Ok. Flat tax concepts aside, I'm not clear why you believe a tax on corporate activity differs so greatly from individual taxation - particularly given that the entire concept of 'corporation' is to create a fictional 'person' for the sake of managing the assets of companies.
If all corporate transactions were taxed regardless, then I think you'd have a strong argument for the effects being directly negative and regressive - however if I'm not mistaken corporations generally pay their taxes on profits, no? They can even withhold some of their declared losses in one year to offset profits in another to even out the inevitable spikes?
Yes, that still results in an inevitable increase in consumer prices - but it is NOT proporational to the tax, not even close. If taxes were levied against a corporation's gross *income* then it would be proportional, and create the full brunt of the woe you seem to be ascribing to it.
Now SALES taxes are the really brutal ones. Those are severely regressive and they hit both corporations and individuals right in the jimmies.
Corporations function to make their shareholders a profit. Yes, the tax is levied against the profit, and yes just like individuals they can take losses incurred in one year, and use them against profits in later years. The issue is that corporations focus upon the bottom line, if I tax them an extra 1 percent, they should and will find a way to keep the bottom line constant. They can do this by cutting costs (employees is the easiest way to do this one), or raising their prices... either way the little guy gets the shaft.
This doesn't bring into the picture that increased corporate/business taxes encourage businesses to do business elsewhere... one can just look at two of the highest tax burdened states for businesses (MA and CA) and see that they are also two of the three states over the past two years to lose both GDP and population (LA is the third). We live in a global market where the differences between doing business in one country, is not much different than doing business in a different state. If we discourage businesses from doing what they are meant to do... make money. We will find more and more of them seeking to do it elsewhere.
One mistake of others that I see you repeating is tying corporate profits to the wealth of the top earners in our economy. One of the issues we have is that there is no correlation between executive compensation, and corporate profit levels. Taxing the corporation won't fix it - as I said, the CEO's pay won't get impacted - but the line worker putting Chinese parts together to make a "US" product certainly will be impacted.
Yes, its true that compensation and profitability are completely unhinged from each other, and that has nothing at all to do with taxation.
That's the accursed board-set compensation system that puts all the CEO's into one big happy back-rubbing country club where they assign each other massive raises every year. My hatred for that particular arrangement knows few bounds. If you have any suggestions for fixing THAT, I'd be happy to hear them. :(
Now as to the problem with countries 'undercutting' each other to attract businesses, that occurs at every level. Towns, Counties, States, Countries. But you cannot simply state that taxation is the ultimate arbiter of corporate positioning and then begin a meteoric race to the bottom to attract them. There are many other factors at work - the two other most important of which are Skilled (or unskilled) Manpower, and Infrastructure.
In short, many companies must go to where the talent is. California and Massachusetts are two of the richest states in the Union because they have most of the best SCHOOLS in the Union, and generate enormous pools of skilled labor ripe for the plucking. They both back this up with extremely high levels of Infrastructure suitable for high-tech businesses - advanced telecoms systems with excellent coverage, reliable power systems (ok, California screwed the pooch on that one when they created that cockamainie privatization and power trading scheme, but they'll have to unwind that fuck up on their own), and transportation systems, not to mention a lot of other professional services in the same area that are designed to support middle-high income workers comfortably.
Sure you could try and create a tech start-up in Alaska, but seriously. I don't care what their tax rate is. Irrelevant. Could be 0%. They couldn't begin to subsidize enough to start up a real tech concern out there. Our company is looking to move its offices now. Concerns? Commute times, power grid, local dining, visibility. You know where taxes are on their list? Not there. Its all infrastructure concerns. You know the old mantra - Location, Location, Location.
If you focus on nothing but taxes, and you risk forgetting everything else that matters to a successful company. Which is a lot. Otherwise no one would EVER open any business in NY City EVER, on the basis of the salaries alone. But they do. Oh do they.
The poorer states can't afford to compete with the rich ones in terms of infrastructure, so they compete with low tax rates, and they attract different business as a result. That's fine, but it's not a one-size-fits-all solution. Some companies are more or less tax averse, and some are more or less infrastructure dependent. Our state obviously takes the infrastructure/talent approach, and is one of the richest. It's been a pretty good deal for quite a long time despite rather high tax rates compared to the rest of the country, I'd say.
