The United States could pass a law tomorrow that said a company could not trade in the United States unless it paid all it's taxes in the United States - for the entire world - and there is no company, or very very few, who could resist it.
The reason this doesn't happen is that the Americans who control most of the world's major companies are more interested in their personal income than the welfare of their fellow Americans. It is simply economic treason.
16
Another tax year. Realms of paperwork will go flooding into the IRS office from US Citizens who live and work overseas yet are still forced to report every cent of income earned and spent abroad. Please tell our story. We are punished by the tax authorities in two juridictions. Where we live and because of our US citizenship. Corporations escape taxation while we spend hours on the paperwork and pick up the tab in two jurisdictions.
Thank you for reporting what we all expected would be the truth behind the legislation, but this is not enough. We need the complete list of companies who do this so that we can actively engage them in why they are reigning in even more money from us, their own customers, via the US income tax system. In effect we are paying their taxes for them. Corporations are people too. Senator Romney, prove it. Treat us like corporations and
make taxation RESIDENCE based, not Citizenship based.
80
@J.C.
Once again it is consumers that pay the tariffs, not the manufacturers.
10
The usual ignorant spiel. What benefits, pray tell? Please be specific. No, the US is not going to evacuate you if you are caught in unrest abroad except if you pay them upfront. (Yes, the State Department wants your credit card.) And sometimes they refuse to help. Every other country assists their overseas citizens but none impose a citizen-based taxation like the US. So your argument is specious. And as another poster noted, why doesn't your logic apply to corporations, who SCOTUS has deemed are US citizens?
2
@Dave
Why would you call @BBB out so harshly while not calling out corps with polititions in their pockets...?
7
Trump and his regime should go to prison for this. Another Trump con job that did nothing but lined the pockets of the rich. Nothing at all to help America except to put the country deeper in debt. Of course, the guy will zero conscience, would argue otherwise, in spite of the facts.
6
This would require replacing the majority of Congress and the entire WH...along with perhaps a fair part of the Supreme Court. Tucker Carlson was spot on....our governors are drive-by people with no skin in the game (they almost all profited by the GOP tax bill).
2
Trump and his minions disdain the ordinary citizen. Trump lives to serve himself and the 1% who can collude with and shore up Trump's sense of himself and his facade of competence. To Trump, ordinary people are chumps who he can manipulate and who can pay the freight. Trump is everything he pretends not to be. It is going to take years to fully understand the extent of the damage this phony populist has caused.
8
Trump's tax reform is just another scam by the con man carnival barker and his loyal grifters.
7
Hats off to Mr. Setser for this column. It now makes sense to me for an article I read on Wolfstreet.com. about the buyers of US Treasury bonds. Why small countries like Ireland, Luxembourg, Caymans, and Belgium own about $ 1 trillion in US treasuries. I mean Cayman Islands owns 240 billion in our bonds, how did this come about? I mean what is the GDP of the Caymans? Does this not raise any flags in our government? We need a taxpayer revolt.
https://wolfstreet.com/2019/01/31/who-bought-the-gigantic-1-5-trillion-of-new-us-government-debt-over-the-past-12-months/
7
Funny (maybe not - this is the NYtimes) how one can find just the opposite regarding international companies that are paying larger tax bills due to the GOP tax reform. Here is an example from Fortune
http://fortune.com/2018/01/18/apple-overseas-cash-repatriation-gop-tax-plan/
what is correct??? My guess the Fortune article because it DOES NOT have a political spin. There are other articles that also align with Fortune's content and conclusion.
1
Oooh!
Big surprise-- Trump's 'signature achievement is a con job?
Never saw that coming.
8
Feature, not bug.
1
Trumps tax cut scam is only the tip of the iceberg. For 40 years the Republicans have been conning the American people, Systematically looting the treasury in return for tax cut legislation and campaign contributions. Do you think billion dollar fortunes Are made through product sales? Crooked tax policies, armies of lawyers and accountants all working diligently to screw the American people by not paying their fair share of taxes.
30% of the population, the "cult of Trump" are perfectly happy living in a bubble of hate. To support their anger and racism, they allow Republicans to loot the treasury. Traitors all.
11
In another article in today's digital NYT, there was a video 'explaining' crypto-currencies. I didn't understand a word of it.
I can't follow much of the 'tax stuff' in this article except the overarching 'reveal' that the 'average' U.S. person is getting screwed -- but that is no revelation at all.
Same as it ever was … and I 'knowed' that much by default.
Indeed, even w/o any claim to Nostradamus-like 'talents,' I will always know that much before any tri-partite republican 'government' puts any tax bill forward.
3
Great article and something all proud, patriotic, MAGA wearing hat Americans should read.
2
Did anyone actually expect that Trump and the GOP would do anything but loot the ordinary taxpayer, while rewarding the rich and corporations? To treat the Republicans as a political party is a joke, they are the paid agents of wealth and profligacy.
6
Ever wonder why there has been an increasing number of extremely wealthy people that have occupied Congress & the Presidency? You shouldn't; after making profits greater than the GDP of some tiny countries, they need to manage all that wealth. What better way than to become Republican, get elected by spreading a false prosperity-for-all message to impressionable rubes and then craft laws like the Tax Reform to make themselves even more rich.
5
The lying, cheating, and stealing. Where does it all end? If we are to extract ourselves from the miserable state in which we now tread, there will need to be a paradigm shift in human thought around the world. This is not only desirable, but necessary if we are to survive as a species.
In the near future, we will program the human mind in the computer based on a linguistic "survival" algorithm, which will provide irrefutable proof as to how we trick the mind with our ridiculous beliefs about what is supposed to survive - producing minds programmed de facto for destruction. These minds see the survival of a particular belief as more important than the survival of all. When we understand this, we will begin the long trek back to reason and sanity.
See RevolutionOfReason.com
2
In short, this is why it all needs to be undone, period.
5
The real problem is that 99 percent of the American people have no idea about issues that shift wealth and power to corrupt special interests.
43
We have a billionaire president with a cabinet full of billionaires and industry lobbyists and a senate full of millionaires. We have a country by the rich, for the rich, that worships the rich. We have had presidents and congresspeople who aren't wealthy when they get elected but who leave office as multi-millionaires.
At what point to we put the blame on ourselves for continuing to elect all of these swamp monsters and buying into or ignoring all of their lies? The whole thing is one big con and only we can put an end to it. Don't expect them to kill their own golden goose anytime soon.
5
This is the man who railed against socialism in his speech to congress. He means that any share the wealth for the people is socialism, but share the wealth for corporations and the rich is capitalism, and must be preserved. The pockets of his supporters are being picked by this con man acting as pickpocket in chief.
4
Republicans make the tax code complex so they can loot the Treasury without the low-information voters ever finding out. Even when the loopholes are exposed (recharacterizing income as capital gains is a favorite), non-financial types don't understand it. They are outright thieves!
5
"Only the little people pay taxes" -- thus spaketh Leona.
The observation that in the end the consumer pays the corporate taxes is well take.
