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Everyone "knows" that the corporate income tax is a mess. Ask any company. They pay too much in corporate income tax, face rates higher than in any other OECD country, and are just following the law when they use tax havens to keep profits eternally deferred from taxation and to perform general sleight-of-hand.

Don't believe a word of it. While some economists believe we shouldn't tax corporations at all, the corporate income tax (CIT) is a necessary backstop to the personal income tax (PIT). With no CIT or a rate lower than the PIT, individuals have an incentive to incorporate their economic activities so they aren't taxed on them, or are taxed less. Needless to say, this is something an average wage or salary worker would not have the ability to do. This is another area where we have one tax law for the 1%, and different rules for the rest of us.

So what should we do? The answers are simple, which is not to say that achieving them will be simple. Corporate interests hold a lot of political sway right now, and overcoming them will be anything but easy.

1. End the usefulness of tax havens for secrecy by instituting "publish what you pay." Currently, companies can hide all sorts of transactions because they are only required to publish "consolidated" accounts of their global operations. Thus, Starbucks reports losses on its British tax statements while telling investors how profitable it is in Britain.  Apple can get away with leaving its subsidiaries in Luxembourg, the Netherlands, and the British Virgin Islands off its annual report because it classifies them as not "significant." By forcing companies to un-consolidate their reports, we would know where their employees were, where their their sales (both source and destination of products and services) were, where they declared their profits and paid their taxes, etc. Part of the beauty of "publish what you pay" is that it doesn't require the cooperation of the tax havens to obtain the information.

2. End the usefulness of tax havens for avoidance by enacting unitary taxation. Upheld by the U.S. Supreme Court in 1983, unitary taxation treats multinational corporations the same way many states already tax the income of multistate corporations: considering all of a company's subsidiaries as a single entity, and using a formula to determine what portion of its global profits are taxable in your jurisdiction. The most common factors to put in the formula are sales, employment, and assets. Like "publish what you pay," this has the advantage of not requiring the cooperation of the tax havens, which have largely shown themselves to be minimally cooperative at best with global efforts to combat tax evasion and tax avoidance.

A big roadblock is the Organization for Economic Cooperation and Development (OECD), which promotes allegedly "arm's length" transfer prices that companies long ago learned to run rings around. Via the Tax Justice Network, Bloomberg reports that this allows U.S. and European companies to save over $100 billion a year on their taxes. As an indication of how uncertain lost tax estimates are, note on the one hand that this is significantly less than the $189 billion TJN estimates is lost to illegal tax evasion, but at the same time Bloomberg reports that the European Union says it loses EUR 1 trillion ($1.3 trillion) annually to tax avoidance and evasion, far in excess of these other two estimates. We're talking big money here. The OECD has begun a project called Base Erosion and Profit Shifting (BEPS), but there is widespread doubt about how much progress will come out of this. Bloomberg notes a major revolving door where OECD tax officials leave to work for tax avoidance consultants, and documents how many OECD conferences on tax are underwritten by the very enablers of tax avoidance in the accounting and legal professions. Unitary taxation would make the BEPS project unnecessary, but the OECD has long opposed unitary taxation.

3. In the United States, end the deferral of taxes until profits are repatriated. In other words, require companies to pay tax in the year the money is earned, rather than when it comes back home years later, if ever. Tax deferred is tax reduced, at the very least. To show just how difficult this will be politically, Robert Gilpin of Princeton University recommended this in his book U.S. Power and the Multinational Corporation--all the way back in 1975. (By the way, this book was quite influential on my thinking in graduate school and ever since.) Even now, U.S. multinationals are trying to get a "repatriation holiday" that would allow them to bring back $1 trillion in profits at a nominal tax rate, even though the 2004 repatriation holiday was a dud in terms of investment and job creation.

