America's Corporate Taxes are SO HIGH that... [W:49]

[Papa bull]

On this we can agree. My original point was it would "help" if American Corporations practiced a little "enlightened self-interest." Basically by keeping jobs and industry HERE in the USA so that WE could afford to keep buying THEIR stuff.

But then you wouldn't WANT to buy their stuff because it would be priced much higher than everyone else's stuff. Americans don't want low paying jobs and a lot of manufacturing jobs are low paying by necessity.

Americans want cheap and plentiful goods and we want high paying jobs.

Joe makes widgets. Joe wants to make a lot of money and enjoy a high quality of life so he charges a lot for his widgets. Everyone else has to choose between Joe and his competitors. They have to decide whether they want to improve Joe's quality of life by paying more for their widgets or increase their own quality of life by paying less for them.

Not surprisingly, most people choose to improve their own quality of life. That's why we have Chinese people making our widgets for us at a rate that they think is fair, but we wouldn't.

 

[Captain Adverse]

Refer back to the last part of your response in post #72. Not sure that the enlightened self interest works in that case. Yes we do need to have a better industrial policy to maintain manufacturing jobs in the U.S. That involves having a real energy policy, a corporate tax code that works, a workforce that has the skills needed etc.

Using your example how does Apple hiring 1,000 workers in California out somewhere out West to assemble some phones enrich the millions of people buying their phones on the East coast?

Dunno, unless they are the only company making phones. Since they are not, and I can buy one in NYC from another "American" company that does...I don't see a problem. People in the surrounding states would have Apple phones, and I could have, say, AT&T phones. Normal process of American competition. Get the phones to me somehow without increasing my costs and I'll buy an equivalent phone from Apple too.

 

[iguanaman]

government attempts to modify "that dirty business" (I reject that claim) tend to be far worse a cure than the disease you rail against. Governments have killed 100 million people in the last 100 years-much of it inspired by "good intentions"

War is inspired by good intentions? You have a twisted mind for sure. Govts. have SAVED far more people than they killed and without proper regulation capitalism does not function. We have learned that from history. At least some of us have.

 

[Captain Adverse]

But then you wouldn't WANT to buy their stuff because it would be priced much higher than everyone else's stuff. Americans don't want low paying jobs and a lot of manufacturing jobs are low paying by necessity.

Only because inflation makes stuff cost so much people have to demand higher pay to meet the higher costs. Also because we've been "indoctrinated" by corporate advertising to be consumers of things we want because we're convinced we "need" them.

Americans want cheap and plentiful goods and we want high paying jobs.

Ditto. We really don't need most of the crap being sold. We've been made to think we do though.

Not surprisingly, most people choose to improve their own quality of life. That's why we have Chinese people making our widgets for us at a rate that they think is fair, but we wouldn't.

There are people who actually would, if they knew the buying power of their earnings wasn't evaporating every day due to inflation. Inflation, btw, caused by the Fed (a semi-private banking interest) printing as much worthless money as it thinks our economy needs.

 

[Papa bull]

Only because inflation makes stuff cost so much people have to demand higher pay to meet the higher costs. Also because we've been "indoctrinated" by corporate advertising to be consumers of things we want because we're convinced we "need" them.

That isn't true. Right now there is very little inflation and my remark was that you wouldn't want stuff made in this country because it would be priced higher than stuff made in other countries (for the most part). That is true and it's not true because of inflation. It's true because people in other countries are willing to work for a lot less than we are. It's true because corporate taxes in other countries are often a lot less than ours are. It's true because regulation in other countries isn't as onerous as ours is. It's true for a lot of reasons. Inflation isn't one of them.

Ditto. We really don't need most of the crap being sold. We've been made to think we do though.

Speak for yourself. I don't think I need an iPad or 200.00 tennis shoes. If people are dumb enough to think they "need" to buy everything being marketed, they deserve to be broke - a fool and his money are soon parted.

There are people who actually would, if they knew the buying power of their earnings wasn't evaporating every day due to inflation. Inflation, btw, caused by the Fed (a semi-private banking interest) printing as much worthless money as it thinks our economy needs.

The buying power of peoples' earnings increased rather steadily until recently, so we can't blame that for not buying American. What we can "blame" is the fact that places like Wal-Mart make it possible to get stuff that will give us reasonable utility at very good prices and actually give us more for our money than higher priced goods that don't provide additional value even though they're made in the USA.

