Advocates of a territorial system for international tax — where the USA would not tax any foreign income of U.S. corporations — say we should adopt it because the other major industrialized countries have it.
When it comes to a Value Added Tax, the fact that every other major industrialized country has one DOES NOT MATTER to those folks.
They are as consistent in their antipathy to taxation as I am in my sympathy for it.
This argument says “No one does.”:
“While the sales tax rate in North Carolina is 5.75 percent (plus another 2 percent in most localities), movies and other entertainment, alcoholic beverages, tobacco products, hotel rooms, and rental cars are all taxed at higher rates.
“In a free society the purpose of a tax system is simply to raise money for the operations of government. It should not be used to punish activities that are disfavored by politicians or to reward activities that politicians consider virtuous. Indeed, principles of both justice and economic efficiency would suggest that the tax system should be neutral with respect to people’s freely made choices.”
That hard right view is as purely materialistic, in its own way, as Marxism. Some of the folks on the hard right are believing Christians. Are they buying this view?
Meanwhile, equating the government with “politicians” may be accurate in a way, but the tone of this argument shows little faith in our republican form of government.
That will slow down the adults who supply them. Or at least make them think.
This is almost common knowledge:
“Rather than subsidizing the production of unhealthful foods, we should turn the tables and tax things like soda, French fries, doughnuts and hyperprocessed snacks. The resulting income should be earmarked for a program that encourages a sound diet for Americans by making healthy food more affordable and widely available.”
A comprehensive proposal involves a lot of line drawing. Even a tax on candy makes you decide about Kit Kats and Twix: candy or not? Here’s a definition that says not:
“Candy means a preparation of sugar, honey or other natural or artificial sweeteners in combination with chocolate, fruit, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. Candy shall not include any preparation containing flour and shall require no refrigeration.”
If that’s too complicated, we could just tax sugar.
The so-called repatriation tax holiday makes the tension between corporate power and the general interest crystal clear.
US multinationals are simply shifting profits offshore – and now they want to bring them back nearly tax-free. It’s a travesty. http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html.
The multinationals argue that getting this tax break will allow them to hire workers. But this argument has three problems. First, corporations have plenty of cash already. Second, we tried this kind of amnesty before, in 2004’s Great American Jobs Act Tax Caper (see Charles I. Kingson’s article in the Tax Law Review) and they just distributed the cash to shareholders. Third, if we let the multinationals get away with this money grab, they’ll be back again and again. Plus all the conventional wisdom is that small companies are the ones that create the jobs.
If this is a done deal, Congress should at least (1) push to end future deferral of U.S. tax on foreign earnings to prevent future amnesties, (2) push for a repatriation rate of 20 percent or more, and (3) reject any face-saving tracing of funds: money is fungible, and tracing it is futile.
Somebody has got to pay for government. Singling out huge multinationals for a tax break does not seem like a good idea right now.
Protesters drew attention at a rock concert recently. Their complaint? Rock stars who move to tax havens to avoid paying taxes.
“‘Tax(es) nestling in the band’s bank account should be helping to keep open the hospitals, schools and libraries that are closing all over Ireland,'” Art Uncut member Charlie Dewar said ahead of the protest.
“U2, [Ireland]’s most successful band, was heavily criticised in 2006 for moving its corporate base from Ireland to the Netherlands, where royalties on music incur virtually no tax.”
Nonviolent protests, I’m for.
What about corporations that shift income to tax havens? Where, as Bob Dole once asked, is the outrage?
Back in the 1980s President Reagan signed an income tax treaty with China in Beijing so as to prove his trip a success. The treaty was a mess: Treasury negotiators had orders to produce a treaty for him to sign, and they did — with huge giveaways to corporations that artificially routed transactions through China. See http://ia600409.us.archive.org/16/items/preparedstatemen1185ogle/preparedstatemen1185ogle.pdf.
But signing does not a treaty make. The Senate must approve it. The most liberal Senator, Howard Metzenbaum of Ohio, put a hold on the treaty for allowing giveaways to multinational corporations; the most conservative Senator, Jesse Helms of North Carolina, put a hold on it for being too lenient with Red China. Those holds stopped the treaty in its tracks. Treasury went back, renegotiated, and eliminated the loopholes. Eventually, the repaired treaty came back to the Senate and sailed through.
Now the most liberal and the most conservative members of the U.S. House of Representatives join forces against the status quo.
Barney Frank and Ron Paul propose legalizing marijuana. http://ca.news.yahoo.com/lawmakers-introduce-bill-legalize-marijuana-225335489.html. Time will tell how this turns out.
The American public views foreign aid as the kind of spending the Government should cut. I’ll venture that few understand the aid that the Tax Code supplies for the foreign operations of U.S. companies. This aid is exemplified by General Electric’s manipulation of the Code to use foreign operations to reduce its U.S. tax bill. It is explained in great detail in Edward D. Kleinbard’s “Stateless Income,” downloadable at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1791769.
Here’s the antipathy to foreign aid, from http://www.economist.com/blogs/democracyinamerica/2010/04/economistyougov_polling: