the deductions and loopholes in the tax code that corporations are able to take advantage of. If nothing in the tax code is changed, and the corporate tax rate is reduced to 20%, the effective tax rate for corporations could drop to as low as 10%. This would result in enormous, unneeded, tax savings for corporations, and an effective tax rate that is less than the 12% rate for the lowest individual income earners in the country. The Republicans could achieve the appearance of reducing corporate taxes by just reducing the corporate rate to 20%, eliminating all the corporate deductions, and closing all the loopholes in the tax code. This would allow them to meet their goal of a lower corporate tax rate (without actually reducing corporate taxes), would greatly simplify the tax code, and would allow corporations to also file their tax returns on a postcard. Corporate savings would then come from tax consultants and lawyers and not the taxpayers.
5
Tax law and regulations are like every other law in this country. They are geared for the wealthy who have the money and influence to guide legislation. Middle and lower class tax payers like myself only have the vote. It is all we can control.
If we bother to look at the flow of our economic growth and the distribution of wealth since the Reagan years, it is simple to understand what politicians have been doing at the behest of the wealthy. They get more and we get less. Simple. That is what needs to change in these new tax revisions.
If business is going to get a tax break, it needs to be tied to wage and benefit increases; not suggested, but tied. If Congress can figure out how to make tax law do that, go for it! Give corporations all the tax breaks you want. But if all this law does is create the same, silly "trickle down" that Reagan sold us, forget it. It didn't work; it won't work. The wealthy will just get more rich on the back of our labor.
6
It is about time the U.S. cut corporate taxes. The trillions of offshore money should be coming here and companies should not be moving to other countries to avoid those taxes,
3
We need to tax corporations and their phony-baloney foreign subsidiaries exactly the same way that we presently tax individuals, which is that ALL of their overseas income should be deemed taxable income, not just what they bring back to the US, which is exactly how it is with individual taxpayers. Then, because more income will be subject to tax we can reduce the corporate tax rate from 35% to about 18%.
We will continue to allow our taxpayers to take foreign tax credits for taxes paid to foreign countries so that the same exact income does not get taxed twice. That's fai
Not only will we collect more tax from our corporations but with these lower rates we will attract foreign corporations from high-tax jurisdictions to our shores instead seeing them go to places places like Ireland, Luxembourg or the Caymans.
3
This is just so obvious - tax cuts to 20% when the effective rate is already 18% just won't be stimulative, even if the effective rate goes down further. Publicly traded companies are already sitting on cash in unprecedented amounts and higher wages are only happening at a trickle. More cash won't do it.
A stimulative approach would have to be on the demand side. More money in poor and lower middle class pockets leads to spending and higher demand. This GOP bill won't do that. Running up the deficit to benefit corporations is simply antithetical to our current economic reality.
If you need any proof that Republican's ideas on the all- healing powers of tax cuts is utter madness need only look to Kansas.
6
I could support cutting corporate taxes to 20 percent--for those corporations in which executive compensation is no greater than 20 times that of the lowest-paid employee. Call it a 20-20 plan.
10
Stop the corporate tax loopholes and initiate a Alternative Corporate Minimum Tax of 20% on all profits. No longer the "highest tax in the world" but more revenue with the elimination of the loopholes.
7
We're at the point where Democracy and Capitalism are not symbiotic. The 'un' American corporation doesn't want to pay it's fair share nor does it want to play fairly. Instead they want to be considered people courtesy of the Supreme Court, line the pockets of our so-called representatives, push for lax regulations and fewer worker rights.
I do not understand why the parties aren't pushing for re-building and improving our infrastructure. This is badly needed, will be an asset to America, grow jobs and reduced the inequality gap.
7
I generally agree with your analysis and limited propsal. What reallly caught my attention was this “Real reform would also include a minimum tax on profits earned abroad by American corporations in the year those profits are earned, minus a credit for taxes paid to other countries.”
I live in Portland OR and our tax system is strongly based on State income and property tax. Under the current tax proposal I will lose those deductions (and that’s no credit, merely a deduction). So if Corporations are “people” under election laws, why do they get a credit and I get nothing? I don’t like being taxed twice on a portion of my income.
6
The Republican tax bill should also leave the estate tax as is and not take away many of the deductions that benefit middle class citizens, especially those for local and state taxes. Why should anyone have to pay taxes on money that is used to pay taxes. Also a deduction for high medical expenses should be kept. The ultra rich in our country do not need any more money. In fact, they should pay higher taxes, and they should definitely not be allowed to hide money in foreign accounts legally or illegally.
7
Just a note, the employees social security deductions are presently after tax. Then when the funds are collected again in old age they are taxed again.
Thank you. The ignoring of the substantial loopholes is a huge blind spot. There are so many complaints about the extensive tax forms without identifying that most of that has to do with corporation loopholes. But these seem to be blind spots, and we still "need" to cut corporate taxes (and raise the deficit, take away deductions that proportionately help the middle class in blue states, who already disproportionately pay higher federal taxes.) And so on. And then there will be the continuing deficit that will demand cuts to social security and benefits to the needy. And all this to give unneeded tax benefits to the already rich beyond the rest of us comprehension?
6
What I find perplexing in the thinking of those who say corporations are overtaxed in the U.S. compared to other nations--beyond the fact that the "effective" rate (what the average rate paid really is) makes that overtaxed premise a fiction--is any recognition that our ability to set corporate rates extends only to our borders.
We can not control what other countries do.