 

[Captain Adverse]

That isn't true. Right now there is very little inflation and my remark was that you wouldn't want stuff made in this country because it would be priced higher than stuff made in other countries (for the most part). That is true and it's not true because of inflation. It's true because people in other countries are willing to work for a lot less than we are. It's true because corporate taxes in other countries are often a lot less than ours are. It's true because regulation in other countries isn't as onerous as ours is. It's true for a lot of reasons. Inflation isn't one of them.

I agree with most of your points explaining motives for Corporate decisions. In fact I have cited several of the same points. I disagree with your comments on inflation, at least in regards to average consumers, because empircal evidence shows me every day in higher prices for goods, services, rent, gas, etc. easily observable by just going to the store. And much of this stuff is made in factories overseas.

Corporations aren't necessarily reducing prices when they shift factories and labor overseas. Prices apear to remain the same and even gradually increase. This is how successful corporations negate inflation and retain massive profits. Cut costs in labor (and anywhere else they can) while still charging what the market will bear.

Speak for yourself. I don't think I need an iPad or 200.00 tennis shoes. If people are dumb enough to think they "need" to buy everything being marketed, they deserve to be broke - a fool and his money are soon parted.

Again we agree, but probably because we are peers in age and experience. But again, empirical evidence shows that our recent generations of American consumers are not so discerning as you and I.

The buying power of peoples' earnings increased rather steadily until recently, so we can't blame that for not buying American. What we can "blame" is the fact that places like Wal-Mart make it possible to get stuff that will give us reasonable utility at very good prices and actually give us more for our money than higher priced goods that don't provide additional value even though they're made in the USA.

Really? Thats not been my experience of late. But then again I haven't been shopping at Wal-mart, mostly cuz there isn't one within commuting distance of where I live. Again I can only point to the higher cost of living shown in gas prices, rents, food costs, and other items of popular use (man, have you checked the price of razor blades these days? Outrageous!! LOL).

If money had intrinsic value again, and a person could count on his salary meeting living expenses within a reasonable fiscal plan, raise requests would be a mere desire based upon hopes of raising one's standard of living, not a need in order to maintain the current one. Savings would have value, and people would be more than willing to work for a reasonable wage. Of course we still could not complete with sweat-shop labor in foreign countries with high populations like India, China, and Indonesia.

But is that what you think our nation needs? To go back the the old days of sweatshops and Robber Barons in order to bring corporate investment back and revitalize our economy?

 

[Papa bull]

But is that what you think our nation needs? To go back the the old days of sweatshops and Robber Barons in order to bring corporate investment back and revitalize our economy?

I think we're pretty much on the same track here with everything else, but let's examine this one for a minute, shall we? Think about how many people are living on the dole that could be working. What they make on the dole isn't much, but the problem is that they are getting that money for doing nothing, when they should be working for it. The problem in this country is that people would rather sit on their arses and collect government money than work low-skilled low-paying jobs, which is human nature, but to be more to the point, we let them do it. That's the problem. At least it's a big part of it. Instead of paying them for doing nothing, they should be doing something that profits society for the money they're getting. Making something, performing a job or a task of some sort.

We don't need robber barons. We need a society where people know they have to work for a living or go hungry. When they do that, they compete for better jobs and so people move out of those "sweatshop" jobs and into more lucrative and more fulfilling sorts of work at their own pace, which is something that never happens if they have the chance to sit on their arses instead of working.

Oh... and about inflation... Oil has gone up in price a lot over the last ten years but overall inflation has been pretty low. One dollar today would have had the buying power of $1.08 cents in 2008. That's an 8 point difference over 5 years, which isn't steep at all. Here.... check for yourself: Inflation Calculator: Bureau of Labor Statistics

 

[Jack Hays]

Okay, I was unable to find a clear-cut source outlining price comparisons world-wide, although I found that in some European markets consumer goods were priced higher, while in some Third World markets (but here it was difficult to determine product quality equivalency) they were lower, than US markets. Therefore, since the price comparison does not show a universal trend of American lowest prices being higher than the highest outside our borders, I am willing to back off from that assertion.

However, most recent financial information shows our current GDP to be shrinking ( ex. GDP Shrinks, Stocks Soar, Go Figure? ), and that it has been fluctuating down and up for several years with each UP return trend being lower than prior "up" years. When taken in comparison with the growth of government deficits, I stand by my position that it is shrinking over time.

Is this a satisfactory reply?

Quite satisfactory. Thank you. For a quick price check I usually just rely on the "Big Mac Index" published by The Economist. I don't think I'll concede the GNP point until I see negative growth numbers published for the year.eace

 

[haymarket]

so none of the people who earned money working for facebook paid taxes?

Under the laws of the USA, those are two different legal entities. The taxes paid by the employees have nothing to do with the tax that the corporation employing them pays.