4. Don't cut the corporate income tax rate. There is a big difference between the headline rate of 35%, which is indeed tops in the OECD, and the effective rate of 12.1%, one of the lowest in the OECD. In fact, there is a significant economics literature showing that large countries can charge higher taxes than smaller ones do without suffering for it, just like the federal government can charge a much higher CIT than state governments can. There is no need for the U.S. to content itself with revenue neutral combinations of rate cuts and base broadening when government will actually put the money to work, something companies have avoided doing ever since the beginning of the recession which, need I remind you, began over five years ago.

While the road to truly fixing corporate income tax will not be easy, we seem to have reached a promising juncture in the battle with government initiatives like the Foreign Accounts Tax Compliance Act (FATCA) and the massive International Consortium of Investigative Journalists (ICIJ) tax  haven investigations. Last week (via markthshark), the U.S., British, and Australian tax agencies reported that they had received an even larger data leak than ICIJ had, and that one was gigantic. We certainly can't count our chickens yet; instead, we need to redouble our efforts to force governments to stamp out tax abuse by corporations and the wealthy.

Originally posted to Kenneth Thomas on Tue May 14, 2013 at 03:01 AM PDT.

Also republished by Community Spotlight.

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Comment Preferences

  •  Taxes are levied by the entity which issues the (6+ / 0-)

    currency so that "which is Caesar's" comes back to Caesar as "revenue" to count and keep track of how the economy is doing. Taxes keep the currency circulating and counter-act the apparently "natural" tendency to accumulate and hoard (hide, sequester) the cache.
    Otherwise, if the currency doesn't come back, while the issuer can always issue more (especially when it is in electronic form), the accounting function is lost when the dollars don't come back.
    It's occurred to me that the function of currency is poorly understood by some people because they don't "get" function in general. Some people are not process oriented. Because they can't see it, they don't understand change. It's as if, in looking at an equation, the see the 'A' and the 'B' but they don't recognize the significance of the function signs (+, -, x) between them. At best, they see 'A' and 'B' sitting on a sew-saw. When one goes down, the other goes up, but they don't know how and, besides, balance is what they want to see. They don't know how change happens and they wish it wouldn't because they don't like it. What they want is for things to stay the same.

    Some people don't get give and take because they don't understand the relationship. "makers" are people who make others do things -- i.e. people who coerce -- and "takers" are people who take orders -- i.e. are coerced. It's the mode of behavior employed by the predator. It's binary behavior that's missing the connective process. Oddly enough, it allows troops sent to die to be described as sacrificing themselves. Without an awareness of connection, the cause/effect relationship doesn't exist. Blame isn't assigned to victims; their injuries are merely observed as their own.

    We organize governments to deliver services and prevent abuse.

    by hannah on Tue May 14, 2013 at 04:10:14 AM PDT

  •  The main reason "corporate interests hold (10+ / 0-)

    [so much] political sway]"is because of Third Way politics. Third Way Democrats thought they were being sensible, serious and prudent by thoroughly embracing de-regulation and trickle-down economics. Instead they have handed over the keys to kingdom to a handful of financial terrorists, keys we will likely never even lay eyes upon again. As a result, not only are the 99% screwed, but the Climate and Terror Wars are all but lost. The Third Way has been first way into permanent defeat, yet Third Wayers will cling to it like Easter Islanders to there stone heads to the our collective bitter end.

    From here on out, no one can escape the havoc wrought by the unmitigated Class, Climate and Terror Wars.

    by Words In Action on Tue May 14, 2013 at 04:29:46 AM PDT

  •  I doubt most small business owners are 1%ers. (4+ / 0-)
    Recommended by:
    MGross, hmi, Buckeye Nut Schell, Tork

    They are us and eliminating their taxes might result in increased employment which just might result in greater profits and just might produce another American Success Story who has become a one per center with many happily employed people.

    "If the past sits in judgment on the present, the future will be lost." Winston Churchill

    by Kvetchnrelease on Tue May 14, 2013 at 06:25:34 AM PDT

    •  C-corp is 15% IIRC, on profits (5+ / 0-)

      Small business's wont do better until demand increases.