And post WW-II history makes it clear that slashing our corporate rate will almost certainly provoke other nations to lower theirs more.
It is a vicious cycle of dwindling revenues and rates--a race to a bottom in which corporations are free riders--enjoying all of the benefits of the economic systems the rest of us fund freely, contributing nothing towards upkeep and operations, all while extracting profits.
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It is ironic - or maybe not - that what you call the worldwide competition for job-creators (sometimes called entrepreneurial companies) is a 'race to the bottom'.
How many careers and jobs do you think Apple, Google, Facebook, Amazon and Tesla have created in the past three decades?
How many have the 'rest of us' created?
Do away with corporate taxes but raise the alternative minimum tax for only the top twenty percent and do away with it for the lowest 80 percent. Raise the tax rates for the top twenty as well. Charge a higher capital gains tax that gradually gets smaller over the length of the investment. Do a VAT tax.
Do away with all deductions. If legislators want to have effective policy then let them have the intestinal fortitude to vote for it with an affirmative plan for implementing said policy.
Every share of all classes of stock has to be issued with an equally valued non voting share to be held by the government for building a retirement trust fund to supplement SS.
interesting concepts, but the government already has a non voting share in all corporations through the ability to charge a corporate income tax. The distribution of the government take is up to congress.
the problem is not that there are loopholes but that they disproportionately benefit large corporations who end up paying a lot less than the rest. 18% effective rate is just an average. Apple and co pay a lot less.
But those loopholes are very hard to shut down. How do we stop corporations from setting up foreign entities and reporting revenue into those foreign entities?
Further, the concept of a corporate tax is sort of absurd. Taxes are already levied on workers output through the payroll tax and the income tax. Profits earned by investors in the company are taxed top (dividends and capital gains). And products sold by the company are taxed via the sales tax. Every participant in this game is already taxed as are every inputs (labor, capital) and output. What exactly is the corporate tax doing and who’s paying it?
As noted in the editorial, it’s probably the shareholders who are paying the bulk of it through lower dividends and lower capital gains.
So instead of maintaining this system with loopholes and taxing shareholders twice, why not drop the corporate tax entirely and fix the dividends and capital gain taxes so they match the income tax rate and shareholders pay their fair share? That way no more loopholes and no more incentives to hide profits (and incidentally no more distortions for people earning money through capital gains).
1
Wait a moment, Canada is providing greater benefits to its citizens with lower tax rates? How are they doing this?
4
I believe they call that bit of magic, "priorities".
Republican's "tax reform" plan becomes much more logical and understandable if you first admit the fundamental goal of the Republicans. That goal is not, as stated by them, to "reform" taxes so that they are fairer, or to give working-class and middle-class people a tax break. The Republicans true goal, which they are spending a lot of time, and a lot of highly-vocal lies denying, is to give some corporations a bigger tax break than they already get, and give a huge tax cut to the wealthy while more firmly entrenching wealth across generations. Once the Republican's true goals are recognized, their "tax reform" plan becomes a brilliant piece of legislation, zeroing in 'with laser-like focus' on these goals. The "tax reform" plan is a huge handout to the wealthy, goal accomplished. The "tax reform" plan gives certain businesses, particularly 'pass-through entities' (which, not coincidentally, our current president is the owner of dozens or hundreds) a big tax break, as well as preserving useful loopholes prevalent in the real estate development business. Goal accomplished. Self-dealing has risen to a new level of achievement in this tax bill. What the Republican's "tax reform" legislation does NOT do is reform taxes, nor does it lower taxes for many working-class and middle-class people, but actually raises taxes for them. It does give a massive, immediate, and continuing tax cut handout to the very wealthy.
6
Voters need to ask their members of congress simple questions to derail the GOP welfare for the rich program that masquerades as a tax cut.
How will the tax cut rebuilt the crumbling roads, rails and bridges?
How will the tax cut built schools and pay teachers?
How will the tax cut help pay back the national debt?
How will this tax cut provide energy security through US made wind, solar and hydroelectric energy?
How will the tax cut fight the opioid epidemic?
How will the tax cut lift people out of poverty who don’t make a living wage?
How will the tax cut fund essential higher education?
How will the tax cut pay for basic health for the uninsured children?
How will the tax cut grow a work force that is ready for the information driven economy?
How will the tax cut ensure clean water, air and soil?
How will the tax cut invest in basic research that will benefit everyone?
How will the tax cut do anything but make rich richer and everyone else go broke?
8
Precisely. If this keeps up, corporations will be paying no taxes, the middle-heading-toward-poverty class will be paying all the taxes, there won't be enough revenue to support any government programs other than defense and Congress will abandon all pretense of serving the people by becoming a giant corporate board of directors dedicated solely to the profits of multinationals.
4
One more perspective, between income and payroll taxes, working Americans pay 73% of the federal budget.
Corporations only 11%.
12
If corporations move profits offshore to lower their taxes, why wouldn't they move jobs overseas to lower their labor costs? GOP rationale does not compute.
5
Is it just me, or if we're saying 35% but only actually getting 18% then couldn't we just say it's a flat 20% with no loopholes and actually raise more?
That way Trump can claim to have cut the rate whilst actually bringing in more revenue. Some of that winning we keep hearing about...
5
There would have to be a method of closing the loopholes, which is conveniently NOT included in the Republican tax plan.
Tax cuts to drive up employment rates is a scam meant to throw even more cash on the already trillions of dollars of money piled up by large corporations and wealthy people.
