As you may have heard by now, Burger King is preparing to merge with the larger Canadian equivilent of Dunkin Donuts, Tim Hortons and move the company’s headquarters to Canada. As with the proposed Walgreens move to Europe that was considered and ultimately rejected, the Burger King merger was made for tax reasons, and good ones. The good ones should be clearly explained to the American public, especially voters and those with unemployed workers in their families, but they are not. Let’s call this BK Ethics Foul #1: news media incompetence. Because the public doesn’t understand what “tax inversion” means, they are vulnerable to having it distorted and demagogued for them by unethical politicians and pundits, and so it has been. Let us designate this BK Ethics Foul #2: the anti-corporate disinformation campaign.
The United States tax rate is a whopping 35%, more than any other large industrial nation, even more than those that tend toward socialism. There’s nothing unethical about this, necessarily, though it can be argued that it is a foolish and self-destructive policy. Did you know, however—and I wouldn’t blame you if you didn’t, because not being an international corporation myself, I didn’t know until this issue arose—that the U.S. applies that tax to all global earnings of U.S. companies. This means that the earning of U.S. companies doing business abroad are not only taxed where they earn the profits, but also in the U.S., or as this is technically called, twice. (UPDATE: I should have made it clear that the the US does give a foreign tax credit for the money paid in taxes abroad, so the effect is not completely double tax, just two taxes.) That is definitely unfair (and also bad policy), and will be called BK Ethics Foul #3: predatory taxation.
Think about what this policy means. A company domiciled here, doing 10% of its business in the U.S. and 90% overseas, still pays that tax rate of 35% on the 90% of overseas business. It also pays foreign taxes on the 90%, because other government don’t care that the U.S. is intentionally handicapping the competitiveness of its own businesses, and is happy to help out. Companies domiciled in those countries, however, pay those nation’s corporate tax rates for the operations in those countries, and whatever the tax rate is that applies in any other country they do business in. Here’s an analogy: If you live in Virginia and work for the U.S. Government in Washington, D.C., you pay Washington, D.C. taxes. If Virginia had a law that said that you had to also pay taxes to Virginia at a higher rate for everything you earned in D.C., might you be tempted to move to a state that didn’t double tax you? Would that be unethical?
Given the fact that the predatory taxing of Virginia would be taking away your ability to, for example, save for your children’s college education, I would argue that you might have an obligation to move, or work hard to change the policy. Any Virginia politician who publicly called you a traitor for choosing your family over your state would be quickly condemned as deluded. Yet numerous elected officials, all Democrats as far as I can determine, including President Obama and Vice President Joe Biden, have suggested that a U.S. corporation that changes its domicile (or, as in the case of Burger King, merges with a foreign corporation to establish legal domicile elsewhere) is being un-American, unpatriotic, or even treasonous. Here is Sen. Sherrod Brown (D-OH), a member of the Senate Finance Committee and the Senate Banking Committee calling for a consumer boycott:
“Burger King’s decision to abandon the United States means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders. Burger King has always said ‘Have it Your Way’; well my way is to support two Ohio companies that haven’t abandoned their country or customers.To help business grow in America, taxpayers have funded public infrastructure, workforce training, and incentives to encourage R&D and capital investment. Runaway corporations benefited from those policies but want U.S. companies to pay their share of the tab.”
Of course, Burger King did pay its fair share, and will continue to, by paying taxes on every penny the company earns is this country while using that infrastructure. Meanwhile, the new Canadian version will also will meet its fiduciary duty to its investors, consumers and workers by maximizing profits and minimizing costs, allowing the business to expand and grow, requiring more U.S. workers. Brown’s boycott would hurt U.S. workers and U.S. investors in the middle class. As Brown himself has (sort of) acknowledged, the real culprit is incompetent U.S. tax policy which encourages financial investments while discouraging manufacturing and international trade, which create more jobs. Brown says he wants to see those laws change, but meanwhile he condemns U.S. companies for responding rationally to the laws as they are. Welcome BK Ethics Foul #4: irresponsible and dishonest lawmakers.
I’m not even going to assign a foul to blather like Move-On’s petition about Burger King “dodging” taxes and not paying their fair share “to help balance our national debt and restore economic stability to the lower classes.” Oh, what the heck: lets call this BK Ethics Foul #5: moronic socialist sludge fed into public discourse by progressive anti-corporate activists who have no idea what they are talking about. Does that cover it? Balance the national debt? Taxes don’t balance the national debt. How can anyone not be embarrassed to be associated with a shrill organization that puts out such nonsense?
I don’t have the stomach to see what the Daily Kos is saying about Burger King. Someone check it out for me, please.