      .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Tue May 14, 2013 at 08:40:57 AM PDT

      [ Parent ]

    •  It depends what you call a small business... (7+ / 0-)

      People think of Mom & Pop shops when they hear "Small Business".  I always hated how the Republican candidates would talk about looking out for the small business man knowing that their definition and ours were completely different.

      Let me ask you, would you consider these small businesses?

      Allowed 1,500 Employees

      Petroleum Refineries4
      Ammunition (except Small Arms) Manufacturing
      Aircraft Manufacturing
      Scheduled Passenger Air Transportation
      Scheduled Freight Air Transportation
      Nonscheduled Chartered Passenger Air Transportation
      Nonscheduled Chartered Freight Air Transportation  
      Line‑Haul Railroads
      Pipeline Transportation of Crude Oil
      Pipeline Transportation of Refined Petroleum Products
      Couriers and Express Delivery Services
      Wired Telecommunications Carriers
      Wireless Telecommunications Carriers (except Satellite)
      Telecommunications Resellers
      Direct Property and Casualty Insurance Carriers
      Allowed $175 Million in assets
      Commercial Banking8
      Savings Institutions8
      Credit Unions8
      Other Depository Credit Intermediation8
      Credit Card Issuing8
      International Trade Financing8
      Allowed $35.5 Million in Annual revenue
      Home Centers
      Family Clothing Stores
      Electronic Auctions
      Mail‑Order Houses
      Port and Harbor Operations
      Marine Cargo Handling
      Navigational Services to Shipping
      Other Support Activities for Water Transportation
      Software Publishers
      Motion Picture Theaters (except Drive‑Ins)
      Radio Stations
      Television Broadcasting
      Cable and Other Subscription Programming
      Leasing of Building Space to Federal Government by Owners9
      Passenger Car Rental
      Passenger Car Leasing
      Truck, Utility Trailer, and RV (Recreational Vehicle) Rental and Leasing
      Consumer Electronics and Appliances Rental
      Lessors of Nonfinancial Intangible Assets (except Copyrighted Works)
      Military and Aerospace Equipment and Military Weapons
      Contracts and Subcontracts for Engineering Services Awarded Under the National Energy Policy Act of 1992
      Marine Engineering and Naval Architecture
      Facilities Support Services12
      Solid Waste Collection
      Hazardous Waste Collection
      Other Waste Collection
      Hazardous Waste Treatment and Disposal
      Solid Waste Landfill
      Solid Waste Combustors and Incinerators
      Other Nonhazardous Waste Treatment and Disposal  
      Job Corps Centers16
      Kidney Dialysis Centers
      General Medical and Surgical Hospitals
      Psychiatric and Substance Abuse Hospitals
      Specialty (except Psychiatric and Substance Abuse) Hospitals
      Food Service Contractors
      Industrial Launderers
      Parking Lots and Garages
      Other Grantmaking and Giving Services
      All Other Pipeline Transportation
      New Single-family Housing Construction (Except For-Sale Builders)
      New Multifamily Housing Construction (except For-Sale Builders)
      New Housing For-Sale Builders
      Residential Remodelers
      Industrial Building Construction
      Commercial and Institutional Building Construction
      Water and Sewer Line and Related Structures Construction
      Oil and Gas Pipeline and Related Structures Construction
      Power and Communication Line and Related Structures Construction
      Highway, Street, and Bridge Construction
      Other Heavy and Civil Engineering Construction

      "Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour..."

      by Buckeye Nut Schell on Tue May 14, 2013 at 10:21:46 AM PDT

      [ Parent ]

    •  As a small business owner, (2+ / 0-)
      Recommended by:
      Kenneth Thomas, jm214

      truly small as in 2 stores with a total of 14 employees, I can tell you that taxes are the least of our problems.  Last year we paid about $2000 in federal income taxes and over $20,000 in health insurance premiums for our employees.  Rent for the two stores was $130,000 for the year.

      What we need are consumers who earn enough money that they have a little extra and can afford to buy a bicycle from us.  I'd like to know what happened to those Republicans who were elected on "Jobs! Jobs! Jobs!"