In all my years in business leadership roles, from small start-ups to large multi billion dollars corporate behemoths, never did we hold off hiring in anticipation of potential tax breaks to cover the cost of new hires. Never. We hired if the business projections pointed to revenue growth enabled by more employees or we cut jobs if projections pointed to a revenue downturn for our business. We found the money to hire, by borrowing from banks, selling corporate equity, or by re-allocating employees from less revenue generating endeavors, or whatever else it took to increase revenues driven by hiring more employees to increase productivity.
29
The problem isn't our tax system, it is our political system. As this editorial points out there are obvious and easy ways to really reform the tax system. But we all know they are unlikely to be made part of the GOP plan.
We also know that trickle down economics has been empirically shown to be a false promise. When big companies have a choice between paying a dividend to their shareholders or a higher wage to their workers they have consistently chosen their investors.
Wages didn't become stagnate for thirty years because corporations weren't making a profit and the modest increases that we see now are in real dollars only slightly above inflation.
Our problem is Citizen's United and the army of lobbyists who virtually own Washington. Just as the fossil fuel industry has been writing our environmental regulations, big corporations and their investors have their way on a host of issues including taxes.
The only thing that will get our politicians to listen is to unseat a few of them over this issue. Given the make up of our political system that's unlikely in the short run, but it's clear that most of our representatives no longer speak for the people.
71
Yes, corporations, always favor investors with dividends over higher wages for workers. One big reason is that business executives are often paid with stocks from their own company. Why, why would a business executive increase a workers salary when he could simply increase his own?
1
I have a simple idea to deal with taxing overseas profits. Regardless of whether a corporation is US based on not, lets look at world wide revenue and profit for the overall entity, including all subsidiaries, shell companies, etc.
Once we have identified worldwide revenue and profit, then identify US based revenue. We can then determine what percentage of revenue is from US sources. We would apply that percentage to worldwide profits, and apply a tax rate.
For example: company B has $1 billion in total revenue and $100 million in profit. $500 million of the revenue is from US sources, or 50% of total revenue. We would then tax 50% of $100 million, or $50 million, at whatever tax rate we end up on.
While not a perfect proxy, this system would prevent companies from parking profits artificially in tax havens overseas and also allow us to properly tax foreign companies that do business in the US.
3
This is exactly what the author said. This is how startes tax profits. The real problem is deductions. The only deduction that should stay in place is depreciation of equipment and other intellectual property.
Also taxing foreign profits at a discount rate immediately.
But we know this is not how a sausage is made. Hope for terrible expect worst.
I get a pension from the UK's Royal Air Force (RAF) for 20 years of active service. I have lived in the US for the last 20 years (became a citizen in 2007) and I own a small LLC pass-through business.
Paul Krugman advises that the 25% pass-through rate this article cites will not apply to me because it excludes people who actually work for the company! I also have to declare and pay taxes on the UK RAF pension which, to me, is clearly taxation without representation.
The republican tax 'plan' does not benefit me and I'm in the top 3% earnings-wise, it benefits the 1% or maybe 0.1% only.
9
The GOP plan would create 1.5 trillion dollars of new debt. Instead of giving that money to wealthy people, why don't we rebuild our infrastructure?
127
The rich would rather have the money to build private roads and highways at tax payer expense, then charge us to drive on them. Win-win for them, and for the other 99%? Well, we lose-lose as always. What would be the right thing to do is to force these corporate welfare cheats to repatriate their money and pay FULL taxes on them. imagine what amazing things our country could do with a few trillion added into the federal government coffers? Totally upgrade our infrastructure to be the most modern and efficient in the world, fund healthcare for all, fully fund every single school system so they can really provide top quality education to all of our kids regardless of their neighborhood, city, or state they live in. That's a good start right there.
VKM says that tax cuts should be tied to "specific investments" , which I guess means building new offices, factories and equipment, and hiring more people. Wouldn't all of those stimulate the economy and create more jobs than just giving corporations more money to do with as they see fit? We can see how they have spent their money in the past, and its not always job creation.
6
We've known for at least 40 years that for every dollar invested in IRS auditing capabilities, the government receives $6 in return. No one knows how much money slips through the cracks, but it's possible we're leaving a half trillion dollars of unpaid taxes on the table every year. The IRS employs about 100,000 civilians--the Defense Department employs 750,000. Our military owes its might to the money we spend on it. This makes tax collection a national security issue. Universities across the country should offer a major in tax auditing and collections so that the IRS can be begin hiring 25,000 agents per year until the work force reaches one million. You want a robust jobs program that offers high wages while raising tons of cash for the government? This is it.
52
They already do. It's a little thing called accounting major.
You obviously have not worked with the IRS. The test for hiring was downgraded in 1998 so that more 'less educated and fortunate' could get federal jobs. About 30% are black now, and sadly still don't know what they are doing. Worse, they are arrogant beyond belief.
No, we do not need more IRS workers. They are no force against tax attorneys anyway, attorneys used by the big companies that make the most. And the IRS doesn't go after one of the simplest means to collect - 1099 workers that don't claim their earnings. While you might think that is small compared to the hated rich cats, it is worth billions. Billions that they do not go after.
The ONLY answer is to eliminate the loop holes, all of them. And, to then fire 50,000 of the least capable IRS employees as they won't have much to do with a simple tax code. I pay my taxes, through the nose, but know of many that do not - many that you would call the precious middle class that somehow think they are entitled to not pay as others don't pay (or don't pay their 'fair share).