To Move-On, Brown and others, are citizens who move from a high tax state like Massachusetts to Florida (with no personal income tax) tax-dodging criminals? No, and the reason is that these groups, and the current administration, regard corporations as necessary evils, and don’t seem to understand that profit is essential to companies strengthening the economy, and that pro-business incentives create jobs and wealth, and anti-business policies don’t. I think the moment it first dawned on me that President Obama doesn’t understand business, capitalism or the obligations and priorities of corporations was when he went to the U.S. Chamber of Commerce and exhorted the assembled corporate chiefs there to hire more workers, like he was selling Girl Scout cookies or collecting for the United Way. Companies are not charities; they hire workers when doing so makes business sense, and not because a President whose employment policies have tanked begs them (I’m sure he thought it was an order) to do so. That’s how you do business; any other way is a breach of fiduciary duty, and unethical
My colleague in ethics, Steven Mintz, a.k.a The Ethics Sage, has been somewhat conflicted on this topic, as he has blogged provocatively about the ethical issues involved. He writes:
“Corporate America reacts to incentives to maximize profits that can lead to higher personal income through bonus and other incentive compensation, and rising stock prices. There is nothing wrong with it. It is a part of our system. However, we must begin to initiate policies to reduce the growing number of people in poverty, bring more into the middle class, and do what is necessary to reverse years of stagnant growth that has resulted in steady or reduced earnings of all to many currently in the middle class. In my view this is an ethical issue, not one based on paying a fair share of the taxes. Corporations have an ethical obligation and social responsibility to do what it takes to improve the economic circumstances of all members of its community — a community that depends on jobs and economic activity. Our society cannot prosper without an ever-expanding middle class and lowering of the poverty rate in this country.”
All true, but the responsibility is on the government to make it possible for corporations to do that, not on corporations to behave against their business interests and in so doing relieve Congress and the President of their duty to have coherent and fair policies. Steve asks, “Just imagine if all corporations acted to shield corporate income and pay lower or no taxes to the U.S. government.” I would imagine that if all corporations could legally do that and did that, it would be the direct result of outrageously incompetent tax policies, and a clear indication that they had to be overhauled. This is BK Ethics Foul #6: avoiding accountability. Corporations respond rationally to incentives and disincentives. Blame Congress and tax policy for the merger with Tim Hortons, and regard the demagoguery that the company is unpatriotic to avoid harm to its business caused by incompetent and anti-American business tax policy as what it is: smoke, mirrors and lies.
In 1947, legendary Federal Judge Learned Hand (generally acknowledged to have the best name for a judge ever) wrote this in a U.S. Court of Appeals decision regarding taxes:
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the courts have said there is nothing sinister in so arranging affairs to keep taxes as low as possible. Everyone does it, rich and poor alike and all do it right, for nobody owes any public duty to pay more than the law demands.”
I don’t cite this as an appeal to authority, but do so because it is, as everything Hand wrote, articulately stated, and his reasoning is as valid today as it was then.
There is nothing unethical about what Burger King is doing; nothing unfair, or unpatriotic either. What is unethical is the campaign by elected officials, pundits and the news media to make you think there is.
[ For a clear and more technical explanation of what a tax inversion is, this post by Hanlon Chang, cited by The Ethics Sage, is excellent.]
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Sources: Fiscal Times, Ethics Sage 1, 2; Chicago Tribune,
Ethics Alarms 
You have 2 BK Ethics Fouls that are #5.
And then there were 6.
Wait…1,2,3,4,5,5. Right?
On Predatory Taxation:
It’s actually a worldwide income tax. U.S. taxes 35% on all world-wide income and gives a foreign tax credit for all taxes paid to foreign governments. So if you pay 21% to the U.K., when you repatriate the money, your tax bill is the remaining 14%.
What I don’t know though is if the foreign tax credit applies only when money is repatriated, or if the credit is being taken when it is incurred – reducing the “pure” domestic tax bill while foreign profits remain overseas.
Thanks Tim…i was very unclear on that, and just made a fix to clarify. It isn’t truly double taxation, two taxes that add up to what the single US tax would be. the linked article by the economist covers it well.
Oooh! Can Con! Yay!
The one thing I want to help clarify for you is that on your point on predatory taxation, Canada and America have a tax treaty, which means that instead of the 15% Canadian Federal Tax amount, a corporation earning profits in Canada would pay 15% + 20% to bring the total tax paid to 35%. That’s just the Canadian side though, if an American company operated in a country that America DOESN’T have a tax treaty with…. Say Cuba, they WOULD be double taxed. They would be taxed by Cuba, and then America wouldn’t recognize the tax paid to Cuba and would require their 35% anyway. (Although Cuba is a horrible example, I don’t think foreign companies can operate there, I’m just certain there isn’t a treaty there. I think America has something like 100 tax treaties, which still leaves a third of the world’s countries treaty-less)
Tim flagged that too—I knew that, I just botched the description. it’s fixed, I think.
But those nasty old corporations have to “pay their fair share”, according to Barry and his buddies.
Incuriously missing from all this is mention of the guy that’s helping to finance the deal, Medal of Freedom winner Warren “SirTaxMeMore” Buffet.
Ah, the perks of being designated as a “Nice 1 % er!”
Replace Burger King with Georgia Pacific (part of the evil Koch Brothers dark realm); think the latter wouldn’t have had every orifice probed most uncomfortably by the lickspittle 4th Estate?
Me either, no one’s that blatantly bold-faced and cravenly hypocritical, right?
I love “lickspittle.”
Warren Buffet is against corporate taxes but for personal taxes. He really loves the death tax.
It isn’t for altruistic reasons though – it’s to benefit his own bottom line. When a CEO dies, the corporation doesn’t have to pay 50% of its value to the government. But when the owner of a privately held corporation dies, that’s what happens. Often there aren’t enough liquid assets to pay that tax bill. So what do the heirs of the owner do? They have to sell the company. Who do they sell it to? Companies like Berkshire Hathaway.
Florida (with no personal income tax)
**************
They pillage us in other ways, trust me.
Didn’t DC try a revenue grab just like the example you gave, back in the 1990s? I seem to recall a move at that time to tax all those rich feds from the ‘burbs who commuted into the fair jurisdiction of Marionsworld.
If it is unpatriotic to decide to move to another country for more favorable tax treatment is it equally unpatriotic to deduct the home mortgage interest permitted by Congress, set up a corporation in Delaware or Colorado to obtain favorable corporate taxes, or move to a state that waives income taxes on retirement earnings or has none at all?
For a non-accountant you did a pretty good job explain the realities of tax inversion strategies.
I was formerly a tax consultant, now I work for an in-house tax department for the US operations of a company that is and has always been foreign – so they have no inherent patriotic obligation to the US even if such a thing could be said to exist for domestic corps. And yet when we asked our regular advisors why they hadn’t brought us a legitimate planning idea that their competitor was proposing, their only comment was that it “didn’t look good” to appear to be shifting profits overseas. These are the people we are supposedly paying to help us minimize our taxes while staying firmly within the law, from a major firm. The “Burger King ethics” are insidious.
“in-house tax department for the US operations of a company that is and has always been foreign ”
How can we not see the obvious. Surely, if we are at the point that corporations need to devote entire departments (read as overhead that ultimately forces consumers to pay more) to analyzing tax codes for compliance, then we have reached a point where our tax code is ludicrously complex. If something that ought to be simple, like taxes, requires that much analysis and waste of effort, can’t it be declared unethical?
Corporate taxes make up ~13% of federal revenue. Fifty years ago, they made up about 30%. If corporate taxes were raised to that point, that would bring in almost enough to balance the federal budget. How is that “socialist sludge”? It seems at first glance to be a reasonably fair assessment of the facts. Our unwillingness to tax corporations is a large part of our problem, and as you said, that is all on Washington.
The claim that our corporate tax rate is too high is another form of obvious demagoguery. For most corporations, the effective tax rate is lower and for GE and Apple, way lower. Many large corporations (like FedEx) are LLCs, which don’t pay any corporate-level taxes at all. All corporations want to be freeloaders, and have a duty to maximize net profits. In other words, to be ethical, you have to be amoral. 🙂
There are a lot of ways to make strides toward balancing the budget, and a lot of them involve raising taxes. And it is something we have to do, as the federal tax burden is about 17% of GDP, which is the lowest it has been in my lifetime. http://www.businessinsider.com/government-spending-and-taxes-2012-12?op=1 We can’t continue to borrow like this, and unless you are prepared to cut our military budget in half, there aren’t any major savings on the spending side.
I heard a great solution to this. Tax corporations on the income they report to Wall Street at a flat 25% rate, apportioned by sales. If Apple built all their toys here and sold them all in China, they would pay no tax, but if they build them all over there and sell them here, they pay 25% on their real economic income. Burger King would have no reason to become Tim Horton’s South, and business decisions would be made for business reasons. And all their Double-Dutch sandwiches would go stale.
China’s income tax rate is 25% and the global average is 24%, according to KMPG. That would make us competitive.
When corporations pay no tax, it is because of other, duly passed incentives, or because they lost money. Balancing the budget on the backs of corporations would just guarantee closed plants, fired workers, and higher prices. In a world economy, competitive conditions and policies are essential.
Your flat rate solution is at least a step in the right direction.