Put back the the progressive income tax, the 10% luxury tax and a meaningful estate tax.. or maybe it doesn't matter.
BTW as someone pointed out yesterday before 1982 corporate stock buybacks were illegal!!
OTOH A tariff on all goods made abroad by US companies and sold here is a great idea. Maybe then some jobs can come back to America. (You mean we're too stupid to make clothing, cars, steel, computers -- apparently we are!) We are now a supplier of soybeans and oil -- inappropriate for what is supposed to be an advanced economy.
2
It appears Mr. Setser (unwittingly?) makes a strong case for the US to reduce the US corporate tax rate still further, to, say, below 10.5%.
Never thought I’d see this in The NY Times.
Why are we not surprised? Does anyone really think Trump id in favor of anything but Trump>? The horror is that he was elected and that millions still worship him.
4
When Republicans speak on television the warning label 'Buyer Beware' followed by the sorry consequences of their 2018 tax scam as revealed in this op-ed rightly ought to crawl across their faces on a loop.
3
We can thank the Bush years for providing us a fine illustration of the “magic” of tax cuts. Enter the Homeland Investment Act .. which came on the heels of the Bush tax cuts of 2001 and 2003. With private investment lacking despite the tax cuts, the act was sold to Congress in 2004 as a way to spur investment in America, building plants, increasing research and development and “creating jobs”.
It gave international companies a large one-time tax break on overseas profits, but only if the money was used for specified investments in the United States. Approximately $300 billion in overseas profit was repatriated by American companies in 2005, when they had to pay a tax rate of just 5.25 percent, rather than the normal corporate tax rate of 35 percent. The amount was five times the normal amount of repatriations. What happened to all these profits? Left to their own devices, about 92 percent of it went to shareholders, mostly in the form of increased share buybacks and the rest through increased dividends, all non-permitted uses under the legislation. Barely a trickle went towards new growth (see NBER http://www.nber.org/papers/w15023).
So much for the magic of tax cuts ...
4
The Republicans enabled the Wealthy Locusts to descend on nation after nation as they decimated the land devouring the riches and migrating onward.
4
Trump has harnessed human weakness and schadenfreude to ensnare public support in his loophole trap.
Welcome to Patheticville USA.
4
The middle class cannot take much more. We are being crushed by the burden's foisted on us when the rich are let off the hook. The lies and unequal representation must stop. The lie's and continued power grab by those in government who are in bed with the wealthy must be stopped and if they don't, we must speak with out votes. I for one will not vote for a "centrist" who will not commit to cleaning house and giving the middle class back it's losses. I will only vote for those who will assure that the rich pay their fare share and are forced to give back the wealth stolen from the middle class.
69
@JDH
I'm with you. Maybe we should start a "Fair Share" party.
7
Yeah- the other con is that the Witholdings were manipulated to make people think they'd had a cut. They reall had not had a cut and they are learning that now as their returns are prepared and they owe money.
6
Mr. Setser ignores the pre-tax profits earned in the US by subsidiaries owned by foreign based multinationals - pre-tax profits that are shifted offshore and NOT subject to repatriation.
1
@Nancy - What would you suggest to address that or are you only pointing out its omission?
As more and more regular salaried workers and retirees file their taxes this year, they will realize that the supposed "tax cut" for the middle class as the GOP advertised was a BIG LIE.
Several commenters here already have discovered this, and a large proportion of those who rely on receiving refunds every year will find that they owe money to the IRS rather than getting a check from the government this year.
This article sheds a laser light on the "sleight of hand" that the "Tax Cut and Jobs Act" purported to benefit voters. Clearly, the decrease in receipts from corporations and the wealthiest sectors will need to be made up either by reducing government services (i.e., Medicare, Social Security, Medicaid, etc.) as already proposed by the GOP, or by compounding the national debt through borrowing to pay for these mandatory spending items, which will affect generations to come.
Now that the true effect of this law is being exposed, it will be interesting to see if there is an enormous increase in public support of the Democrat's proposed change in brackets for those with incomes over $10 million. An additional proposal to truly eliminate the corporate loopholes described in this article would also be highly beneficial.
Indeed, this would not be "socialism" as the POTUS tried to paint it on Tuesday night, but an equitable reallocation of wealth to those who have mainly been shouldering the tax burden for the past 20+ years.
12
I know blessedly little about economics, but the 'Golden Rule' is well known: He who has the gold makes the rules.
9
You don’t mean the US Congress was misled into voting for the bill.. do you?
Also since corporations are people too (as in citizens union) should they also not be taxed as people too, on their global income?
9
@Solomon Reduce corporate taxes, people "persons" pay for them anyway. Raise the progressive tax rates on the persons, the people, the individuals with the income.
Perhaps Nixon's VAT, the value added tax, should be reconsidered.
You mean regressive tax on wages (that’s what VAT is)
@Enri Is a VAT appropriate for corporations?
There is a hidden gem in US tax law. Washington State's hated B&O tax. Anyone interested in tax law should have a look. The B&O is interesting in that it taxes revenue, not profit. This is a fascinating proposition. While we need an accountant to tell us how much profit we have, our gross receipts we can add with a hand calculator. There are Pro's and Cons. Accounting costs go down. This includes business process inefficiency resulting in the gymnastics of tax avoidance. Rates are low, and transparent. The big downside is, in a year when a business takes a loss, it can be hard to pay. The B&O was supposed to be temporary when the Washington Supreme Court Struck down the depression era state income tax. Now, 80 years later here is a study in tax policy waiting to happen.
1
Terms add to the confusion. Income should be solely associated with wages. Profits are in a category by themselves. By calling profits income their source becomes hidden. Taxes should be directed to profits which are solely created by waged labor
Big companies pay less taxes than small ones, which puts the big companies at a competitive advantage compared to the small ones. Even worse, this pushes the big companies to absorb smaller independent companies. Once absorbed, the profitability of these absorbed small companies can immediately be enhanced by applying the same tax tricks to the smaller absorbed company, which provides a further incentive for big companies to absorb smaller ones, leading to further concentration in the sector. Monopoly anyone?
11
Does anyone out there, regardless of political party, believe that Trump ever read "his" tax plan? Does anyone out there, regardless of political party, believe that Trump can string three coherent sentences in a row to explain "his" tax plan? If so, I have this penny slot machine that gives back dimes on sale just for you.
19
The fundamental dynamic of money is that successful businesses prosper by gathering money through profits by receiving it from those who have it. Like any resource, the rarer the source, the less it can be found. Since labor unions, like many other necessary species today, are rapidly moving to extinction, and thereby the wages they encouraged are now cut down to the minimum which is frequently almost impossible to survive on, the source of money for profits is disappearing as well. Nobody wants to invest in a business that will not make money, no matter how low the tax rate may be. When wages rise to give workers what they deserve from the technological advantages in new production methods there is little doubt that profits will re-appear to encourage investment.
3
That why we can't have a honest debate on the U.S. tax code that is riddled with more loopholes than Swiss cheese. The average U.S. taxpayer doesn't even realize the game is already rigged in the favor of the wealthy, politically connected, and corporate masters of the GOP. Until we get money out of politics we will always have a tax avoidance scheme that favor the interests of powerful multinationals.