Transnational data outflow of profits to tax havens should be taxed as they leave the U.S. financial system. Either spend and invest in the U.S. or no tax cut. And corporations should pay their fair share for roads, bridges, water and sewer systems, and insist on negotiated drug prices for U.S. residents.
13
"In 1967, corporate tax revenue totaled more than 4 percent of the gross domestic product. Last year, it totaled just 1.6 percent. By contrast, individual taxpayers are contributing a larger share through income and payroll taxes."
This statement alone says it all. Corporations have been socking profits away for decades, gaming the system to ensure that they keep the most they can, wherever they can, anywhere in the world. This has forced the government to run on withheld taxes from ordinary people who don't have access to fancy accountants.
All these books coming out, that capitalism has run amok--and the Trump tax plan as currently configured just confirms the direction we're going in.
So each family is going to see a $3000 to $7000 salary windfall from employers? Do you believe in the tooth fairy?
The board makes many reasonable suggestions including having Republicans work with Democrats to stop the loopholes and force businesses to pay their fair share, some of which can go for infrastructure.
But start with the premise that each side compromise--ain't gonna happen.
Our broken politics, and naked greed permeate the plans put forth by Congress. How we conduct our economy says a lot about the values of the majority party.
Forget the rhetoric: this tax plan is for the rich. The rest of us tread water, or even go under based on where we live, the size of our families, how old we are, and what we do for a living.
How is that making us great again?
86
Right and look at http://economix.blogs.nytimes.com/2011/05/31/are-taxes-in-the-u-s-high-o... to see that 1.6% is among the LOWEST of developed nations.
Um, you forgot to look at the spending change and government largess since 1967. You forgot to look at all the new entitlement programs and expanded eligibility to receive those entitlements.
Ma - What dies that have to do with how little taxes corporations really pay?
We do not need a tax cut. We need to raise income taxes on the wealthy. This is the most significant area of change over the last 30 or more years. The bottom line is that we need to raise revenue, not create more debt.
There is nothing wrong with refining the tax regulations to make filing easier for those of us who do not have an accountant or a lawyer, but any revision of corporate taxes should focus on them paying more, not less.
As this article points out, and as other articles have pointed out similarly, corporations pay less than 20% now. What's the point of focusing any attention on these companies, other than to stop them from falsely sheltering their profits.
The Republicans are in the process of holding up the country before getting out of town, and they are in a rush to do it. This is not how any revision should take place, let alone taxes.
105
"We need to raise income taxes on the wealthy."
This is exactly why we need to eliminate the deductions for state and local taxes and property taxes used by "the wealthy" to avoid paying "their fair share."
As a New Yorker I'm sure you have no problem with the above.
Mookie, because paying state and local taxes is the same as not paying taxes? Huh? And do you really think only "the wealthy" pay state, local and property taxes?
Besides, the regions with high local taxes are generally the same regions that *already* pay much more to the federal government than they get back, while the low tax regions pay in less but get more.
Now, what was that you were you saying about people who should be paying "their fair share"?
NO, the bottom line is that the Fed MUST cut spending. They are one of the few organizations that still use a zero sum budget - if you spend it this year, you get more next year; if you don't spend it this year, you get less next year. It is astounding that readers are so unaware of the utter waste. About 20% of the Federal government employees actually know what they are doing and work at any level of urgency to get a job done. Additionally, we need to eliminate about 50% of the administration employees that do nothing.
Of course the response from the public service union employees (all) will be to slow down and basically whine that they can't do their job because of budget cuts. And you will believe them, because you've been brainwashed to trust the government vs. those 'evil' rich (not) business owners. The absurdity of this thinking will bring this country to it's knees. Once that happens, there will be no resurrection.
I wonder why in an article discussing the relative corporate tax rates between OECD countries there is no mention that the U.S. is one of the few countries which taxes companies and individuals on their worldwide income? What's the impact of this worldwide system on the competitiveness of U.S. companies?
7
Also consider the US military, NSA, diplomatic, research, copy write costs etc. to protect corporate world wide system? Over 50% of the US budget.
1
the easiest way for corporations to cut their corporate tax bill is to simply pay 100% of revenue to workers in wages and benefits, either directly in operating costs, or in depreciation of built capital assets, ie, the labor costs of building factories, machines, new technologies, new products, better products.
business taxes in the US are on the business revenue NOT paid to workers.
in the rest of the world, the primary business tax is on the labor costs in goods plus profits taxed in the local of the national value add, the local of labor. eg, the VAT which is used to pay the social costs of a valued labor force AND consumers.
economies are zero sum. GDP can not exceed the total consumers pay for the production, and consumers can't pay more than they earn in wages, benefits, and other welfare.
conservatives keep trying to promise a free lunch of zero costs but high incomes. they have failed to deliver the free lunches Reagan promised in the 70s, and that has been the GOP promise ever since.
28
Unless the proposed corporate tax rate cut is duly aligned with the larger goals of economic policy such as the judicious expansion of tax base, revenue mobilisation, domestic savings, job increase, and plugging loopholes in the overall tax regime, mere lowering of the corporate tax rate wouldn't serve any purpose than benefiting the filthy rich and the tax evading realtors, hedge fund managers, and the Walls Street sharks, which is what the Congressional Republicans really are itching for.
37
The proposed corporate tax rate must be raised, not cut, to duly align it with the larger goals of economic policy; the #1 goal, curb an increasing national debt to grow no faster than the GDP.
7
Many states tax physical property. Why don't we tax financial property, and least over a certain threshold, and with a graduated increase on larger holdings. We could call it the billionaires tax. They think they can make better decisions about how to invest their money than the government can. I disagree. The government would invest it right here at home on roads and schools, and lots of other things billionaires don't need and don't care about.
46
If Congress genuinely wanted to reform the tax code, it would oppose its use for making policy. Taxes should be used to raise revenue, and that is all. If Congress wants to support a particular policy, it should do so through legislation and appropriation. Of course if they did that, there would not be all the loopholes and credit favors to grant to potential campaign contributors. In addition, they would have to vote on policies and, thus, be put in a position to be held politically accountable.
Most Americans resent the tax system because they view it as unfair. Make it just about raising revenue, treat all income the same with progressive brackets, and everyone can fill out a 1040 in minutes rather than hours. If Congress wants to subsidize mortgage-holding homeowners, people with children, users of solar power, tobacco growers, 501 c3s, or any others as is currently done through the tax code, let them go on record and pass legislation granting the money. They should not be able to hide behind a pork-laden tax code so long and complex that I would bet not a single Member of Congress has actually read the whole thing.
Much of the discontent voters made evident in the last election resulted from a justified feeling "the system" is both unfair and unaccountable. Returning taxes to their original function of raising revenue, and forcing politicians to take a stand by having to vote on functional subsidies would be a good start to reawakening Americans' faith in "the system."
33
I so agree. Tax money is supposed to raise revenue to run the government, and not drive social policy. But those in government don't have the courage to alienate those special interests, who keep them in power. Maybe term limits would change that.
1
See my answer above to this comment.
For all its good intentions, this discussion is once again lost in the weeds like all tax analyses. A better start might be to recognize that all corporations do not pay taxes at the same rate. A fixed asset-heavy U.S. manufacturer is far more burdened than a patent-rich technology or pharma company that may artificially transfer intellectual property anywhere it serves a purpose. That purpose, as we all know, is only to reduce taxes. This is why we have so much cash parked overseas where it does little good. A tax holiday to bring it home will do little long term good to the U.S. economy. I say: tax worldwide income of companies doing more than 50% of sales in the United States at a fair rate (20% is as good as any); allow deductions only for taxes actually paid to another foreign jurisdiction; and be done with it. All the other details will strangle us... actually they already are.
26
There are two principal theories about how to grow the economy. Republicans favor tax cuts. Democrats favor government spending. The Board says the Republicans are telling a fairy tale. A quick search of the internet reveals that the following, among others, believe Democratic policy --as implemented by TARP -- was a failure in part or on the whole: Forbes Magazine, U.S. News, leading conservative economists like John B. Taylor of Stanford, NPR, Slate Magazine, and ABC News.
Lots of folks attack the conservative theory. A lot fewer defend the Democratic theory. Many economists will tell you that FDR's New Deal was a bust for one reason or another. The reviews of TARP are mixed. A fair overview of the situation is that the conservative strategy is highly dubious and the liberal strategy is iffy at best. If the economy needs stimulating nobody really knows what to do. I suggest that we all get $1,000 from the government and $1,000 from our employers and spend it however we want. After all, it can't hurt.
TARP wasn't Democratic policy. TARP was implemented by Bush.
2
Actually, you accidentally hit on it. Our economy is uncompromisingly oriented around consumer spending. However, just handing out money won't cut it. Depending on the person, one may spend it, another may save it; in the end unless demand is increased (and there's no way demand can be stimulated sadly), there's no improvement. While both systems are essentially rolling the dice hoping that providing more money to someone will increase demand, given how our economy is organized, we're better off in the long run providing more money for those at the bottom of the scale (who are more likely to spend extra funds than save/invest it) than at the top. In that way, tax cuts are a far worse bet than additional government spending. At least government spending could be spent on increasing demand in areas that need it. Barring that, giving additional funds to poor and working class people would be a close second.
Instead, what we do is to give money to the very segment of society least likely to spend it - the richest. (who BTW got rich by NOT spending money) Given it's easy to show that consumer spending and economic growth are directly correlated, as money further concentrates in the upper percentages, growth should drop off, exactly as we've been seeing the past 40 years. It's not regulations killing growth, it's this slavish devotion to tax cuts for the richest that is causing it.
No references, no figures, no sense.
I miss the 90's. Clinton raised taxes, yet jobs were plentiful and the economy was booming. Then W decided to cut taxes during wartime and here we are. But as long as the wealthy and corporate America gets their tax breaks that's all that matters.
52
Unfortunately, the Clinton boom was based on an explosion of private debt. Bush's deficits were smaller than the trade deficit so money continued to flow OUT of the private sector and private debt continued to increase. The cumulative effect of the resulting stress on the banking system was the crisis of 2008.
3
Actually Clinton cut the capital gains tax and that coincided with the budget surpluses of the late nineties.
1
Economic growth was highest in the 50s-60s when tax rates were much higher, with marginal rates of 90%. The Reagan wealth transfer to the wealthy hurt the economy. The Bush wealth transfer to the wealthy hurt the economy. The Trump wealth transfer to the wealthy will hurt the economy.
Economic growth occurs when the largest economic groups have discretionary spending. When the lower and middle classes have cash, they spend it. When the rich have cash they send it to the Bahamas.
The Trump tax cuts seem to have been chosen to benefit exactly Trump. I will not benefit from this plan, the odds are that you will not either.
As long as wealthy individuals and corporations can buy representation the politicians will put their interests ahead of mine. And yours.