 

[Carjosse]

T His isn't a corporate tax rate issue, you need relatively low corporate taxes but rather a much bigger tax loophole issue.

 

[fmw]

While I have no problem with removing most of the corporate tax loopholes from the tax code, it is important to understand a couple of things. The first is that taxes are an expense on the P&L and affect the bottom line directly. That means that higher taxes mean higher prices. In the end it is consumers who pay corporate taxes and all other corporate expenses. If consumers want to pay more corporate tax, I personally have no problem with it. With the second, I do have a problem. Giving a corrupt congress more money to waste is beyond stupid.

The job of company management is to maximize profits. That is what they are paid to do. They will adapt to virtually any situation in order to do that. Tax loopholes are no exception.

 

[iguanaman]

While I have no problem with removing most of the corporate tax loopholes from the tax code, it is important to understand a couple of things. The first is that taxes are an expense on the P&L and affect the bottom line directly. That means that higher taxes mean higher prices. In the end it is consumers who pay corporate taxes and all other corporate expenses. If consumers want to pay more corporate tax, I personally have no problem with it. With the second, I do have a problem. Giving a corrupt congress more money to waste is beyond stupid.

The job of company management is to maximize profits. That is what they are paid to do. They will adapt to virtually any situation in order to do that. Tax loopholes are no exception.

I love how the "free market" is never free when it comes to pricing. Since profits are at all time highs, why can't corporations pay their higher taxes out of that? Are they afraid that CEO compensation at 200+ times their workers might have to come down too? I also love them crying poor when they have trillions in cash on hand.

 

[fmw]

I love how the "free market" is never free when it comes to taxes. Since profits are at all time highs, why can't corporations pay their higher taxes out of that? Are they afraid that CEO compensation at 200+ times their workers might have to come down too?

Public corporations pay what the tax laws require of them and nothing more. If you want to pay more taxes through the corporations, lobby your congressman. Perhaps he or she is interested in raising corporate taxes. As I said, it's OK with me. I don't care how much corporate income tax you pay.

 

[iguanaman]

Public corporations pay what the tax laws require of them and nothing more. If you want to pay more taxes through the corporations, lobby your congressman. Perhaps he or she is interested in raising corporate taxes. As I said, it's OK with me. I don't care how much corporate income tax you pay.

I thought prices were determined by supply and demand? Are you saying that all prices are fixed by corporations and they can charge whatever they want because there is no competition? It sure sounds like it and if that's true we have some serious monopoly busting to do.

 

[CanadaJohn]

Typical of American law, particularly tax law.

It's true that America's corporate tax rate is the second highest in the G20, slightly behind Japan, yet many American corporations pay no corporate income taxes. That should tell you that there are too many loopholes and writeoffs built into the code.

As with many things, American lawmakers are more interested in making legislation virtually unreadable so they can build in pork and perks for their friends and appear to be doing the nation's and the people's business. Sad part is, the American people let them.

People should be demanding a comprehensive tax code overhaul along the flat tax proposals so that paying taxes is fair and no longer a game to employ millions of tax lawyers and consultants to scam the system.

 

[fmw]

I thought prices were determined by supply and demand? Are you saying that all prices are fixed by corporations and they can charge whatever they want because there is no competition? It sure sounds like it and if that's true we have some serious monopoly busting to do.

No, I'm explaining how businesses work. If there is an increase in corporate income tax, all corporations will increase prices and still remain competitive with one another. You can't lose money filling demand, at least not for very long. If a tax increase were small enough, the corporate world might absorb the additional expense but they would be constantly working toward that maximization of profit. It is what they do. It is what capitalism is all about. Be thankful. You live in a wealthy country because of it.

 

[rabbitcaebannog]

You got to love American sentiment. "I like to buy cheap things so paying workers less and getting cheap goods from overseas works out fine with me". Only, it really doesn't because more than likely these are the very same people who complain excessively about subsidizing both corporate entities in various forms and also these entities worker's benefits. The irony is funny yet tragic.

 

[fmw]

You got to love American sentiment. "I like to buy cheap things so paying workers less and getting cheap goods from overseas works out fine with me". Only, it really doesn't because more than likely these are the very same people who complain excessively about subsidizing both corporate entities in various forms and also these entities worker's benefits. The irony is funny yet tragic.

Even funnier is blaming business or government for their woes. If they want to see the source of their woes, a mirror should be close by.

 

[rabbitcaebannog]

Yes, I wonder if those who just love to buy lots of cheap stuff look in the mirror after complaining about welfare. I doubt it though.

 

[CriticalThought]

government attempts to modify "that dirty business" (I reject that claim) tend to be far worse a cure than the disease you rail against. Governments have killed 100 million people in the last 100 years-much of it inspired by "good intentions"

It isn't that black and white, but I recognize that is how you think. When you cross the line into being a socially conservative anarchist, there is no coming back.

 

[Lord of Planar]

T His isn't a corporate tax rate issue, you need relatively low corporate taxes but rather a much bigger tax loophole issue.

I disagree. Most corporations can show a good profit because they can deduct so many things and end up paying low or no taxes. It hurts the ones more that cannot deduct so may things. Now I am of the mind that corporate taxes is double taxation. Either tax the stock holders, or the corporation. Not both. That said, as long as we have corporate taxes, wouldn't it be better to lower the tax rate, and remove all deductions beyond the cost of doing business?

 

[Lord of Planar]

I love how the "free market" is never free when it comes to pricing. Since profits are at all time highs, why can't corporations pay their higher taxes out of that? Are they afraid that CEO compensation at 200+ times their workers might have to come down too? I also love them crying poor when they have trillions in cash on hand.

CEO compensation... Strawman alert...

Why should anyone care? Is it jealousy? Is it hatred? How does it affect pricing or taxes to any significant degree?

If profits are at all time highs, I would suggest it's because there is more and more outsourcing.

Higher taxes on corporations are just going to cause more outsourcing and more loss of good paying US jobs.

 

[washunut]

I disagree. Most corporations can show a good profit because they can deduct so many things and end up paying low or no taxes. It hurts the ones more that cannot deduct so may things. Now I am of the mind that corporate taxes is double taxation. Either tax the stock holders, or the corporation. Not both. That said, as long as we have corporate taxes, wouldn't it be better to lower the tax rate, and remove all deductions beyond the cost of doing business?

It seems that people tend to forget that corporate tax rates and deductions are as much social policy as economic policy. Some ( and I am included) think the system has gone haywire. But just a few example of deductions, not many would consider looplholes but something the country needs.
- The largest deduction for corporations is the deduction for paying an employees health care. Unless/until we have a single payer system taking this deduction away woould leave millions more without healthcare.
- R&D tax credits- The U.S. is a leader in fields such as technology and biomedical research. Do you want to give up our leadership by taking away those credits.
- Accelerated depreciation of purchase of fixed assets- America is a high wage society. In order to be able to pay these incomes we need to be a leader in productivity, thus capital expenditures to be susessful.

- At least when I think of loopholes I think of a provision snuck in my some legislator which says that factory X in a certain location, does not have to pay taxes for the next 50 years. There are thousands of these handout exclusions that I am sure cost millions and only enrich large supporters of certain legislators.

 

[Papa bull]

It seems that people tend to forget that corporate tax rates and deductions are as much social policy as economic policy. Some ( and I am included) think the system has gone haywire. But just a few example of deductions, not many would consider looplholes but something the country needs.
- The largest deduction for corporations is the deduction for paying an employees health care. Unless/until we have a single payer system taking this deduction away woould leave millions more without healthcare.
- R&D tax credits- The U.S. is a leader in fields such as technology and biomedical research. Do you want to give up our leadership by taking away those credits.
- Accelerated depreciation of purchase of fixed assets- America is a high wage society. In order to be able to pay these incomes we need to be a leader in productivity, thus capital expenditures to be susessful.

- At least when I think of loopholes I think of a provision snuck in my some legislator which says that factory X in a certain location, does not have to pay taxes for the next 50 years. There are thousands of these handout exclusions that I am sure cost millions and only enrich large supporters of certain legislators.

Most deductions are reasonable deductions that deal with the costs of doing business and all these that you mentioned fit that category. When I think of loopholes, I think of gaps where some sneaky corporate accountants can leverage poorly worded or thought out tax law to make deductions that were never intended by the law. Like a law that would relieve you of a property tax burden if you had agricultural income.... and you stick a couple beehives on your estate and sell a couple pounds of honey to some friends in order to save yourself 50,000.00 in property taxes.

 

[fmw]

I disagree. Most corporations can show a good profit because they can deduct so many things and end up paying low or no taxes. It hurts the ones more that cannot deduct so may things. Now I am of the mind that corporate taxes is double taxation. Either tax the stock holders, or the corporation. Not both. That said, as long as we have corporate taxes, wouldn't it be better to lower the tax rate, and remove all deductions beyond the cost of doing business?

Profits are taxed, both for the investor and the corporation. So only dividends represent double taxation. Corporations are taxed on P&L, investors pay a capital gains tax if they sell the stock to someone for more than they paid for it.