10
This very insightful article still confounds tax offshoring (transfer pricing, patent boxes) with employment/investment offshoring.
The one has practically nothing to do with the other, as we are again finding out after the Trump tax "reforms".
2
As a salaried employee, I find the lock-step lemming plunge to financial suicide advocated by the GOP in Congress shocking. Their careerist behavior - simply acting on the behalf of a wealthy cabal of donors in a manner that in the long term undermines the welfare of the country and broad swaths of the electorate - still shocks me. These folks have it so, so good ... and they want more on the backs of hardworking Americans. And, the GOP had a choice. Not much more to say.
29
@Dodger Fan
The operative word is more - they will never be satisfied and will continue to strip-mine the country until the last $ is theirs.
1
I wish to thank the NY Times for publishing this informative article. I encourage you to keep us informed on the honest economic results of "tax cuts" and other legislation. It can help me hope we will finally get honest legislation that will narrow class division.
I remember Democratic politicians justifying support for the Reagan's upper class tax cuts because they were "eliminating tax loopholes." At that same time they were raising payroll "deductions" on the working class. At that time the press didn't say payroll "taxes", and of course you can't talk of Republican "class warfare", it's "economic stimulation", or "job creation".
Apparently, over 30% of US corporate stock is owned by foreigners -- including Saudi royalty, Russian oligarchs, and other members of the world's ruling classes. It's so nice of the Republicans and Wall Street Democrats to shift corporate tax burdens to US citizens. (Of course, some of that corporate ownership is held by employee retirement funds, etc.) I would be interested in having a better understanding of that connection in addition to what Setser explained.
Please keep shining light on the economic con-games that are taking place world wide. Thank you.
21
follow the money. Use simple math.
if the rich get taxed less, then the working class and the elderly get less health care.
if the corporations get taxed less, then the major benefit goes to their major shareholders, again the rich.
how does Tucker Carlson get away with bemoaning the fate of American families while he does not attack the Trump tax cuts?
Makes no sense.
Are the voters that guillable?
21
One small quibble, but overall a great article. However, you write:
"Overall, the Tax Cuts and Jobs Act amounted to a technocratic sleight of hand — a scheme set to shift an even greater share of the federal tax burden onto the shoulders of American families. "
You left out "non-wealthy" in front of "...American families" there at the end of that sentence. Trump's "Tax Reform" giveaway to corporations and the wealthy was expressly designed to shift tax burdens away from not only corporations, particularly large corporations, but also the very small number of "high net worth" families - only a few thousand out of millions of American households, families in the 0.01% who come out very big winners in the "Tax Reform" payoffs sweepstakes.
18
What I'd like to know is how much money the IRS can collect if existing tax laws are enforced. The super wealthy among us are only a fraction of 1% of the population; if the IRS can go after common citizen tax cheats, why not add on the tiny population of multi-billionaires. The take from one multi billionaire could be worth several ordinary tax cheats.
For starters, I'd begin with the Trump family. Just how much are all those Trumps costing this nation. And to think it started with grandfather Trump who immigrated here from Germany and then brought over his wife and some of her family. Has Recalling articles on how Fred Trump cheated his tenants and NY tax laws, I wonder how this compares with taking in one refugee from Honduras.
11
@citizen vox This is why the IRS budget keeps getting reduced - so that it doesn't have the resources to go after the big fish but only the little ones.
11
Sadly this seems affect all developed economies, the multinationals work the system to minimise the tax they pay wherever they operate. Here in Australia, BHP (advertising themselves as the "Big Australian") has been the subject of an Australian Tax Office (ATO) review, as it has been reducing/avoiding the company tax it should be paying in Australia, by selling iron ore to it's Singapore associated company at cost or a small profit, which then sells at market value for a considerably larger profit and foregoing the higher Australian corporate tax rate. And boy have they screamed about getting caught out. Amazon, Apple and several others have also been targeted. They have by and large agreed to pay a smaller amount than they has been determined by the ATO, to avoid court cases with companies with extensive financial and legal resources. The ATO is seen to be too soft on these multinationals by most Australians, by accepting these significantly reduced amounts and avoiding court cases, and at the same time going after individuals and small businesses that do not have the resources to take them on.
5
How much of the "intellectual-property-intensive industries like tech and pharmaceuticals" profits benefited from tax payer paid for research and development, educational costs (including debt) born by their employees, infrastructure and legal protections provided by the society they are STEALING from?
Given that the theft of society's resources - tax revenue - that it needs to function is a national security issue, perhaps we need to militarily invade the pip-squeak island tax havens and nations to recoup what has been pilfered from our society - a society these scoundrels need to profit from.
They're nothing more than modern day pirate havens for the wealthiest pirates in the world to deposit their loot - and we should let them get away with it? These tiny outlaw nations with no army?
Before returning to a 35% tax rate, we need to go to 70% or more to claw back all the revenue that was disappeared offshore. After the budget is balanced, then a sustainable reduction to 35%, or whatever, with no loopholes makes sense.
6
I depended on a yearly IRS refund after retirement from 30 years of professional nursing. The new tax law deflated my usual IRS return to zero. At 71 years of age,I took a minimum wage job called Support Services. We serve adults with Down's, cerebral palsy, autism and brain trauma---all compounded with non acute cardiac, respiratory, or neurologic issues. Support Services are non nursing services. We take our clients to parks, picnics, and walks.
Support Services are funded by the California taxes Trump is deflating. In most states, especially Red states, support services are volunteer only.
10
So sad what they did and how they have mischaracterized the new law. Trump is just an extension and expansion of the self-serving politicians that preceded him.
11
This is why simply raising the tax rates on income isn't going to solve the bigger problem of the loss of jobs and wealth in the working and middle class. And why aren't the Old Guard Democrats raising this issue? Because their wealthy donors - Wall St. and Corporate America, and all those wealthy investors don't want them to.
Sure the Republicans are the ones who lead the way on these tax policies that favor their own donors - and let's not kid ourselves that these movers and shakers don't have both sides on their payroll - but the Democrats are supposed to be for the "little guy". Seems they long ago sold them out to the highest bidders.
This is all part of the "trickle down" structure that pushed wealth to the top and concentrates in the hands of a few. It's long past time that we break up this rapacious system that preys upon the majority for the benefit of a very small minority and the political parties that profit from it.
11
@Kingfish52
So what is it then?
Only Democrats want to raise taxes on the rich and you put all the blame on Democrats selling American middle class?
Make up your mind, son!
If you really want to see what a sham these tax havens are, just look at which courts these companies use to sue one another, or enforce patent rights. Hint it ain't any on the list in this article. If you really want justice, you have to pay for it.
7
@Ask Better Questions
Exactly. The longest jury duty I ever served was 3 months in a civil court. One corporation sued another corporation. Each litigant had 3-4 attorneys every day and a CPA on either side.