Socialist sludge is a pretty fair description for “All corporations want to be freeloaders, and have a duty to maximize net profits. In other words, to be ethical, you have to be amoral.” With or without a smiley face.
You’re forgetting your basic Econ, Jack. Taxes are a way to assign costs to goods, so that the economically proper amount of goods are produced. We own a manufacturing plant. We need roads to get raw materials to the plant, and to get our products to market. We need courts to enforce our contracts, and police to protect our property rights. We need schools so we have an adequately-educated work force. We should have to pay for them and, if we can’t earn an adequate return on capital after we pay for them (and pass our costs onto the consumer), maybe we should shut the business down and do something else. Corporations are supposed to be amoral, but governments are supposed to ensure that they pay their fair share, so that a free market is approximated.
We balance the budget on people as a matter of course, no matter how we do it. Why shouldn’t we extract enough taxes to do ensure that the market is efficient? This is Wealth of Nations 101. It sounds paradoxical, but the most efficient market is in fact a heavily-regulated one (think Securities and Exchange Commission).
As for a world economy, you sound like you think a race to the bottom is a good thing. Tariffs can be used to discourage companies from doing what you suggest. We have a crude system of anti-dumping laws, but they are not strong enough.
I would far rather see no taxes on corporations at all in exchange for regulated compensation ensuring a fair ratio between management and employees, and penalties on keeping excessive reserves. Make it profitable to put people to work and build stuff. Tax the income once, when its ends up in a human being’s pockets.
I’m not saying that there aren’t other ways to do it — and your idea may be a sound one, but it might require a far more invasive government than we already have — but that this is one economically sound way to do it. Unfortunately, neither you or I are in the position of dictator.
The ratio of corporate taxes to revenue is irrelevant. A reasonable argument can be made that corporate tax should be 0, and that the revenue passed along to investors/employees/etc should be the only thing taxed. Doing so may increase total revenue even if that particular portion drops to zero, because it provides an incentive to re-invest in the company instead. It should be accompanied by treating capital gains as regular income, since double taxation is the justification for taxing it at a different rate. See Daily Kos for more. http://www.dailykos.com/story/2014/08/25/1324505/-Eliminate-corporate-tax-seriously
Markos at the end fails to account for the effect of a small transaction tax on the quantity of transactions to be taxed, but that’s such a common error i hardly notice it anymore. I don’t how many transactions are so marginal that even a 1% tax would stop them, but I suspect it’s quite large. I wouldn’t put too much stock in his numbers there.
Lest that get your hopes up Jack, overall the other articles there on BK in particular are a little hostile, and the commentators display all the idiot progressive tropes you would expect. I am not saying all progressives are idiots, but the idiots there are nearly all progressive ones.
One thing missing in the notes on the US’s global taxation rule is that money that stays oversees is exempt. Granted, the left wingers also want to eliminate that, but it does reduce the ridiculousness of global taxation. http://www.sanders.senate.gov/newsroom/press-releases/sanders-schakowsky-propose-tax-fairness-act
We actually do that with the LLC. An LLC pays no corporate-level tax, but its shareholders pay tax at normal rates.
The game in corporate taxation is to keep your money in corporate solution so that you don’t recognize it. This is how Buffett does it: He never pays a dividend. That money–often taxed at minimal rates–builds up until forever, and you never have to pay tax on it as long as you live. If you need money, you can borrow it from the bank, which is not a recognition event. You get the benefits of society without having to pay for them. Deferring income and changing its character is what tax planning is all about.
I learned a thing or two from the CPA in the house. 🙂
Unfortunately, Cathi, ours are already 35%, the highest on the planet and this still doesn’t satisfy your cronies at the WH. They want corporations to pay “their fair share”, but without defining it. And, just a little dose of real life, corporations, no matter where they are or what product they are selling DO NOT PAY CORPORATE TAXES ANYWAY. Their tax burden is always figured into the price of their product, and ultimately, is paid by the consumer. You know, US! You and me!
There’s a reason the Founders only had one layer of taxes worked into the Constitution… taxes effectively covering sales.
Any layer added and money gets taxed several times in the economic cycle, which leads to myriad codes we have and confusion behind it. It also drives cost of living increases and inflation…
With respect, Drag, that is just nonsense. No one pays 35% unless they are too lazy to not avoid it. What the corporations are doing by relocating offshore is enabling themselves to take advantage of tax arbitrage, as the various jurisdictions treat different kinds of income differently. The way to fix this is to impose a tax on economic income apportioned on the basis of sales, which is what I proposed. Who cares if your chefs at Ernst & Young make you a double-Irish sandwich if you’re going to pay tax anyway?