In fact, we're about as high up the ladder as you can currently go (particularly given how small MA really is), so it's not a huge surprise that we're stalling as some of the middle-pack states catch up and it DOES get easier to move tech concerns into more remote or foreign locations as tech improves and more highly skilled competition comes into the market. It'll be interesting to see how we adapt.
Yes, its true that compensation and profitability are completely unhinged from each other, and that has nothing at all to do with taxation.
That's the accursed board-set compensation system that puts all the CEO's into one big happy back-rubbing country club where they assign each other massive raises every year. My hatred for that particular arrangement knows few bounds. If you have any suggestions for fixing THAT, I'd be happy to hear them. :(
I'll be honest, I kind of like McCain, and if he wasn't in that insanely incompetent party, I might even vote for him.
But he is, and they are, and there's not a snowball's chance in hell that I will.
I prize competence over ideology by a very large factor. Either party COULD run the country via their respective approaches - and either could work, we'd just be living in a different result. Either could be pretty good, just different.
But no, the republican party has screwed the pooch big time on this round. They have convinced me (and a lot of others) than they can't be trusted to run a lemonade stand - much less a large country - whether they attempted to do it via capitalist principles OR socialist ones.
They have some serious house cleaning and navel gazing to do over the next 8 years or so, and they can do it from the sidelines and then come back and give it another shot if they get some fundamental governance issues sorted out by then.
MA doesn't stack up when it comes to infrastructure. I know because I had to do an ROI analysis on us moving the company from NH to MA... and MA doesn't do well on the infrastructure side of things.
Roads and Bridges - amongst the worst in the nation per AAA Internet coverage - nothing compared to the central Eastern Seaboard, the Mid-West, or the West Coast... everything in MA is just a pipeline from NY... which is in turn a pipeline from VA. Phone Coverage - feh? It's pretty much the same everywhere... just taxed more in MA.
MA is not doing well economically - largely because it has major infrastructure issues, especially when you weigh it's being behind the curve on everything but education in relation to its level of tax burden. This can be seen by the fact that the state is hemoraging both population and businesses.
I'll be honest, I couldn't care less if our population dips a bit. I'll let you in on a little secret - the countries that can maintain the highest level of economic activity and technology with the lowest population density are going to be the ones that remain happy and rich as we approach the limit of our biosphere to sustain our population.
One thing we are going at some point to have to come to terms with is the idea that growth (population growth, economic growth) is not an unending upwards cycle. We are going to max out somewhere - and to a great extent our standard of living is going to depend on where we do that. If we push our planetary population up to 12 billion for example, most of us are going to suffer miserably low standards of living.
If on the other hand we were able to somehow actually turn back the clock and bring the numbers down to 5 or even 4 billion, we would likely be able to sustain a far higher standard of living across the world, particularly as technology continues to improve. It's a simple matter of how much natural resource is available to each person to sustain their standard of living. We appear to be pushing several critical limits now on a global scale (total arable land, CO2 emissions, oceanic fishing stocks, fresh water supplies, oil supplies, etc). The sudden jump in food prices as we attempt to shift our agricultural base to support some of our energy needs is another symptom of that limit. The fact that we are willing to shift such a critical resource in an attempt to bolster another one is pretty telling (and possibly rather stupid actually, another place I'm not sure I like Obama's specific policy platform).
As a side note, individuals respond to taxation in a manner similar to corporations. Perhaps not as sensitive in most cases, but moreso in a few.
Some people just won't live in a state with sales tax, or high state income taxes, much like a company might be discouraged by the same - but again taxes directly corrolate with infrastructure. States with low tax schemes simply cannot compete in infrastructural development.
For someone who prefers to live in a corn-field or a log cabin, that's just fine, and they should stick to states with very low taxation schemes. For people who prefer living in cities with a good transit system and a Starbucks on every corner, well, they have no choice but to suck up some additional taxes and deal.