2
What Mr. Setser is talking about is the problem of transfer pricing. It existed nearly 50 years ago when I took a college course on International Economics and it continues to exist today. Multinational corporations are very good at booking a disproportionate share of their profits in low tax countries. The IRS has been underfunded for years and the Republicans would just as soon keep it that way. Corporate profits ought to be taxed by various countries based on the amount of economic activity done by the company in a particular country. But that would require international cooperation among various countries, something the US has not been very good at it in recent years.
20
Quite ironic. US citizens living and working overseas have to pay US income tax on their foreign income over a certain amount, even if they earn *absolutely nothing* in the US. Even if any of that foreign income is *never* repatriated. That is just the opposite of the case for US corporations as this article documents. Once again, right wing tax policy not only favors the rich but penalizes the worker. None of this is by accident.
58
Only the US and Eritrea have citizenship-based taxation. To make matters worse, many of us have lost the right to vote because we were purged from voter rolls when we were not present for jury duty, or opted not to vote in a couple of state elections. We cannot have our right to vote reinstated w/o moving back, or agreeing to pay state income tax on foreign earnings. Many states have no provision for excluding foreign-earned income. No representation without taxation for up to 9 million US residents abroad.
7
Just finished doing our 2018 Income Taxes using Turbo Tax (and, comparing to 2017 taxes). Thanks a lot, Republicans (I'm dripping with sarcasm here). This 70 and 74-year old middle class couple raising their 17-year-old grandson received in 2017 a Standard Deduction + Exemption amount of $27,350. This year (2018), the standard deduction is $26,600 with no Exemption allowed. Thanks, Trump and Republicans, for our "middle class tax INCREASE" of $850! I wish there was some other way, other than commenting in a newspaper forum, where I could express my anger.
138
@Susan
Sorry to hear it, but this is just as been predicted - and I'm dreading doing my taxes for a similar reason. The only thing I can see to do is to get behind Democratic politicians who have detailed plans for how to tilt the playing field back toward the working/middle classes and away from corporations and the 1%. No "fake", corporat Democrats need apply!
51
@Susan
Thanks for clear example of what is happening. You and so many others are having to pay more so that the wealthy can get richer and corporations can avoid paying their fair share.
Send this info to all your representatives, get involved with DNC / Rock the Vote / Move On, etc.
3
@Susan -- "I wish there was some other way, other than commenting in a newspaper forum, where I could express my anger."
There is! REMEMBER - AND VOTE IN EVERY ELECTION! You'll know who not to vote for... just look for the "R" next to their name.
6
Thanks for the analysis. Now that we know more about the true impacts of The Trump Tax Cut, all citizens who care for the financial sustainability of our democracy should resolve to strike down this destructive, deceptive law -- or at least reverse its most pernicious effects. The Trump Tax Cut is another example of how Congress blithely adopts laws that subvert the best interests of the people they are supposed to serve.
30
Corporations can't pay taxes anyway. They are just tax collectors for the government, marking up their good and services to make the a profit. This is why price/earnings ratios are stated using earnings after taxes.
The best thing to do would be to get corporations to pass their profits through to the stockholders without tax, and then tax the stockholders at their regular rate on these profits. Then, it would no longer make sense for corporations to try to hide profits.
6
Let's just call Corporations what they really are.
DONORS!
They must be rewarded by Tax Cuts so that they will donate to political campaigns.
Let's not forget Citizens United.
Mitch McConnell' s reason for living are the Republican Donors and Citizen United.
Trump made sure Trump, Inc. got the best greedy Tax Deal as usual.
Trump is now sitting on 100 million in Donations so far for 2020.
Trump and his Republican party SCAMMED The People once again.
42
@sandi
Talk about emoluments...what would the Founding Fathers say?
Presumably taxing profits at 21%, no matter where the profit is made, would apply only to US companies. In that case, surely the companies would simply have a small company in Bermuda or Singapore "buy" them and then not be subject to this rule. It has happened before and would happen even more with the strategy proposed in this article.
3
trump's congress did not pass a "tax reform law."
they passed a "wealth refund law."
38
Of course, immigration and the “wall” are smoke screens that help distract people from or hide the reality described in this article. Capital flows wherever it wants regardless of where it obtains its profits. Groups of people are always easy targets to distract people from reality. But it works for those who benefit from this induced collective imagery.
21
I can see the headlines in the National Review: "Left-Wing Council on Foreign Affairs Attacks Tax Reform".
14
During the heart of the economic crisis that drove our nation after 2008, all we heard about from the Republicans was how we needed to avoid turning ourselves into Greece.
Of course they focused on the social programs as the whole reason for Greece's deep problems. But they ignored the reality that Greek businesses simply were not paying taxes. Corruption and tax evasion were a huge part of the problem.
We aren't bothering to make our companies find ways to evade taxes. We are handing them the money on a platter, and blaming our deficits on social programs.
For a party that decried the problems of the Greek economy, the GOP sure seems to want to emulate the results.
73
It is only right that the makers and doers pay no taxes at all, for that would "incent" investment, and it is only right that the takers--those who work with their hands for a living--should be hit hard with taxes. In an ideal world, the makers would get a tax rebate and a large incentive to invest and not only not pay taxes sat all but receive a gift of money--maybe large gold bars--so that they can make the economy work. Labor should be punished with draconian taxes so that the takers will learn to become makers and so that the makers never become takers.
9
@Barney Rubble Parody is hard in these days when it's so close to what's actually happening.
1
Thank you for your analysis. Trump's "tax reform," as enacted by the GOP, is indeed another scam on the American people. The already rich got much richer while the average US taxpayer got some crumbs or broke even. Corporations got big tax breaks which they mainly used to gift stockholders, while investments and workers gained little.
The US Treasury also took a big hit from lost tax revenues, as did (and will) the most needy of US citizens because necessary social services throughout the country were curtailed by the revenue loss at both federal and state levels.
21
I trust that the term 'fake tax reform' is applicable to the irresponsible tax cuts for the corporate world, so unnecessary at a time of minimal unemployment and a rosy economic outlook (however temporary, and begun with Obama's discipline to come back from the 2007/08 financial fiasco), and of no value to the customers or companies' employees, as corporate profits went on hiding in tax havens abroad...if not in buybacks to benefit shareholders.
9
First, (Democrats) should announce their intention to enact a "Revenue Recovery Act" REPEALING all the entire fraudulent "Tax Reform" act of 2017.
Second, enact a wealth tax to recover some of the ill gotten gains the wealthy and corporations have stashed away.
Then they can begin to close loopholes and tweak the system. Things like doing away with the carried interest exception and a corporate Alternative Minimum Tax with teeth.
But this is all dependent on Democratic control of the house and Senate, and the people realizing the window to overturn the oligarchy is closing.
The bottom 20-30& of our population has slowly slid into depression like economic condition over the past generation. We did not have a permanent floating homeless population when Reagan began the Republican domination of the discussion. We desperately need to move the terms of reference back to the real center, somewhere in the middle of the democratic party's current position, and consign the Republican party as currently constituted to the dustbin of history. Otherwise the impoverishment and poverty will continue to creep up the economic scale.