The “let’s just raise taxes to solve the debt” crowd amuses me as much as the “let’s just print more money to solve poverty” crowd.
Yes, because defense spending is the only viable place to cut costs…
Christ, these people are predictable.
Where do you propose to cut? Defense produces nothing, and patrolling the sea lanes only benefits the major corporations who don’t want to pay for it. It’s Ron Paul’s argument, Ag.
Cheap goods benefit only the corporations that sell them?
You cut the Department of Education. Gone. Cut HUD in half. You cut redundant agencies. You cut bloated staffs. You definitely cut about 100 billion a year in corporate welfare, subsidies, cronyism, boondoggles like high speed rail. And little crap like NPR and PBS. Get out of the U.N., which is anti-American and useless. There’s plenty of stuff to cut.
A few stray billion, at best. We need hundreds of billions of dollars, and that is chump-change. I would agree with trimming the DoE, and we could probably do away with tax subsidies for oil exploration, but your list reveals an extreme right-wing political bent. Other countries have the equivalent of NPR and PBS, but I guess that the only voice you want people to hear is that of our corporate masters.
The entire DoE budget is about $100 bn. Would you eliminate ALL of the services, or just the ones you don’t like? Which laws would you repeal and why? The devil is always in the details.
Annoying as it can be at times, the U.N. is worth the investment. If we were to walk away, we would have no voice at the table. Only serious John Birch right-wing extremists have a problem with the U.N.
High-speed rail makes sense in a few markets. SF to LA, and on to Vegas. Bos-NY-Wash. Have you ever tried to drive to LA from Vegas on a Sunday afternoon? We can either add another two lanes to I-15 or put in a bullet train. I think that economically speaking, the train makes more sense. The general rule is that investments in infrastructure have a high ROI.
Getting rid of subsidies means raising corporate taxes.
If we cut $300 bn a year from the military budget, we could let corporations patrol their own damn sea lanes. Why do we need to be the world’s police? I agree with Ron Paul: Let the rest of the world step up, because we can’t afford it.
Wow. You really jumped the shark with this nonsensical screed, and, I fear, outed yourself as an knee-jerk ideologue.
Your Top Ten absurd statements, in order of appearance:
1.”…but your list reveals an extreme right-wing political bent.”
Yet I am far from “right wing.” I simply pay attention. Eliminating corporate welfare is right wing? Not choosing to castrate the military when the world is getting more dangerous daily? Killing DoE makes sense from any perspective: education was much better before the feds started mucking with it. Let localities handle education, and leave Big Brother out. The Department was a gift to the teachers’ unions.
If one is far enough left, everything looks right. You should see things from where I am—dead center. I know it’s a long walk from where you are.
2. Other countries have the equivalent of NPR and PBS..
Oh, well that settles it then! Who cares what other countries have or don’t have? They are other countries—the US is often right when they are dead wrong. This is the international equivalent of “Everybody does it.”
3. but I guess that the only voice you want people to hear is that of our corporate masters.
Oh, shut up, you embarrass yourself. You don’t know what you’re talking about. I LIKE NPR….it’s the only radio station off satellite I listen to. PBS is fine—a fraud, since its programming is full of old re-runs of the shows PBS was supposedly an alternative to in the 70s. NPR uses me as an ethics commentator, did you know that? My theater company has been featured on PBS. But it is completely superfluous, appeals to people who can afford to pay for it, has been completely superseded by cable, Netflix and satellite, and, yes, toadies to the government masters far too much. A total waste of public funds. Low hanging fruit, and an easy cut, and symbolic of how big government addicts scream like stuck pigs at even the tiniest cut.
3. Only serious John Birch right-wing extremists have a problem with the U.N.
Where are you from, the Fifties? Who doesn’t have a problem with the UN? The UN no longer does anything but supports dictatorships, lobbies for world government actions on power-tipping issues like climate change, and makes resolutions it has no intention of following through on. This is your designated policeman. Without a UN…and without the US, there would be none within six months—at least we would know there was no international peace organization, and stop expecting the UN to act like one. It is corrupt, it is undependable, and it anti-American. The US should demand reform, or leave.
4. “High-speed rail makes sense in a few markets.”
A dream, like rapid transit was. Do you know no rapid transit anywhere in the US system breaks even? High speed rail is a money pit, and is going nowhere.
5. Have you ever tried to drive to LA from Vegas on a Sunday afternoon?
Why would I?
6. The general rule is that investments in infrastructure have a high ROI.
Yes!—roads, highways, bridges, airports, waterways, pipelines, water pipes, tunnels, sewage systems—all the things we’re not spending money on because politicians block a gas tax, and the Administration wants a new shiny rail system while the core infrastructure rots. You pick the one project that fixes nothing and adds to the debt.