If its the federal taxes that bother them, then they'll just go to Dubai where its 'anything goes', and its all subsidized by oil wealth. But that's a strictly temporary phenomenon. In 15 years or so when the oil cash runs out (probably well before then honest) there is going to be a very dramatic shift in how those 'bubble cities' are supported, and it's going to involve A) a lot of new taxes and/or fees or B) they are going to fall into ruin.
Its a great way to get a modern city started, but we can't compete with them in the same manner due to our lack of a couple trillion dollars of oil wealth, so we have to find other ways. No way to compete with them on the taxation front I'm afraid.
If all corporate transactions were taxed regardless, then I think you'd have a strong argument for the effects being directly negative and regressive - however if I'm not mistaken corporations generally pay their taxes on profits, no? They can even withhold some of their declared losses in one year to offset profits in another to even out the inevitable spikes?
Yes, that still results in an inevitable increase in consumer prices - but it is NOT proporational to the tax, not even close. If taxes were levied against a corporation's gross *income* then it would be proportional, and create the full brunt of the woe you seem to be ascribing to it.
Now SALES taxes are the really brutal ones. Those are severely regressive and they hit both corporations and individuals right in the jimmies.
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This doesn't bring into the picture that increased corporate/business taxes encourage businesses to do business elsewhere... one can just look at two of the highest tax burdened states for businesses (MA and CA) and see that they are also two of the three states over the past two years to lose both GDP and population (LA is the third). We live in a global market where the differences between doing business in one country, is not much different than doing business in a different state. If we discourage businesses from doing what they are meant to do... make money. We will find more and more of them seeking to do it elsewhere.
One mistake of others that I see you repeating is tying corporate profits to the wealth of the top earners in our economy. One of the issues we have is that there is no correlation between executive compensation, and corporate profit levels. Taxing the corporation won't fix it - as I said, the CEO's pay won't get impacted - but the line worker putting Chinese parts together to make a "US" product certainly will be impacted.
Reply
That's the accursed board-set compensation system that puts all the CEO's into one big happy back-rubbing country club where they assign each other massive raises every year. My hatred for that particular arrangement knows few bounds. If you have any suggestions for fixing THAT, I'd be happy to hear them. :(
Now as to the problem with countries 'undercutting' each other to attract businesses, that occurs at every level. Towns, Counties, States, Countries. But you cannot simply state that taxation is the ultimate arbiter of corporate positioning and then begin a meteoric race to the bottom to attract them. There are many other factors at work - the two other most important of which are Skilled (or unskilled) Manpower, and Infrastructure.
In short, many companies must go to where the talent is. California and Massachusetts are two of the richest states in the Union because they have most of the best SCHOOLS in the Union, and generate enormous pools of skilled labor ripe for the plucking. They both back this up with extremely high levels of Infrastructure suitable for high-tech businesses - advanced telecoms systems with excellent coverage, reliable power systems (ok, California screwed the pooch on that one when they created that cockamainie privatization and power trading scheme, but they'll have to unwind that fuck up on their own), and transportation systems, not to mention a lot of other professional services in the same area that are designed to support middle-high income workers comfortably.
Sure you could try and create a tech start-up in Alaska, but seriously. I don't care what their tax rate is. Irrelevant. Could be 0%. They couldn't begin to subsidize enough to start up a real tech concern out there. Our company is looking to move its offices now. Concerns? Commute times, power grid, local dining, visibility. You know where taxes are on their list? Not there. Its all infrastructure concerns. You know the old mantra - Location, Location, Location.
If you focus on nothing but taxes, and you risk forgetting everything else that matters to a successful company. Which is a lot. Otherwise no one would EVER open any business in NY City EVER, on the basis of the salaries alone. But they do. Oh do they.
The poorer states can't afford to compete with the rich ones in terms of infrastructure, so they compete with low tax rates, and they attract different business as a result. That's fine, but it's not a one-size-fits-all solution. Some companies are more or less tax averse, and some are more or less infrastructure dependent. Our state obviously takes the infrastructure/talent approach, and is one of the richest. It's been a pretty good deal for quite a long time despite rather high tax rates compared to the rest of the country, I'd say.