56
Another example of "it's never enough" for the rich. You can cut the tax rate to 1% and a significant portion of the wealthy and corporate execs will still try to hide profits and avoid taxes.
Other than acknowledging the number of women in Congress, the Scammander-in-Chief received his loudest applause last night by saying we'll never be a socialist country. Low taxes and no government oversight is a financial crook's dream.
34
Why do we retain the pretense that these companies are "American"? Why do we owe them anything in terms of tax cuts or subsidies. Where does Amazon have its money parked that NYC needs to give them $3 billion? Jeff Bezos could probably could find $3 billion just behind his sofa cushions.
62
That is illusion created by national phenomena. Capital is by definition international and its stage is the world. National borders serve political purposes only
10
The problem with capitalism is Greed.
If corporations' only responsibility is to increase profits for their shareholders, no matter what the cost, then certainly they cannot be considered persons - who have freedom of speech. Persons (at least most of the ones I know) don't act this way toward their fellow human beings.
32
If corporations are people - especially multinational corporations - they should all be put in jail for tax evasion.
In other words, people doing business overseas are taxed in the US and in the foreign country. But corporations don't want that applied to them.
Multinational corporations don't want US citizens to have their jobs and they don't want to pay a fair tax rate to benefit US revenue. It's the old shell a and pea game that the wealthy have been playing for many years. If you find the pea, they would already have moved it to another location.
The only way to bring these corporations to heal is to place a high tax (tariffs) on them when their products are brought to America to sell.
22
@Donald Coureas Other benefits ought to be appraised as well. Does the corporation rely on our judicial system to resolve its legal issues? Does it rely on our patent and trademark protections? These things are not free. Court costs and PTO fees do not cover the entire cost of these benefits.
11
@Donald Coureas
This is called tax avoidance, not tax evasion. Tax avoidance is perfectly legal. It is what large multinational corporations and extremely wealthy people who can buy congressmen and presidents do to reduce their taxes. When they get greedy and their avoidance shades over into evasion, they can afford large accounting firms and high priced lawyers to avoid any serious penalties.
Tax evasion is a crime. That is something people who are not multinational corporations or extremely rich want to reduce their taxes do. They are frequently caught and pay interest and heavy penalties because unlike rich tax evaders, they can't afford prestigious accountants and large law firms to defend them and force the understaffed IRS to run up the white flag.
8
@Andrew Zuckerman - Please -- "tax avoidance" is created by our Congressional Lawmakers who cater to their corporate donors pleas for relief from those "burdensome" "high" and "unreasonable" taxes the rest of us have to pay because we do not have the wealth to "lobby" the law makers.
9
The Corporation v The Individual is akin to Artificial Intelligence set against The average Joe Striver/obligatory Tax Payer. The Fair Deal, The Square deal, A New deal would be much appreciated and is terribly overdue. If All believed the System was on the level, a better world it would be indeed as we hurdle downward with one trillion dollar budget deficits and a national debt of twenty trillion. There should be obligatory percentages of corporate profits paid to the U.S. Treasury notwithstanding all the chicanery its Board Officers might muster. Tariffs on off-shore goods and services to ensure compliance if necessary. Tax rates for individuals must be adjusted to truly reflect the ability of a wealth hierarchy's and the average citizens shared responsibility to fairly contribute to a the greater good of all . The key of course is the best and brightest in Government Service for all the right reasons as perceived by an enlightened electorate.
3
The Corporation v The Individual is akin to Artificial Intelligence set against The average Joe Striver/obligatory Tax Payer. The Fair Deal, The Square deal, A New deal would be much appreciated and is terribly overdue. If All believed the System was on the level, a better world it would be indeed as we hurdle downward with one trillion dollar budget deficits and a national debt of twenty trillion. There should be obligatory percentages of corporate profits paid to the U.S. Treasury notwithstanding all the chicanery its Board Officers might muster. ObligatoryTariffs on off-shore goods and services to ensure compliance if necessary. Tax rates for individuals must be adjusted to truly reflect the ability of a wealth hierarchy's and the average citizens shared responsibility to fairly contribute to a the greater good of all . The key of course is the best and brightest in Government Service for all the right reasons as perceived by an enlightened electorate.
From the inflections in speech of politicians (like Senator Grassley) pushing the tax cut bill on radio, I suspected that the tax cut bill was a con job. And then some details (like a break on private aircraft expenses) added to that suspicion. And now I am even more convinced. Why do we allow ourselves to be used in this manner.
22
Short of overturning the disastrous "Redistribution of Wealth to the Wealthy Act of 2017," it will be imperative that we all remember (this time, finally, for once) when the next Democratic President assumes office with Republicans in control of any portion of the legislative branch, that Republicans' calls for a balanced budget and reducing the deficit were of absolutely zero importance to so-called "Conservatives" when it came time to shell out billions of dollars to their wealthy donors and benefactors. And furthermore to vociferously call out their hypocrisy when they oppose any Democratic initiative over questions of funding.
26
"“My administration rejects the offshoring model," Trump said.
Apparently not for his rich buddies who hide or launder money.
Just saying.
25
Although our top corporate rate used to be 35%, one of the highest in the world and the main argument Republicans used to shrink it, hardly any company actually paid that much. In a 7-year study of 258 Fortune 500 companies with profits of more than $3.8 trillion, the Institute on Taxation and Economic Policy found that 100 of them, nearly 40%, paid no taxes in at least one year between 2008 and 2015. Moreover, 18 of them including corporations like General Electric, International Paper, Priceline and PG&E, used loopholes to get negative tax bills, meaning they received rebates. Not surpringly, most of those companies still keep their profits stashed in foreign tax havens as opposed to bringing them home to be taxed by Uncle Sam at 21%.
60
Let's add to that an annual tax of 2% of total stock value - and another 10% of all stock buy-backs.
15
Thank you so much for your expert analysis.
I can't get upset by this anymore. I've established that the Republicans and the wealthy are abandoning our nation as they export wealth and industry to support them in their new lives in their new foreign homes.
Perhaps we should be deporting them to stem the tide of loss.
78
@PATRICK and sadly for you as well as we here in Australia, if these individuals get into any trouble whilst residing "offshore", they scream and yell for their "home" countries to rescue them, despite paying as little as possible for these services.
The Wealthy are like wild Locusts as they move from land to land decimating the land.
2
Good reason for Dems to promote an equitable 7% tax on corporate buybacks. The rationale is that buybacks mainly benefit the rich, given that the top 1% own 38 percent of stock, and most of them hold a substantial share of equities into their estates which avoid cap gains taxes through the step up. this way, corporate boards need to think twice about giving their CEOs a head start on stock price appreciation (vs dividends which are taxable). Any argument that this would hurt pension funds is easily pushed aside as they don't pay taxes on dividends anyway.
And of course, a 30% AMT on all income above $500K would help level the household playing field further. To include dividends, cap gains, and especially carried interest, commodity and real estate profits.
23
Corporations are people too. American people pay taxes on their worldwide income. Ergo, corporations should pay taxes on their worldwide income.