7. Getting rid of subsidies means raising corporate taxes.
This one is just puzzling, but you may understand something I don’t. Why?
8. Why do we need to be the world’s police?
Because someone does, because the US has done a pretty good job in the past, because no other nation can be trusted to do it, because the UN has abdicated, and because, uh, we are looking at the results when we aren’t. Saying this is like asking “Why do I need an umbrella?” when you are standing soaked in a monsoon.
9. I agree with Ron Paul:
This is a per se insane comment, and probably should be #1. Ron Paul would have let Hitler overrun Europe, and the Japanese Asia. (So, probably, would Barack, but for a different reason.)
10.Let the rest of the world step up, because we can’t afford it.
They can afford it less, and the only reason we can’t afford it is irresponsible spending in the last six years, doubling the debt. That’s an argument for being fiscally responsible, so we CAN afford it.
Arg…this counts as a tie. I started mine about 40 minutes ago but got distracted by a youngster that was supposed to be in bed asleep.
Dang it. Yours is more eloquent even if nearly a twin…
It is! That’s hilarious. Not surprising, though…those moldy talking points are like Pavlov’s bell.
(Wow! Even when you disagree with Jack politely, you will be bullied and browbeaten, because everyone is entitled to HIS opinion.)
If we were talking in person, would you be as impolite, Jack?
You ARE a right-winger, Jack. Are you ashamed of that? It doesn’t bother me a bit. If I didn’t know better, I’d say you were Ann Coulter. It is per se unethical for you to not admit it. You are a conservative, as all of your “solutions” cling to the past. You are what you are. That is your right, but can’t we discuss ideas without being unpleasant? Can’t we disagree?
And don’t tell me that I haven’t been “paying attention.” How arrogant! I just don’t think we ought to be subsidizing our competitors. If enormous multinational corporations want our protection, they can pay us for that service. If they want it badly enough, they’ll ask us. Eliminate corporate welfare!!! I agree with Jon Huntsman here.
By the way, unreasonably low taxation is corporate welfare, as I pointed out earlier. Take away arbitrary tax breaks like percentage depletion, and oil companies have more taxable income.
And your comments on taxation are just ignorant. Our federal tax burden is the lowest it has been in my lifetime, as a percentage of GDP. It is not spending, as much as it is the failure to tax adequately. If you want your bombs and battleships, you are going have to pay for them. If we had cut our military spending in half for the past fifteen years and not fought those two wars on credit, we would be solvent.
Talk about jumping the shark! “Irresponsible spending”??? Do you even know what we’ve been spending our money on? We spend a staggering 20 cents on every federal dollar on the military. Our budget is almost 40% of the world’s $1.8 trillion in military expenditures. If we can’t be bothered with taking care of our own people, we have no business subsidizing the very people who are taking our jobs. $7 trillion of our debt is traceable to reckless military spending.
The world is getting more dangerous every day? Jack, you really need to stop binge-watching Fox. The world is a lot safer place than it used to be. I am going to visit a friend in Ireland, and the only thing I will have to worry about blowing up is a volcano. My grandparents had a bomb shelter in their back yard, and Dad was taught to “duck and cover.” The world is in better shape on balance. Have you even been out of the country lately? (Other than Israel, that is.)
Been west of the Mississippi lately? I live out here, and sometimes, people do have to go to L.A. On good days, I-15 is like the Daytona speedway, bumper-to-bumper at 80 mph. On Sundays, it takes eight hours, so you know enough not to go. Inadequate infrastructure means lost time and productivity and on that stretch, you really need four lanes or a way to get people off the road. Trucks bring goods from Asia, and clogged roads add costs. Studies have shown that high-speed rail would work there.
Rail works beautifully in Europe. I can have breakfast in London, lunch on the Seine, and a late dinner in Geneva. There aren’t a lot of places where it would work in America, but the BosNYWash corridor is an obvious one, and L.A. to S.F. is another. I’m especially intrigued by the prospect of tube travel.
Partisan politics is the cause of our declining infrastructure quality. Grover Norquist wanted to drown government in the bathtub, and right-wingers want to replace reasonably-priced and subsidized state universities with useless diploma mills like Capella and the University of Phoenix. I don’t think much of that idea any more because it hasn’t worked.
People don’t react well to bullies, Jack. We have been pushing everyone around for longer than I have been alive, and I have visited enough of the world to know that people don’t like it very much. If people want us to be the world’s policeman, let them pay for it. Let them ask us for it.
The UN has done a lot of good. Universal human rights treaties mean that more people have more enforceable rights (though America is like the old Soviet Union, in the sense that we only sign human rights treaties, with no intention of ever enforcing them). No, it isn’t perfect — think of Libya on the HRC! — but it does get things done. Maybe you have forgotten that 95% of the world is not American, and other people have different interests.