  •  Disagree with 3 and 4. (2+ / 0-)
    Recommended by:
    Roger Fox, hmi

    There's no need for a repatriation tax, period.  We should join most of the rest of the modern world and repeal it.  We don't have an interest in preventing capital flow back to the US, and we can tax whatever disbursements they then use it for anyway.

    On #4, it's time we faced the reality that there's serious international tax competition between nations, and most companies can pick and chose where they want to be headquartered.  The only reason it hasn't been an issue so far is the considerable inertia involved (moving is a lot of work, a slight tax advantage isn't enough incentive) and as you state, the effective tax rate is actually lower.

    •  fairmarketman has it right (3+ / 0-)
      Recommended by:
      RandomNonviolence, ichibon, JerryNA

      Of course there is tax competition, but we're the biggest economy by far (the EU itself doesn't levy taxes), so economic theory says we can charge the most. In any event, if we stamp out the tax havens, that will reduce a major competitive pressure.

      And when you talk about joining the rest of the world with a territorial tax, are you including adopting a strong anti-avoidance principle like those other countries do? The fact of the matter is that the $1 trillion abroad got there in large part by tax abuse, which may or may not have been legal. There is no way we should be rewarding anti-social behavior. We have to deal with the past abuses before considering a territorial system with strong anti-avoidance rules.

      •  I think you're overly optimistic... (0+ / 0-)
        Of course there is tax competition, but we're the biggest economy by far (the EU itself doesn't levy taxes), so economic theory says we can charge the most. In any event, if we stamp out the tax havens, that will reduce a major competitive pressure.
        In the future, other large economies, not some tiny island tax haven are going to be our competition.  That being said, it's not an immediate crisis, and we can adjust things if it becomes one.
        And when you talk about joining the rest of the world with a territorial tax, are you including adopting a strong anti-avoidance principle like those other countries do? The fact of the matter is that the $1 trillion abroad got there in large part by tax abuse, which may or may not have been legal. There is no way we should be rewarding anti-social behavior. We have to deal with the past abuses before considering a territorial system with strong anti-avoidance rules.
        I'd contest that it got there "in large part by tax abuse."  Much of it is simply the result of having multinational US companies with most of their operations overseas.  This is pretty much any resource extraction company...

        "deal with past abuses" is pretty much pure fantasy, as if we can somehow get that stranded money back and tax it.  If the government can prove legal violations, they should do so; otherwise the amount of tax income lost was due to poor policy design and little else.

        We're just making it worse the longer we wait to go to a territorial tax system.

        •  Corporate Tax Abuse is Widespread (3+ / 0-)
          Recommended by:
          Kenneth Thomas, JerryNA, jm214

          I have actually administered corporate taxes for over thirty years. That experience taught me that artificial corporate income shifting through accounting tricks is widespread.  These accounting artifices shift income from where it was earned and should be taxed to where the corporations want to report the income with little or no tax applying. The corporations do not shift operations so much as shift where they assign the income. They report huge quantities of income to small places where they have little or no facilities.

          Academic studies such as those by Kimberly Clausing and Martin Sullivan, journalistic reporting by Jesse Drucker, David Cay Johnston, Nicholas Shaxson and a host of others, and congressional studies--the Pickle Subcommittee in the 1990s and Sen. Levin's studies of tax havens in recent years--all document the extensive nature of corporate tax abuses. Conservative estimates indicate that the federal government is losing $60 billion a year to these tax abuses, and state governments an additional $15 billion annually. Those who want to acquaint themselves quickly with these issues should consult the Tax Justice Network web site and do an internet search for articles by Jesse Drucker (Bloomberg News) on international income shifting.

          The abuses can all be readily corrected by using unitary combined reporting and formula apportionment. The problem is that the federal government for over 40 years has used an arms length adjustment process that simply is a failure and does not work to correct the abuses. The worldwide unitary approach is equitable and has been approved by the U.S. Supreme Court three times!