The common citizen who did what corporations do would be prosecuted for tax evasion.
42
@Swasivious Unlike individual citizens, corporations aren’t the end of the line. Corporate taxes are paid by consumers and investors. It’s a tricky gimmick that hides the true costs of goods and return on investment. Taxes need to be paid but should be paid by the appropriate entity. At the very end of the process the stakeholders own all of the profit and should pay the taxes.
10
@John Perhaps the solution is to raise corporate taxes to the highest individual rate, but allow individuals to receive dividends tax free. Or, mandate that 90% of a corporation's profit must be paid out to shareholders each year to ensure that they're properly taxed.
Allowing them to remain in a corporation for decades tax-free would be a travesty.
7
The two largest tax havens in "Dwarf Economies, Giant American Presence" are
1. The British Carribean Island
2. Cayman Islands, a British Overseas Territory
The most interesting question is : Why has the US not clamped down on the UK to stop this - akin to say the way it bullied Switzerland ?
Might it be that Great Britain's chummy Upper Class that makes money hiding money - stashing away ill gotten gains including Russian Oligarchs - makes too much money and has too many connections to the Upper Class running British politics to offend the British ?
17
Instead of going after Iran, North Korea, Cuba or Venezuela, the countries we ought to be targeting and locking out of the international banking system are tax havens like Bermuda, Cayman Islands and Ireland. They are doing far more damage to democracy and the world economy.
43
@Larry Are we going to go after any and all nations with a lower tax rate than we have? Are nations with higher tax rates than the UD going to demand that we fall in line? This is an endless game where no one is likely to win. We need to manage our system on our end.
5
@John With endless numbers of countries willing to provide nothing other than tax situs, it's a race to the bottom where the smallest reap the greatest benefit. The US is losing a minimum of 1.4% of GDP, which even at a 9% tax rate is $27B in taxes; $108B @ 36%. Taxing US corps globally is only one solution. Should they actually and truly leave, tax them on what they earn here regardless of where products are made or services rendered.
5
Surprise the GOP engineered tax cuts were made to benefit the donor class as payback ,this class will not release its death grip on politics no matter what. Citizens United has made us an oligarchy like TRump's hero Putin runs.
71
There is a simple solution, albeit one which requires acceptance of other jurisdictions.
Stop trying to tax profits on worldwide earnings and instead tax US turnover. Only give tax breaks focused around well paid US jobs with benefits. If you want to be super effective you make the tax work like VAT and turn every corporate accountant in the USA into a de facto tax inspector.
It doesn't matter what country your IP holding subsidiary or your syrup maker is in then...
3
@Adam To me it’s much simpler to tax individuals. Corporate taxes just promote perverse behavior.
What does one expect when our politics has been so infected with special interests and money thanks in part to SCOTUS Citizens United? Sometimes, the best defense is offense. For all of the supposed entrepreneurs and VC money available, why has no one yet launched on online business that specializes in incorporating US households and providing them the same tax shelters as other corporations? Basically a 'LegalZoom' online service that takes a percentage of what you would otherwise pay in taxes but a simple turnkey solution so expensive lawyers are cut off of the equation.
Since the federal government doesn't seem to care about deficits, let's see what another 150 million 'corporations' paying little Federal tax looks like. Especially since SCOTUS thinks that corporations are equivalent to people anyway. Maybe then the government might have a bit more incentive to act.
18
With regards to the following:
"Why would any multinational corporation pay America’s 21 percent tax rate when it could pay the new “global minimum” rate of 10.5 percent on profits shifted to tax havens, particularly when there are few restrictions on how money can be moved around a company and its foreign subsidiaries?"
There's a couple of reasons. First, this tax is imposed on U.S. shareholders of foreign corporations and measured by the foreign-source income of a foreign corporation. If the foreign corporation's income is domestic-source, it's taxed at the full 21% rate (plus a branch profits tax of 30%, assuming a tax treaty doesn't apply, which it wouldn't in a tax haven).
So we're talking about the foreign-source portion of foreign subsidiaries, to the extent not attributable to tangible assets. The real problem, then, is shifting profits from an onshore entity to an offshore entity. But "shifting profits" isn't trivial.
Suppose you generate income (taxable!) in the United States, and then pay a royalty to your offshore subsidiary (reducing U.S. taxable income). That's what the BEAT (also part of the tax bill) curbs: pay too much to a foreign affiliate and you get slapped with an excise tax.
Additionally, the deduction for foreign-derived intangible income lowers the effective rate for intangible income to the point where there's not a huge benefit to moving offshore.
GILTI in isolation is bad, but it wasn't passed in isolation.
7
Basic algebra tells you 10.5% of something is infinitely more than 38% of nothing. Before, we got nothing from offshore accounts.
1
I'm sorry but I just don't get it. An American company, that enjoys all of the protections and benefits that this country has to offer, simply refuses to pay their share of taxes by utilizing loopholes ( I'm sorry the tax code) to hide profits and the Congress and President are helpless to intervene preferring to let the middle class continue to shoulder the bulk of the tax burden. Why don't we simply have a "wall of shame" listing all of those companies and urging consumers to boycott their products or simply pass a law that would levy a tax on profits of American companies wherever their products are made or their profits hidden. This would require lawmakers to accept responsibility which I guess would be asking way too much.
91
@Richard Perry
The problem is that virtually every company that's not a pure brick and mortar retailer would be on that list. You'd have to boycott every tech and pharma company and every company with an international brand. Hard to get along in today's world doing that.
8
@Richard Perry Because those companies do not care. Their primary duty is to maximize profits for the shareholders. All else is secondary. Failure to take actions that maximize short term gain is often punished by "activist shareholders" and Wall Street.
15
Congress and president are NOT helpless to intervene. This is what they wanted. And they got what they wanted.
19
Good ole "Magic Math" at work again....
Here are some examples of Magic Math:
"Mexico will pay for the wall"
"Free college for everyone"
"Free Medicare for everyone"
"What deficit?"
Notice no politician, from either party, is exempt from using Magic Math to support thier positions.
2
@Ignatz
No one ever says free medicare. We all pay for medicare through our paychecks. And we pay through the nose for medical care and drugs. Single payer would cut costs.
We already pay for free medical care, those w/o insurance cost us. When they use the ER, we pay for it.
Now to me if you are going to pay for something, you get the best price possible. But we don't try to do that. We go with the most costly inefficient way possible.
As for free college, yes that does cost us, just like free schooling through high school. And these days college or trade school education is necessary. Just like high school was seen as needed 100 yrs ago. And we were willing to pay for that. The dividends are a better educated populace and a more prepared work force. It helped us in the past. It will help in the future.
We spend money to avoid problems and thus assure that we spend far less than if we let the problem fester.
6
It's Donald Trump's gift to himself and his buddies. It's the GOP's gift to the donor class and securing lucrative lobbying jobs once they're out of office.
Yes, it's cynical. And yes, very likely true.
But hey, the folks who vote for these politicians are getting stiffed and get their abortion and anti-other laws to make themselves feel good about their position life and smile...