The Middle East would have been just fine if we hadn’t started a needless war. Ukraine was a result of NATO pushing eastern expansion too hard. We invaded the defenseless and harmless isle of Grenada, and meddled in the internal affairs of just about every country in our hemisphere. If we have a right to invade any country we feel like, why can’t Russia have its own Monroe Doctrine?
I don’t call demeaning accusations of me being an extreme right winger” and statements like “I guess that the only voice you want people to hear is that of our corporate masters” polite, unless the definition of “polite” is now “condescending and snotty while being a guest on someone else’s ethics blog.” Nor are ridiculous statements devoid of fact and rationality “polite,” for they are pollution, and my calling an absurd argument absurd is neither bullying nor browbeating. If you can’t take the criticism, don’t offer statements so easy to criticize, like making the pathetic claim that what the rest of the world thinks is right necessarily should be emulated by a superior culture.
I am non-ideological, as even a casual reading here would confirm. “Right wing” suggests opinions formed based on ideology rather than objective analysis, and applied to me, that allegation is either ignorant, a negligent diagnosis or a lie. I don’t care which it is in your case..it’s a cheap effort to invalidate my integrity, and the next time you do it, you’re banned.
I also don’t “binge watch” Fox. Jerk.
Your world view is standard issue Left/Pacifist delusion. Simultaneously defending the funding of NPR and extolling Ron Paul’s international views is res ipsa loquitur. I was looking for a single non-deluded comment in this latest comment—the closest was about taxes—you do know that I didn’t say that taxes were too high, or reference taxes at all. It’s east to tar someone as right wing when you attribute to them right wing positions that they don’t think or express. Of course, that’s also dishonest.
The other semi-accurate statement was about the infrastructure, except that partisanship has nothing to do with it. The infrastructure was already in crisis in 1981 when I ran a study on it for the US Chamber…both parties have been equally irresponsible since at least the 70s. To do what is needed you will have to raise taxes and forgo some new hand-outs…and boondoggles like high speed rail.
For the most part, you didn’t even attempt to rebut what I wrote in response to your by-the-book silliness last time. You’re an anti-American isolationist who embraces both warped history and dubious values. Worst and most fantastic statements in this latest installment:
1.The Middle East would have been just fine if we hadn’t started a needless war. (The first 7 words are gems)
2.Right-wingers want to replace reasonably-priced and subsidized state universities with useless diploma mills like Capella and the University of Phoenix. (Libel.)
3.Rail works beautifully in Europe. (may be true, but completely irrelevant to the US)
4. The world is a lot safer place than it used to be. (assuming that you are not referring to 1962).
5. We spend a staggering 20 cents on every federal dollar on the military. (Completely reasonable and unfortunately necessary. The only responsible defense policy for the US is to be the strongest nation in the world, and able to afford to fight multiple conflicts simultaneously.)
Here’s something else that you need to know: You don’t get to be condescending to me. I travel all over the country, all year long; I have traveled in Asia, Russia, Africa and Europe. Your snottiness is over the line. You are welcome to your addled world views, but if you discuss them here, I’m going to correctly diagnose them. Stick to ethical issues and stop trying to bring Noam Chomsky Kool-Aid into every exchange, and we’ll get along fine.
I assumed your Fox crack regarding my assessment—which is really pretty indisputable—that the world has become extremely dangerous was just standard-issue reality denial, but now I see that it is one of the WH talking points on sale this week. That’s really low—accusing me (falsely) of getting my conclusions from Fox, as you crib the latest “Look over there!” excuses from the desperate POTUS.
“Other countries have the equivalent of NPR and PBS, but I guess that the only voice you want people to hear is that of our corporate masters.”
Comparisons with other countries are generally worth about $0 here. But you are correct, many other countries have state run television. Russia for example. It’s the best thang evah!
By the way, if you hate corporations so much, I figure you’d seek economic models that don’t incentivize the formation of them… that is to say decreased government involvement, looser regulations, etc.
But don’t worry, the inefficient corporate model (a maturation of the post WW2 economic model that relied heavily on America literally being the only economic game on the planet post-WW2 destruction) only has about a decade left of momentum. Then America will face it’s most serious cross-roads… either we can shift back towards a more free-market model or a truly nationalized model (not the bastardized nationalist model we currently have).
“Annoying as it can be at times, the U.N. is worth the investment.”
How so? It gives voice to dictators, tyrants, and governments that don’t give a rat’s ass about their
citizenssubjects. It does nothing to actually punish miscreants. It drafts empty resolutions. It siphons funds away from the very nations that could do something decisive in the shit-holes of this planet and funnels those funds into the very corrupt hands that are responsible for those shit-holes being shit-holes.” If we were to walk away, we would have no voice at the table.”