          A territorial tax system would simply ratify all the abuses that now occur--and compel corporations that have exercised some restraint to join with the worst income shifting abusers. The net result would be a further decline in the equity and effectiveness of the corporate income tax.

          From the very beginning of this post and commentary, Mr. Thomas' recommendations have been on target.

          •  All you're doing by that... (0+ / 0-)

            ...is guaranteeing that there's a significant tax disadvantage by being headquartered in the United States.  It also puts us at odds with the rest of the world as we pry into their business to tax subsidiaries that employ and operate in their countries.

            The abuses can all be readily corrected by using unitary combined reporting and formula apportionment. The problem is that the federal government for over 40 years has used an arms length adjustment process that simply is a failure and does not work to correct the abuses. The worldwide unitary approach is equitable and has been approved by the U.S. Supreme Court three times!
            Yes, well, I'm not saying such an approach is illegal, just ill advised.
            A territorial tax system would simply ratify all the abuses that now occur--and compel corporations that have exercised some restraint to join with the worst income shifting abusers. The net result would be a further decline in the equity and effectiveness of the corporate income tax.
            The solution is not to cling to an increasingly obsolete form of tax (corporate income tax) and instead move to other forms of taxation.
            •  Headquarters Location Is Not the Issue (0+ / 0-)

              Nearly every part of the quote below is incorrect.

              All you're doing by that... (0+ / 0-)
              ...is guaranteeing that there's a significant tax disadvantage by being headquartered in the United States.  It also puts us at odds with the rest of the world as we pry into their business to tax subsidiaries that employ and operate in their countries.
              A corporate income tax calculated under unitary formula apportionment does not vary to any significant degree due to headquarters location.The tax varies under the unitary with the location of sales, property and payroll in total. Headquarters property and payroll is typically too small to have any real effect on the final tax. The U.S. tax would basically be the same for a multinational corporation regardless of whether its headquarters were in New York, Tokyo, London, Singapore, Frankfurt or anywhere else. So the tax would not affect headquarters location.

              The unitary approach is more neutral than the current arms length system that provides incentives for U.S corporations to shift production overseas, overstate the profits in those foreign locations, and benefit from deferred taxation on those profits. The current system creates huge incentives for off-shoring production. With a unitary approach, the incentives for off-shoring will decrease.

              As to prying into the business of subsidiaries abroad, the current arms length system is many times more intrusive than the unitary system. An arms length tax audit goes to the details of whether specific inter-company transactions (an enormous volume) are made at the "correct" transfer prices (impossible to determine in reality). The current system digs into the business of overseas subsidiaries much, much more than a unitary tax audit, which is considerably simpler and deals with aggregate financial data and general operational characteristics. In fact, greater simplicity as compared to the arm's length approach is a virtue of the unitary system.

              As to being at odds with the rest of the world, the U.S. convinced the rest of the world to use the arms length approach. If the U.S. moved in the direction of unitary formula apportionment, other major nations will likely be happy to junk the failed arms length approach.

              Yes, well, I'm not saying such an approach is illegal, just ill advised.
              The U.S. Supreme Court decided (in a series of three cases) that the use by state governments of the unitary approach was constitutional precisely because it was fair and equitable to interstate and foreign commerce, i.e. well-advised. In this instance, sticking with the Supreme Court's judgment on what is well-advised is the better course.
              The solution is not to cling to an increasingly obsolete form of tax (corporate income tax) and instead move to other forms of taxation.
              If someone is proposing an entirely different form of taxation, then the person should describe the proposal in terms sufficient for others to evaluate it. Saying there is something better, but not explaining what that tax is, does not advance the discussion.
              •  I really don't understand how unitary taxation (0+ / 0-)

                would work.

                The most common factors to put in the formula are sales, employment, and assets.
                Let's say that a US company is owned 50/50 by CITIC Group (a Chinese state owned investment company) via its CITIC Capital PE subsidiary and by ADIA (Abu Dhabi's sovereign wealth fund).

                Are you saying that this company's tax should be somehow calculated based on the total sales, employment, etc of CITIC Group and ADIA, including that of their various subsidiaries and wholly owned companies?

