Corporate Taxes
Corporate taxes: to cut or not to cut?
While this election issue is prone to partisan spin, here's a balanced article in the G&M about corp taxes. Seems to be a favorite topic of economists since there's no right or wrong answer. They can write/publish ad nauseum to support their free-market or labour-economics hypothesis.
My lack of formal training won't dissuade me from wading into this debate. :) I think in our modern services based economy, corp tax cuts are not generating higher investment in "business" and growth in jobs. Rather, companies are turning higher profits into asset inflation. We have seen this clearly over the past few years in the banks spinning their corp tax winfall into CDO bubbles and massive exec bonuses.
More ancedotally, Teradata has been on an acquisition spree with recent profits, rather than increasing new hires or substantial raises. The latter would have the trickle down economic effect predicted by free-market guys.
So not surprisingly, I seem to be siding with the socialists again.
posted by Junk Bonds @ 4/19/2011 07:28:00 AM
2 Comments:
I thought the article was ok. The best point was about how if there are no corporate taxes then it's hard to affect companies through policy. There are times when you want to manage corporate behaviour by giving incentives to be energy efficient or by hiring more young people for example. Having said that not all policy is good and to think that government has all the answers is foolish. (laissez-faire bias:))
The worst corporate offenders in the US pay very little tax. Case in point is a multinational like GE that uses various international entities to shelter profit from the taxman. In fact GE got a $1 billion refund last year! This should be disallowed. There actually is some fat tail risk in investing in companies like GE because one day some politician is going to grow some balls and stand up to these corporate capitalists and start taxing some of their windfall!
This "gov't has all the answers" is a cheap and weak refrain of the neo cons. No one believes this (maybe Layton), as much as the market is always efficient.
Don't get me started with tax loopholes. I would gladly trade lower rates for closing the loopholes.
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