1
Sorry NYT, there is no "right way to cut corporate taxes" unless these can be linked directly to specific investments and job creation. Otherwise the money saved will simply be transferred to the shareholders and owners, primarily the top 5-10% wealthiest in the country.
Sure the middle class will have a small return via stock holdings in our 401K plans and savings. But lets recognize these are literally bread crumbs compared to the cost we will bear as a result of cuts in government services, investments in our education, health and infrastructure, that will result from a 1.7T increase in debt.
The corporate cuts, along with the estate tax, account for 80% of the value of the 1.7T cut and are simply an epic transfer of wealth to the wealthiest.
120
It seems to me that most of the proposals suggested here for cutting corporate taxes involve actually collecting more corporate taxes in more appropriate ways and effective ways. That sounds to me like the right way to cut corporate taxes.
Arbitrary approaches to cutting corporate taxes may well not work, and the the Republican tax proposals are the worst ways of cutting corporate taxes, for the country and its citizens at large. As you say, "an epic transfer of wealth to the wealthiest."
1
One of the most appealing ideas in the 2016 report from the previous White House & Treasury Dept. was the idea of a "Minimum Tax Rate on Foreign Earnings" - that is, no matter where a company had earnings, there was a "floor" on the amount of tax paid on those earnings in the US.
This is not trivial to implement, but would represent a serious run at tax havens - if a company is taxed on earnings in a zero-tax haven anyway, the incentive to use them will drop substantially.
14
If Congress genuinely wanted to reform the tax code, it would oppose its use for making policy. Taxes should be used to raise revenue, and that is all. If Congress wants to support a particular policy, it should do so through legislation and appropriation. Of course if they did that, there would not be all the loopholes and credit favors to grant to potential campaign contributors. In addition, they would have to vote on policies and, thus, be put in a position to be held politically accountable.
Most Americans resent the tax system because they view it as unfair. Make it just about raising revenue, treat all income the same, and everyone can fill out a one-page 1040 in minutes rather than hours. If Congress wants to subsidize mortgage-holding homeowners, people with children, users of solar power, tobacco growers, 501 c3s, or any other group as is currently done through the tax code, let them go on record and pass legislation granting the money. They should not be able to hide behind a pork-laden tax code so long and complex that I would bet not a single Member of Congress has actually read the whole thing.
Much of the discontent voters made evident in the last election resulted from a justified feeling "the system" is both unfair and unaccountable. Returning taxes to their original function of raising revenue, and forcing politicians to take a stand by having to vote on functional subsidies would be a good start to reawakening Americans' faith in "the system."
7
Taxes have never been used only to raise revenue in the history of the U.S. Early taxation leaned heavily on tariffs, which were intended to raise revenue *and* protect U.S. enterprises from foreign competition. And very successfully, too, as we stole advanced technology from England and Scotland and refined it here.
3
Steve, where does the money that people use to pay their taxes come from? Do they print it in their basements? Does it fall like manna from the skies?
The federal government doesn't need taxes (or tariffs, Tom) to raise revenue. It can create as much as it needs. The purpose of taxes is to adjust the amount of money in the economy.
3
Thanks for the addition/correction, Thomas. Sometimes trying to cram thoughts in 1500 characters leads to lack of clarity, precision, and thoroughness. My bad !
1
If cutting the corporate rates from 35% to 20% would be so beneficial to all of us, wouldn't eliminating that tax altogether be even more beneficial? Why tax the profits of corporations or any other form of business at all? Tax personal income from all sources at the same rate on a progressive scale. To replace the revenue from untaxed corporations, raise the personal income tax rates of the top income tiers and, if that alone doesn't balance the books, tax the spending of personal income in some way. We all know that big corporations will find ways to minimize their tax payments if their rates are reduced. Few will pay even the 20%. There will be loopholes built into the Republican plan. Lobbyists will see to that.
3
Here is another way to look at the problem.
Our illustrious Supreme Court has ruled that corporations are now people and are entitled to civil rights. OK. People pay taxes to support our nation so we can have civil rights. If corporations are now people and are afforded all the protections that people have, then they should pay taxes like people do.
Republicans actually want to zero out corporate taxes. They would if they could. OK. But corporations are heavily engaged in the political process. If they pay no taxes, then they should not be allowed to participate in the political process. No more trade groups, no lobbyists, no campaign contributions.
Republicans want to turn them into pass throughs. OK. Then tax all dividends and distributions at the same rate as labor. It all spends the same. It all represents speech. Why should passive income derived from corporate sources be taxed at a lower rate than a roofer pays?
Or we could protect passive income and just have corporations pay the same taxes they used to pay. Like they did when people earned a living wage.
271
"If they pay no taxes, then they should not be allowed to participate in the political process."
Can we extend this concept to individuals? Unions? Tax-exempt organizations?
And newspapers.
1
I knew I would get a response like yours. Largely yes regarding organizations if they pay no taxes. But all individuals pay taxes. They pay payroll taxes, property taxes, sales taxes, various fees. People cannot and should not be excluded because of their tax status.
4
BIG ERROR: corporations are NOT people. They are merely structures for business entities. We need to correct that error made by our SCOTUS before we move on. It's a fundamental flaw made by questionable Judges who seem to be actively partisan or mentally impaired...how else could they have arrived at that absurd decision?
4
Tax reform could be more revenue neutral if a reduction in the C corporation rate was coupled with ordinary rates on dividends. In fact, the policy pairing might actually encourage corporations to give a bit more of the expanded profits to workers. An even bigger boost to workers could be achieved by replacing the job stifling business portion of the payroll taxes with a 4% VAT – (the lowest in the world). Revenue from the VAT will also grow and support Social Security and Medicare far better than taxation of slow growing payrolls.
@Garrity suggests a “graduated tax on wealth” instead of an income tax for individuals. A flat tax rate on wealth would be progressive and a graduated wealth tax could be over the top. After several decades of considering wealth taxes and studying the family harm caused by the growing wealth gap, I am convinced that wealth taxes should be an option for those with less wealth – a way of reducing the income tax rate. Consider a 28% income tax that could be reduced (to 8% minimum) by 1% for each 0.1% in optional wealth tax (up to 2% maximum). Those with little wealth or income in excess of 10% of their wealth will tend to choose a 2% wealth tax to qualify for a low 8% income tax (with no payroll taxes). The wealth tax option could be made more attractive and fair by giving a tax exemption for savings of up to $500,000 for retirement, health care and education.
Those who think wealth should never be taxed have a serious problem with family values.
4
The most infuriating lie being told by the Republicans is that incomes will rise by thousands of dollars. Who out there would believe this garbage? It's as if someone was selling $20 bills for $50.
For decades before 2005, corporate profits averaged around 5 to 5 1/2 percent. Since 2005, they have essentially doubled. During this increase in profits, did wages rise? Nope! Where did the money go? It went to the shareholders. Who are the shareholders? Corporate officers, Wall Street firms and wealthy investors. Joe six-pack saw none if it.
Then they keep pushing this enormous lie that reducing the tax will spur investment which will create jobs. Large corporations are sitting on trillions of dollars now. Why don't they put that money to work. They can borrow at extremely low rates. Liquidity is not a problem. My tiny business gets offers in the mail almost daily from outfits that want to loan me money. Paypal wants to loan me money. My bank wants to loan me money.
Then the biggest lie of all. Investment will boost supply which will grow the economy. Business operates on demand. Businesses adjust supply to meet demand. A company can make the best widgets in the world. They may be the lowest cost widgets, but if people don't want to buy them, they won't sell and you go broke. Investment is always made in response to demand or anticipated demand. Guess what? Buyers need money (wages) before they can buy anything.
363
Yes, the rate of corporate profit has doubled -- yes, doubled -- in recent years. (Has your income doubled in recent years? That's in real dollars, as percentage profit is equivalent to counting in inflation-adjusted dollars.) The money goes to shareholders, mostly to extremely rich investors, and top executives, and in the financial industry anyone who can claim a cut.
20
I have had many discussions with conservatives who buy into this discredited idea that supply somehow creates demand till I'm blue in the face. It is the economic zombie idea that refuses to die in the minds of conservatives. Even when I point out obvious things like does Boeing build planes then go out and try to sell them? Well of course not they sell them build and before they even start a aircraft program they have to be sure their is demand first? I might get them to agree well in that case I'm right but the zombie never dies.
4
Excellent post. Some of our economists have lied because bribes have trickled down.
5
I really worry that more money goes out of companies and corporations now - the tops guys are raiding the cash register. Designing the tax reform to pull back the money from overseas, to keep money from profits going back in for R&D, new profits, non management employee wages, training and benefits, improvement for environmental changes, new plant development is all good. It's the management wages over 30 x the lowest wage employee that is out of control now. The new tax reform will ultimately be horrible for companies and our economy; all they are trying to do to grab all the cash now and hide it away where it isn't working for our economy.
9
So, what's new? That's the essence of the greedy billionaire class and their political party. Some of us think it's short-sighted of them, as it hollows out the consumer base, but that kind of thinking falls into what Sinclair Lewis meant when he said it's difficult to convince a man of something when his salary (read "income") depends on his not knowing it.
13
As admitted by the editors, the combined fed-state statutory corp. tax rate on average is 39.1%. Pointing to the GEs and Apples of the world that pay little to no taxes because they can afford creative tax lawyers and accountants doesn’t make up for the vast majority of the 1.7 million “C” corporations in the U.S. that pay income taxes. That makes us the most expropriative country on Earth except for … Chad. The editors claim an effective average rate actually paid of 18.1%, but what’s the median? And what’s the median percentage paid in taxes by those corporations OUTSIDE the Fortune 1000? Most companies pay at rates FAR closer to full-freight. The editors might have been clearer about the basis of their claims.
And some suggest that this helps our corporations remain competitive, and that it doesn’t hamper innovation by excessively limiting the rewards of innovation.
Every one of the editors’ suggestions, astonishingly, is one favored by Democrats. It might have escaped some folks that we have undivided Republican government. But a few of those suggestions are marginal, ideologically, and I like them. What’s more, I’m not wild about the current Republican plan, although I realize that Mitch McConnell needs to scare up parochially-vested Senate votes and I don’t.
But here’s how I would do it (which includes parts of some editor suggestions that I like).
3
Create two federal corporate brackets, and encourage states to follow suit. A lower one of 20% would be imposed by default on all “C” corporations for profits actually earned on sales in the U.S., with NO deductions or exemptions. However, beyond a certain size as measured by revenues or number of employees, any corporation that can’t demonstrate on-going performance at keeping jobs within the U.S. is assessed a higher rate – say an unchanged 35%. Do NOT impose taxes on profits earned on actual sales outside the U.S.
ALL corporations, in order to qualify for the 20% rate, must demonstrate that they have an effective training program, rather than requiring that all entry-level personnel possess years of experience applying specific skills – however, give start-ups a grace period of up to five years that forgive them this requirement.