                CITIC is huge - and big chunks of its activities are considered state secrets by the government of China.  (In fact, detailed accounts info of all SOEs in China is considered state secrets.)  I wonder how you are going to get that information to compute tax.  Or are you going to ban Chinese SOE investment in the US?  (Better think carefully - for example, Beijing Automotive Investment Corp bought a bunch of Delphi's factories out of the bankruptcy, including some in the US.  BAIC might welcome an excuse to shut them down without losing face.)

                ADIA is equally opaque.  Its estimated AUM is $627 billion.  It owns companies and real estate all over the world, with an emphasis on the Arab and Muslim worlds, but also plenty of stuff in the US and Europe.  I am working on a relationship with a company that is half owned by a company that is fully owned by ADIA.  That third level subsidiary itself owns dozens of companies in garden spots like Libya, Sudan, and Somalia, some of which are holding companies owning multiple companies beneath them.  They follow Islamic banking rules and their investees report their financials based on the requirements of their local governments, which often bear little resemblance to GAAP.

                Even with the best will in the world, do you think that the hypothetical company I just described would be able to produce a tax return under your system?  If it did, how many gigabytes do you think it would be?  And do you really think it would bear much relation to reality?

  •  From the GOP point of view, the "fix" is already (2+ / 0-)
    Recommended by:
    elwior, ColoTim

    in.

    Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed. --Herman Melville

    by ZedMont on Tue May 14, 2013 at 08:16:21 AM PDT

  •  Big corporations have very sweet tax situations (5+ / 0-)
    Recommended by:
    elwior, ColoTim, Kenneth Thomas, JerryNA, jm214

    because of all the tax breaks they can take advantage of making their effective tax rates far, far lower than the top marginal tax rate if they even pay taxes at all.

    Small business owners who operate as sub chapter S corporations pay taxes on business profits on their personal tax returns and usually at a higher rate than what the big corporations pay.

  •  All Recommendations are On Target (8+ / 0-)

    Mr. Thomas' recommendations are all on target and well justified. Multinational corporations can pick and choose when and where they pay taxes because policies of major nations, including the U.S., allow them to do so. Multinationals that game the tax systems of nations reap benefits at the expense of all other taxpayers, including smaller businesses and the corporations who do not push the tax envelope.

    MGross is wrong on the deferral and repatriation issue. Monies booked overseas are typically accumulated in tax havens via transfer pricing and earnings stripping abuses. The corporations are granted a privilege of deferring taxation on this income that, in fact, was substantially earned in the U.S., but escapes equitable taxation. If the earnings are repatriated they should be taxed as they would have been in the first place if deferral and abusive accounting did not exist. All interconnected profits should be taxed on a current basis under the unitary system described in recommendation # 1.

    On tax rates, revision of tax rates should only be considered after the results of fixing the tax base are known.  First an equitable system of taxation (recommendations 1-3) should be enacted.  Then the revenue, competitive and equity issues can be evaluated.  Rates should not be adjusted on the basis of guessing what might happen to the base before the reforms are implemented.

    Corporate international income shifting is a scandal, and action should be taken to clean the mess up.

    Ironically, there is authority under Section 482 of the Internal Revenue Code to switch from the failed arms length approach to a unitary, formula apportionment system.  President Obama could direct the Treasury Dept. to proceed with rule-making to make the switch. The issue is a matter of political will.

    Congratulations to Mr. Thomas for a great post.

     

  •  I'll bet all these proposals (4+ / 0-)

    would generate more revenue that we used to get from Corporations, 30-40 years ago.

    The largest pie slice change in Gov Tax revenues over 30 years came from corporate sources, so to say these changes would reverse that and more, tells us these changes are massive.

    We need a tax system that creates a more stable economy, forget fairness, thats a misnomer. And as the dairy notes, comparing the corp tax rate of a small country like Luxemborg to the US corp tax rate is silly, and thats what most Republicans do.