The table would fall apart…
I only want an association of nations that think like us and behave like us, I only want to associate with other Commercial Republics that believe in western-style due process and believe in Rights.
Can you believe the Security council has Russia on it? RUSSIA??? CHINA!!!!? Come on now. What a joke. The very nations who would veto productive elimination of the nastiest governments on this planet are given veto power. Why? Because they are among the nastiest governments on this planet…
“Only serious John Birch right-wing extremists have a problem with the U.N.”
Oh the effects of leftist media on this population…
I think people inherently want cooperation between good nations… I don’t think people actually realize what nations compose the U.N. and so errantly assume (thank you media and education) that the members of the UN are all good and have a good vision for the world.
“Getting rid of subsidies means raising corporate taxes.”
Non-sequitur of the day.
“If we cut $300 bn a year from the military budget, we could let corporations patrol their own damn sea lanes. Why do we need to be the world’s police? I agree with Ron Paul: Let the rest of the world step up, because we can’t afford it.”
I’m pretty damn Libertarian, but I am practical about it. If we want free trade, we aren’t going to trust the world to secure that free-trade given that about 80% of the world doesn’t engage in free-trade, nor would posture their militaries to facilitate it. Sorry, I only trust Commercial Republics to secure the oceans upon which the global community engages in commerce and free interaction. And if that means those same Commercial Republics have to clean the clocks of a power that wants to upset those sea lanes then so be it.
Pulling back and letting 30 different nations (80% of whom hate free markets, hate republican democracy, and hate each other) is a recipe for Wars Without End Amen (not long duration and isolated little conflicts here and there, but conflagrations capable of consuming millions of lives and inevitably posturing every government towards totalitarianism). No sorry, I’ll trust security of the seas to the the country that is designed to avoid totalitarianism (despite it careening headlong that direction).
You can cut HUD and any number of other departments and independent federal agencies that have no constitutional legitimacy. We should probably be thankful that there are any corporations of note still based in this country. Consider where we were as a productive country 50 years ago and match it against the present day. It’s nearly like a photo of Detroit- then vs, now.
If someone is for “the working man” they should support tax inversion moves. The tax inversion lowers the cost of manufacturing in the United States. My employer was purchased by a foreign corporation. It wasn’t a tax inversion, as they were about three times larger than us already.
Prior to the purchase, we had about 10% of our sales overseas. We didn’t have a foreign presence, so 100% of our profit on those overseas sales was taxed. If we had a foreign presence we’d pay a foreign tax and then pay more in US taxes to reach the 35%.
It is an encouragement to outsource the manufacturing overseas as you can hold the profit overseas. You either reinvest that profit overseas or wait for an amnesty to bring the profit home without the tax.
When we were purchased, our sales overseas exploded and we do about 1/2 of our business overseas now. Because we are now a foreign corporation, we are taxed on the half of our business in the US. But we aren’t on the foreign sales, as we export them at our cost. No profit is made, hence no tax. The profit is taken outside the US.
Good article Jack.
I think one of the biggest misconceptions is the wide held belief that one can apply a domestic legal and tax solution to a global problem. In my opinion many U.S. corporations are pursuing excessive short term greed at the expense of a more sustainable long term approach, but this applies globally and cannot be effectively addressed domestically.
Why does the US president not try to accomplish a real solution be reaching out to the leaders of other important industrial countries or bring forth new tax related proposals at the WTO or other international organizations?
I also note that a corporation which started out in the U.S. but has since
become a multinational corporation which derives the majority of its revenue from abroad and whose success is mostly attributable to its foreign employees is in substance “multinational” and to claim it is a U.S. corporation unfairly elevates “form over substance”.
I also agree that incentives matter. California has the highest proportion of U.S. welfare recipients because it has the most generous welfare benefits. Why would it be different when it comes to the domicile of a corporation which takes into consideration international tax competitiveness and a business friendly environment (e.g. quality of infrastructure, affordable education and healthcare, excessive and frivolous lawsuits, or oppressive regulations.)
To blame the corporations is to blame the symptoms instead of understanding and addressing the underlying cause. The biggest offender in my opinion is the media which has utterly failed to even make an effort to understand the core issues related to tax inversion. They have lost all credibility in claiming they are helping citizens to make educated and informed decisions.
Yet, the Democrats will tell you that they lack “economic patriotism”. (That’s another quaint term they’ve come up with.) To them, allowing them to pick your pocket several times a day for the privilege of working in THEIR America is the new definition of patriotism… right along with spitting on troops returning home from combat.