25
The day Jimmy Carter left office the total National Debt was $930 Billion. Now the INTEREST alone 0n 30 Sept 2018 $164,221,395,737.97.
17
@swenk
Source, please?
I've got an idea. Let's let corporate lobbyists write our corporate tax legislation.
9
Where is Paul Ryan? This is his doing. Why haven't we heard from Ryan since he passed this attack against American workers?
19
@Ronny
Back home in Wisconsin. It was made a safe place for him when the Republican legislature stripped the Democratic governor and AG of their power.
7
@Ronny The moment the tax legislation was passed he started backpedaling. When asked, right after the vote, whether the tax cut would increase actually revenues, his answer was "I hope."
5
@Ronny, It's no wonder Paul Ryan disappeared. He knew quite well what was in the tax cut, and how the fiscal damage would play out. The lousy coward is in hiding.
2
I don’t need to do deep analysis. If it is Republican tax law, it favors the rich and the corporations. They are the only ones who can afford lobbyists. Rich and powerful lobbyists for poor is an oxymoron.
17
The deficit before the 2017 tax cut was $600 Billion is expected to go to $1 Trillion.
Not one Democratic Senator voted for it.
Every Republican senator voted for it.
This was after 8 years of Republicans relentlessly railing against the debt during Obama.
218
When we had a system of worldwide taxation, that caused corporations to do inversion transactions to move abroad.
And caused various startups to incorporate abroad to begin with. In any event, a system of worldwide taxation would be an outlier (among the G-7, only the U.S. had a worldwide system before the reform).
But high level, it's the existence of the corporate level tax that is the fundamental problem and the cause of the distortion.
So can we just eliminate it and tax dividends and capital gains higher (and apply a withholding tax for dividends paid to foreigners)?
But then U.S. corporations become the world's greatest tax shelter. And all capital gains would get swept up in the increase--from your house to an investment in an LLC.
It's a tricky puzzle. Maybe the author can propose a way to make it all work short of reverting back to worldwide taxation.
3
As a starting point, why not tax SEC reported earnings on a global basis?
5
Setting all charts, graphs and global economic theory aside I contend that multinationals are not bringing their treasury back into the United States simply for the reason they don't know what the future holds for our nation. What if the socialist/liberal wing of the Democratic Party gains traction, do you think that it will be a positive thing for US based corporations? Probably not. The money that did flow back into the US was used to buy up stock, a good thing for anyone participating in a 401k and it freed up investor cash with which to make other purchases. But before massive amounts of cash come flowing back into the country corporations have to have a high degree of confidence that it's not later on going to be snatched or taxed away from them. The countries in which their treasure currently resides have histories of being safe, and non-political.
The con was ginning people up to believe that overnight rivers of corporate cash were going to flood into the United States, factories would be built and high paying jobs would spring up everywhere. Today's political climate is too hot and it's future too uncertain for corporations to be enticed to do anything long term or do something they can't quickly reverse. Even if in the future things calm down it's going to take awhile for confidences to be regained and the full effect of a corporate tax cut to be realized. Then don't expect them to put all their money in one pot.
2
@Kurt Pickard The smart bet is to take away the incentive for businesses to play these games. Put the taxes on individuals.
@Kurt Pickard
The smart bet is to tax the money the corporations collect.
Aside from that, ranting about a "socialist/liberal wing" is mostly fantasy. I don't expect that small group to get us far enough back towards the "socialist?" New Deal.
2
There's so much trump damage to repair. This law must be repealed as a priority of a Democratic administration.
82
I think, in this case, Trump went along with the standard Republican program.
If you are a fiscal conservative you can't vote Republican.
If you don't care about deficits or improving people's lots in life then vote Republican.
12
Trumpian/conservative "tax reform" is of, by and for the wealthy.
The deficits caused by the resulting tax cuts are then paid for by the rest of us who, if the Trumpians/Republicans/conservatives have their way with future "reforms", have"entitlements" eviscerated to pay for the tax cut caused deficits.
It really is this simple...
32
So long as we tolerate the revolving doors between elected officials, their families, their staffs, their networks and the industries regulated by public legislation, we will have the corporate tax structures described here.
Lobbyists plus interlocked Boards plus cronyism across the spectrum ensures that the tax revenue burden will fall increasingly on the citizenry. Too mundane for soundbites but at some point average Americans will realize just how badly Trump and the republicans have conn'd the county into adapting this tax code.
Then there might be real trouble. If the example of the "yellow vests" in France is indicative, the American middle class might just bring out the pitchforks, or something equivalent.
13
Financial experts who know what they are doing make predictions that turn out to be wrong. Sometimes they are consciously lying. Sometimes they are kidding themselves. Sometimes they are pulling a Wile E. Coyote, standing well beyond the edge of the cliff, knowing that as soon as they look down they will fall, and avoiding looking down.
Since finance is a world of absurdity rather than reality, this usually works, but it didnt in 2008. Everyone had created way too much leverage, because money could be made with money one did not actually have. Eventually somebody looked down and the whole structure collapsed.
Too much tax avoidance will collapse financial or larger economic structures. The prosperous working consumers we need to drive demand and therefore production are disappearing; the election of Trump is a sign of the ongoing collapse of our economy.
When people are in a Wile E. Coyote position, thinking straight and clearly will hasten disaster. So such thinking is not widespread in financial and business circles. Instead, they will consider changes to our tax system that will leave loopholes for their business or their sort of business. They have spent their careers thinking about how to find out what the real rules are and how to rig and game them. Asking them to change the system so that the real rules are what they appear to be and are difficult to rig will leave them at a total loss, with their experience and expertise worse than useless.
8
@sdavidc9 This is why I favor taxing individuals exclusively. Increase taxes on the rich and eliminate loopholes. There are plenty of corporations that take on risky debt just to pay the lower rate on dept payments. Corporations have the most incentive to pay teams of people just to lower their tax liability. Individuals don’t have as much resources to play this game.
1
@John
Cancel the loophole for corporate interest payment.
2
@John
What we really need is a way to test ideas that sound good -- yours and others. Aircraft designers may be brilliant, but they use wind tunnels before building a flying prototype. We need a financial wind tunnel, and it should be easy and fairly cheap to build and run a few on the internet.
1
I suspect we will be hearing a LOT more from Democrats about Tax Policy, in April, when middle class taxpayers discover they owe WAY more in tax than before. Once the American people truly feel the pain, of the Republican's Tax Law, the long knives will come out...
99
@Dersh
Yup, with the cap on SALT, and a bracket adjustment that hit working professionals hardest, out taxes are going to go way up.
19
Have you actually done your taxes? Until you do, you will not know. The impact of reduced rates, no personal exemptions, SALT cap, no deductions for investment or unreimbursed employee expenses (for all the whining on SALT, no one mentions these changes) makes every return an agglomeration of actions in different directions. Until you put in the numbers into the software, with several forms not yet complete, you can only guess.