In fact, we're about as high up the ladder as you can currently go (particularly given how small MA really is), so it's not a huge surprise that we're stalling as some of the middle-pack states catch up and it DOES get easier to move tech concerns into more remote or foreign locations as tech improves and more highly skilled competition comes into the market. It'll be interesting to see how we adapt.
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That's the accursed board-set compensation system that puts all the CEO's into one big happy back-rubbing country club where they assign each other massive raises every year. My hatred for that particular arrangement knows few bounds. If you have any suggestions for fixing THAT, I'd be happy to hear them. :(
Well, McCain has a plan to address it ;-)
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But he is, and they are, and there's not a snowball's chance in hell that I will.
I prize competence over ideology by a very large factor. Either party COULD run the country via their respective approaches - and either could work, we'd just be living in a different result. Either could be pretty good, just different.
But no, the republican party has screwed the pooch big time on this round. They have convinced me (and a lot of others) than they can't be trusted to run a lemonade stand - much less a large country - whether they attempted to do it via capitalist principles OR socialist ones.
They have some serious house cleaning and navel gazing to do over the next 8 years or so, and they can do it from the sidelines and then come back and give it another shot if they get some fundamental governance issues sorted out by then.
Reply
Roads and Bridges - amongst the worst in the nation per AAA
Internet coverage - nothing compared to the central Eastern Seaboard, the Mid-West, or the West Coast... everything in MA is just a pipeline from NY... which is in turn a pipeline from VA.
Phone Coverage - feh? It's pretty much the same everywhere... just taxed more in MA.
MA is not doing well economically - largely because it has major infrastructure issues, especially when you weigh it's being behind the curve on everything but education in relation to its level of tax burden. This can be seen by the fact that the state is hemoraging both population and businesses.
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http://www.bls.gov/EAG/
I'll be honest, I couldn't care less if our population dips a bit. I'll let you in on a little secret - the countries that can maintain the highest level of economic activity and technology with the lowest population density are going to be the ones that remain happy and rich as we approach the limit of our biosphere to sustain our population.
One thing we are going at some point to have to come to terms with is the idea that growth (population growth, economic growth) is not an unending upwards cycle. We are going to max out somewhere - and to a great extent our standard of living is going to depend on where we do that. If we push our planetary population up to 12 billion for example, most of us are going to suffer miserably low standards of living.
If on the other hand we were able to somehow actually turn back the clock and bring the numbers down to 5 or even 4 billion, we would likely be able to sustain a far higher standard of living across the world, particularly as technology continues to improve. It's a simple matter of how much natural resource is available to each person to sustain their standard of living. We appear to be pushing several critical limits now on a global scale (total arable land, CO2 emissions, oceanic fishing stocks, fresh water supplies, oil supplies, etc). The sudden jump in food prices as we attempt to shift our agricultural base to support some of our energy needs is another symptom of that limit. The fact that we are willing to shift such a critical resource in an attempt to bolster another one is pretty telling (and possibly rather stupid actually, another place I'm not sure I like Obama's specific policy platform).
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Some people just won't live in a state with sales tax, or high state income taxes, much like a company might be discouraged by the same - but again taxes directly corrolate with infrastructure. States with low tax schemes simply cannot compete in infrastructural development.
For someone who prefers to live in a corn-field or a log cabin, that's just fine, and they should stick to states with very low taxation schemes. For people who prefer living in cities with a good transit system and a Starbucks on every corner, well, they have no choice but to suck up some additional taxes and deal.
If its the federal taxes that bother them, then they'll just go to Dubai where its 'anything goes', and its all subsidized by oil wealth. But that's a strictly temporary phenomenon. In 15 years or so when the oil cash runs out (probably well before then honest) there is going to be a very dramatic shift in how those 'bubble cities' are supported, and it's going to involve A) a lot of new taxes and/or fees or B) they are going to fall into ruin.
Its a great way to get a modern city started, but we can't compete with them in the same manner due to our lack of a couple trillion dollars of oil wealth, so we have to find other ways. No way to compete with them on the taxation front I'm afraid.
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