Remain flexible in order to build bipartisan support by negotiating as needed between 20% and 25% (but negotiate hard to keep that lower bracket as close to 20% as possible).
If we did this, we’d generate MORE not less tax “revenues”, we’d incentivize the right behavior, we’d maintain robust economic growth, and we’d get government out of the pernicious business of creating winners and losers among our businesses, favoring some industries and types of companies over others. Of course, we’d have to find work for the thousands of tax consultants, lawyers and accountants currently engaged in avoiding taxes … but SOMEBODY needs to dig ditches.
11
Astonishing, isn't it, that plans to prevent stealing tax revenue for the ultra-rich (by cutting and raising taxes selectively) are not favored by Republicans. I'm startled. Maybe even shocked, shocked.
19
Thomas:
If the editorial were about individual tax reform instead of corporate tax reform, I'd have a hilarious rejoinder for you. But as it is, I'll wait until you offer a response that's relevant.
I have never understood the republicans who scream about debt and deficits and then, once in power, do everything in their power to increase it.
227
You don't mean that, Mark? We know perfectly well what they're up to. Just watch what they do, not what they say, especially since (collectively, despite some individuals) they've lost every scruple ever invented against lying.
18
Mark, there’s nothing to “understand.” They lie. That’s it.hey don’t actually care about any of the things they claim.
1
Mark:
If you do not understand it, look up the definition of "HYPOCRITE."
1
While the gist of the article is quite correct, in particular the proposals of implementing VAT and financial transaction taxes which would boost revenue without reducing the productive activities in the economy, claiming the proposal to immediately expense capital investment in the equipment to be a giveaway is very wrong. In fact, this is the only thing in the current Republican tax proposals that will have the promised effect of speeding up GDP growth - and longer term, there is no gross tax loss, only re-distribution of the collection in time. For the businesses, especially small and medium ones, this change will make a big difference and allow for many new investments to be made. It shouldn't be limited to 5 years, however, but should be made permanent.
1
A luxury tax is much simpler.. KISS... BTW one could do a bracketed VAT on everything.
Taxes on income, whether corporate or personal, are frequently evaded and they distort investment decisions, a lot.
Also, they require a lot of work to minimize and to file.
A better method is to replace corporate and personal income tax with a combination of a graduated wealth tax and a value added tax.
The graduated tax on wealth would be on all assets controlled by each individual. All personal and corporate assets and any other type of asset, anywhere. The only deduction would be for similar wealth taxes paid to another country. As with real estate taxes, this would encourage all assets to be productively employed.
The value added tax would be on all sales of products and services. It would be made progressive with a grant to each citizen. Savings for retirement would be encouraged since they would be tax-free.
Taxes would become simple to calculate, difficult to evade, and progressive.
The need to avoid taxes would no longer distort economic decisions. We could again focus on profit, on finding the best return.
16
Wealth tax?
That's what the estate tax is supposed to be.
An annual wealth tax would mean that we would all have to get appraisals on everything we own every year. That would be a great jobs program since we would need millions of appraisers.
6
Assets can be masked and hidden overseas just as easily as income. I fail to see how this helps.
1
What you seem to like would be a tax only when money is spent. THAT will really boost retirement savings. We could even close down Social Security.
1
What if we abolished the second set of books for tax purposes?
Public firms could pay taxes on the earnings that they report to shareholders rather than the distorted (and secret) accounts used only to reduce their tax liabilities. Tax returns and accounts should all be open public documents.
127
" Taxes are the price of civilization ". If Corporations don't want to pay a fair amount of Taxes, fine. Leave. Move overseas, completely. Let's see how THAT works, for you. Especially when tariffs and import fees are added to your prices, on your products. Just saying.
161
An example of the non rational, ill advised thought process of the conservative right. Much easier to keep hitting a problem with a stick until it stops moving than investing the hard work to find a workable solution. Well demonstrated in the attempt to repeal Obamacare, the pull out of the Paris agreement, the list goes on. The one sure thing is, that a tax revamping that is driven by an arbitrary timeframe and the need to placate the big money with a favorable outcome will not be favorable to the majority of Americans. One wonders when the GOP and its followers will become the adults in the room they so desperately need.
61
Yeah companies are trying to leave the U.S. What did you think all those tax inversions were for? The Obama administration's Treasury Department decided to unilaterally make up legislation to try to stop that happening.
Actually, quite the opposite is true. Profits go up significantly when you move overseas. Will that be true in the long run? Don't know, but countries behave as our states do now - give away the farm to attract a company promising many good jobs, and then when those jobs don't materialize, change the law? Or, if you're China, steal the proprietary knowledge, package as your own, and sell to others at a deep discount until the competition is gone. Then raise your prices.
The problem, Phyliss, is that companies make a lot more profit when they hide overseas (or in the Caribbean). The tax rate is one driver. Labor rates are the key driver.
1
I get that the Republicans are bad for my financial health. What I also get is that liberals, like those who write editorials for the NYT, are not any better. This editorial praises the suggestion of a value added tax to broaden the tax base. Great. Then I would pay a sales tax of, what, 20% or more (though I’m sure it would start out lower to garner support). Oh, and this regressive VAT would burden the poor and middle class tremendously. So much for the idea of paying more taxes, the more you earn. Add a carbon tax and a financial transactions tax (with lots of loopholes for the rich I bet) and I might be lucky if I have any discretionary income. In conservative or liberal tax plans the only ones who always come out ahead are the wealthy.