4
@Dersh
This is absolutely correct...and my dry run on 2018 taxes indicates as such. The IRS, which has been beaten down and starved over a multi-year period by a Republican Congress, was pressured to implement the tax law without the required analysis - so that citizens would see the "tax cut" in their next paycheck. The result is that many people who expect a generous refund are going to find that whatever tax savings they received were already in their paycheck - and may have in fact grossly under-withheld. April 15th may bring a nasty surprise to many!
36
One of the things we learned first in economics and later in business school, consumers are always paying the tax bill. First in form of sales taxes, then through the taxes imposed on the components of the product before it reaches the consumer, and finally when the anticipated tax on profits are built into the pricing. The solution is to have a universal sales tax, no exemptions, and paid at the cash box. Will never happen. Reasons are 1) Tax lawyers - put them out of business, 2) CPA firms - reduce their business, 3) Politicians - how many people would vote for a person who converts the purchase price of a $1 candy bar to $1.75 simply because of taxes?
8
@Luis K My issue with your idea is a VAT tax is regressive. We need progressive tax policy, eg capital gains at normal income tax %. And I like the idea of taxing the difference between 21% here and tax haven %. (and then the corporations want to trash the environment and put the cost on the wage earner . . . sorry got carried away. )
9
@Luis K, you would have to have a tax on dividends, interest earned, and capital gains, or it would be too heavily born by the poor and way too light for the 1%.
2
“This tax plan will not only pay for itself, but in fact create additional revenue for the federal government.” Steven Mnuchin, August 2018.
Anyone taken a look at the federal deficit lately? There’s a four letter word for Mr. Mnuchin and the rest of the Republican tax cuts for the rich contingent: L-I-A-R.
212
So we will allow the continued stealing from our Treasury the tax monies on the stashed income hidden in low/no tax havens that the Corps earned here and internationally. The GOP at their worst. The last two tax laws (1986, 2017) were authored by the GOP. They do not believe in equitable tax arrangements except for the Corps and the upper crust. If we want equity, Vote Democratic.
48
Now that everyone agrees that corporations taxes are cut, why again are we giving a sweetheart deal to capital gains and dividends? Used to be, the lower rates on capital gains was justified by the notion that corporate profits were taxed at the corporate level, and therefore a capital gains tax was "double taxation". Now what's the excuse for a tax break that discriminates against people earning wages?
65
I would prefer to see a tax increase on wealthy individuals and no corporate taxes. Corporate taxes are an extremely small portion of tax collections and provide no intrinsic benefit that I can point to. If there are no taxes then there is no need for corporations to play these games. Tighten up the loopholes and ensure mandatory reporting of income and capital gains for wealth individuals and the problem should go away.
5
@John
If profits flow through to shareholders and executives at least they will pay more than 10.5% on those dollars. Not much more given the effective tax rate of 13% the likes of Mitt Romney pays; and, the 0% rate the President most likely pays.
Even better would be if more profits went to the workers earning less than $100 K who would pay 20 to 30% tax rates on those same dollars.
3
@John
Corporate citizens need to have some skin in the game (they are people, they can contribute to elections, among other things).
How about their degradation of the infrastructure? I don't drive a train or 18 wheeler on public right of ways. I don't personally pump coal gasses into the atmosphere. Among other reasons.
12
Corporate taxes weren’t historically such a small part of federal revenues. The solution isn’t to give up on fair (to humans) tax policies. The solution is to make them fair. I suspect that will be a big part of the Democrat’s agenda in the next two years. I also suspect that the traditional GOP Big Lie will be exposed - again - as federal revenues drop - again. Even Saint Ronnie had to raise tax rates when the Laffer Curve was proved to be laughable.
Maybe this time GOP base voters will figure it out. There is simply not going to be enough federal revenue to pay for Social Security, Medicare, Medicaid, the ACA or any other program that actually helps them. They have forgotten that Mexico was going to pay for the wall. Will they remember that Trump was going to protect their retirements?
16
Why say the Trump GOP tax bill was a global con? It’s also a con here in the U.S. as Trump followers are finding out they are paying higher taxes to subsidize corporations and the ultra rich.
29
Not a con. Adjustment to the reality of globalization
Econ 101
In a global economy taxation on mobile capital must fall towards the global average as it will move to where it is taxed least
Get used to it.
Yet another unforeseen distributive effect of the free trade, free movement of labour and capital, policy advocated by neo liberal economists
===============
Ireland : Corporate tax 12.5%,
GDP growth, 2017, 7.8%, 2018, 8.6%
Capital, and with it employment, moves to where it is taxed least.
3
@Woof Except as the article notes " But those profits weren’t actually, physically, sitting in a few tax havens." That capital is only notionally "in country" and are merely book entries.
Did you think the capital is going overseas like there are huge factories being built Bermuda, or that BVI is an international center of trade? Obvious not. Notwithstanding the legal ability to characterize the capital as being foreign and not taxable, it is for all intents and purposes, as the article notes, owned by American companies investing in American financial products. There is no effect at all besides tax avoidance.
86
@Woof Oh, so that's why there's so many tech jobs in Kansas and California is down to 2 representatives in the House.... What? That's not how that works? It is quite possible to have relatively high taxation and still have a solid, robust and growing economy. Ireland is doing well but it does NOT have the lowest taxes. It just has lower taxes than we do. Irish success is due to the sum total of Irish governance, not just the one number.
8
@Woof
Taxes are paid on profits. Most business executives are more interested in locating to where they can maximize profits and worry about the taxes later.
Sometimes location decisions are made on finding the cheapest labor, sometimes on finding the loosest environmental regulations, sometimes on being close to suppliers or customers, sometimes on having access to raw materials. The tax rate they pay on those profits doesn't even make the top twenty reasons to locate a business.
2
It’s amazing to me that Democrats aren’t picking this up in their messaging more. They could honestly claim to be able to reduce the deficit, and improve federal revenues to enable health care spending — without raising taxes — all by closing loopholes for corporations and rich tax-evading scofflaws like Trump, DeVos, Ross, and the rest of the corrupted rich plundering our country. I hope they do because if we fail to hold them accountable on this, they’ll send us into a new Great Depression.
235
It's not an easy thing to explain in a pithy bit of messaging; but surely someone like Elizabeth Warren, Bernie or Kamala Harris could figure out how to fire up the left and independents as to what's going on...I'd like to see them start talking seriously again about Social Security as well--specifically removing the cap on earnings to shore up the trust fund. Who wouldn't vote for that?
133
@Brannon Perkison
Like the Republicans the Democrats rely on campaign cash donors and are in on the deal. Why do you think the Democrats are pushing hard to find an insider to primary AOC? They are part of the establishment political money machine that allows the plutocrats to buy tax policy with their campaign cash. It's the best investment they can make. If you ever find in a primary a Justice Democrat, like AOC is, vote for that person, the Justice Democrats are working to take back our Democracy from the capitalists who have bought it.
27
@Capt. Obvious
Honestly, if would mean I actually get to collect some of the social security money that me and my employers have been contributing for decades, I'm all for it. Quite simply, if you make enough salary that your FICA contributions max out during the year, you really can afford the extra contribution. And it's a contribution that does actually go to something (if we don't plunder the trust fund).
20