    I would like to add that a robust vigorous US economy would encourage some companies in some sectors to come back to the US. Tax schemes should not over rule good business decisions. We need a tax system that allows vigorous growth, if the US becomes the center of certain market sectors, we will become home to those areas.

    Over the next 30 years the continental shelf of the east coast will see 10's of thousands of wind turbines installed, recently GE arose to the worlds number one wind turbine manufacturer. We are on the crux of an incredible opportunity and need to take advantage.

    .................expect us......................... FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Tue May 14, 2013 at 09:00:24 AM PDT

  •  While so many are focused on tax laws (5+ / 0-)
    Recommended by:
    DeminNewJ, Kenneth Thomas, zett, JerryNA, jm214

    they miss that some accounting laws are responsible for large differences between "book income" and taxable income, thereby reducing the effective tax rate.

    There is a big difference between the headline rate of 35%, which is indeed tops in the OECD, and the effective rate of 12.1%,
     All sorts of manipulation is done on the accounting side (including capitalizing expenses that should have been deducted) to increase income in a particular year.
      Yes, some tax laws need to be changed, but so do accounting laws.

    My Karma just ran over your Dogma

    by FoundingFatherDAR on Tue May 14, 2013 at 11:18:51 AM PDT

  •  Some good points, and I would add that simplifying (1+ / 0-)
    Recommended by:
    JerryNA

    the tax code for corporations (as well as individuals), would lead to far fewer loopholes and openings for abuse.  The politicians have built into the code far too many caveats, exceptions, etc., in a misguided attempt to more closely manage winners and losers.  A clear, straightforward policy would not only eliminate the havens, but save billions of dollars wasted on the tax attorneys and CPAs, that could be spent on hiring more employees, R&D, dividends for stockholders, etc.

    •  What a pretty picture. Except the reality is that (0+ / 0-)

      regulatory capture always, ALWAYS results in 'distortions' and 'deviations' and the satisfaction of what are so blandly called, and so grossly, horribly real in their pernicious presence and effects, "special interests."

      Maybe there's a need for an Honesty In Terminology Act, to re-cast some of the discussion: "special interests" become "tapeworms" or "metastatic tumors" (e.g., Monsanto), "tax expenditures" become "legalized theft from the public pocket, complete with externalization of huge costs." Stuff like that.

      After all (time for a brief if related detour), the War Department spends hundreds of millions every year keeping its Dictionary of Military Terms and Abbreviations current with the latest propaganda spins -- like the definition of "insurgency," that used to apply only to armed resistance to a constituted government, until the US/NATO turned Iraq and Notagainistan into little fiefdoms...

      "Is that all there is?" Peggy Lee.

      by jm214 on Wed May 15, 2013 at 05:30:31 AM PDT

      [ Parent ]

  •  I'll agree with #1, but the rest, pointless.... (0+ / 0-)

    The way to deal with corporate tax is to eliminate it entirely.

    1: Total transparency on profits should be required, as a report under the SEC.

    2: The correct mechanism is to REQUIRE a minimum 75% of profits be dispersed, per quarter, to the shareholders.

    3: Tax those DIVIDENDS at a similar graduated tax rate as earned income.

    4: Implement a shareholders bill of rights to put the OWNERSHIP back in the hands of the owners, rather than the hired help.... the CEO's and staff... and make management completely accountable.

    In other words, instead of the government trying to ferret out corporate gross profits to tax, let the shareholders do the work.... and sue any corporation lacking transparency. Then back them up with heavy fines for corporations found to be hiding profits from their shareholders.

    This chases the profits into a venue where the government can corner them and tax them appropriately without all the bullshit of international manipulation.

    Any corporation, international or not, must pay US shareholders what they are due, period. I have no doubt the other developed nations will follow.

    Also alter the Capital Gains tax to be graduated in both amount (as is earned income) and TIME, incentivizing long term investment, which is what capital gains tax is supposed to be all about. This protects the little old lady investor AND puts an end to the Filthy Rich (tm) hiding vast amounts of income from The People (tm).

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