Elizabeth Warren for President

[patches70]

That graph is utter bullshit.

Statistics, if you torture numbers long enough they'll tell you whatever you want them to tell you.

[_sabotage_]

I don't disagree with the premise it is trying to show, that republicans favour the rich, but the numbers seem highly suspect. If it showed a far greater growth for the 95th percentile, I'd be more inclined to believe it. But suggesting that the 95th percentile has only had a percentage point more income growth than the bottom 20th it outright nonsense, or as you say, tortured statistics.

[thegreekdog]

Do you have any evidence that your beliefs match reality?

Yeah. I'm a corporate tax attorney. Therefore, I know, for example, that companies don't actually pay "0%" and that this phenomenon is a fictional narrative. I also know what the term "effective tax rate" means and I know the difference between worldwide profits and territorial profits and the two taxing schemes that go along with those two profit items.

But let's take each graph in turn and pretend I'm not a corporate tax attorney.

Graph (1) - "The U.S. raises much less from corporate taxes than other countries."

The graph represents "Corporate tax revenue as a share of GDP." What does that mean? It means that, for example, if my GDP is $2.00 and I raise $1.00 in corporate tax revenue, then I fall at 50%. But what if my GDP was $20.00? What if it was $200.00? What if the GDP was generated by non-corporations (e.g. individuals, partnerships, S corporations, LLCs - which, hey, if I lived in a country with a 35% tax rate on corporations and a 15% tax rate on distributions from corporations to shareholders, I'd probably set up a pass through entity rather than a corporation)? What if I could generate revenue from other taxes instead of the corporate tax?

Graph (2) - "US corporations are taxed less than their foreign rivals."

The graph shows "effective corporate tax rate." Is that term defined in the graph (yes, but it is an incomplete and therefore incorrect definition)? Does that term include just federal corporate income tax or does it include state and local income taxes? Does it include sales and use taxes, franchise taxes, gross receipts taxes, real property taxes, personal property taxes, unemployment taxes, excise taxes, or any other taxes? Does it include non-U.S. taxes like VAT or other countries' income taxes?

Further, the phrase "U.S. corporations" is used. Does that mean U.S. headquartered corporations? Does it mean corporations that pay U.S. taxes?

To put it in further perspective, President Obama, in one of his state of the union addresses, noted that the corporate tax rate (usually 35%) is too high for US corporations to invest in the United States (nevermind non-tax reasons). He knows that companies have a disincentive to invest in the US because of the high corporate income tax rate.

I will address your other points later, but this idea that has circulated that US companies don't pay taxes drives me apeshit so I had to respond.

[degaston]

Do you have any evidence that your beliefs match reality?

Yeah. I'm a corporate tax attorney. Therefore, I know, for example, that companies don't actually pay "0%" and that this phenomenon is a fictional narrative.

So are you saying that articles like this and this and this and this and this are all just fabrications? Are you doing the taxes for these companies? Obviously, most companies do pay federal taxes, but it appears that a few are able to find enough loopholes so that they pay none. And republicans would not close a single one.

Graph (1) - "The U.S. raises much less from corporate taxes than other countries."...

You list a lot of "what if"'s? Is there a conclusion to be drawn from them? Are you saying that the US raises more from corporate taxes than other countries? And even if we are, would that not be expected from a country with our level of military spending, infrastructure, social programs, etc.?

Graph (2) - "US corporations are taxed less than their foreign rivals."

I believe they're just referring to federal taxes. And opinions vary as to whether they're too high, but they are not the highest in terms of what companies actually pay, and it's a bit disingenuous to complain about the 35% rate if no one actually pays that much.

[_sabotage_]

I can open a business in the US and have marginally skilled labour that will gang up on me and stifle innovation. I will have to offer them a package better than welfare. I then need to deal with the most expensive service sector in the world and the most heavily enforced for small businesses.

I then deal with the most complex state and federal tax system in the world, so that I can pay for the worlds most expensive and aggressive military, thereby supporting their murderous ambitions, I can fund the war on drugs, torture, welfare, the worlds worst financial system, shitty schools willing to arrest my kids or trick my kids into implicating me for some crime, a brute police force, a skewed political system, a shitty and expensive healthcare system.

Or I can use the loopholes the democrats established with free trade deals and open up shop with cheaper more grateful workers, where my taxes go towards the local well-being and are much less and not worry or incur so many legal complexities, my innovation is encouraged and the government isn't trying to protect market leaders from competition.

Blaming republicans is bullshit. It takes two to disco.

[thegreekdog]

Do you have any evidence that your beliefs match reality?

Yeah. I'm a corporate tax attorney. Therefore, I know, for example, that companies don't actually pay "0%" and that this phenomenon is a fictional narrative.

So are you saying that articles like this and this and this and this and this are all just fabrications? Are you doing the taxes for these companies? Obviously, most companies do pay federal taxes, but it appears that a few are able to find enough loopholes so that they pay none. And republicans would not close a single one.

Graph (1) - "The U.S. raises much less from corporate taxes than other countries."...

You list a lot of "what if"'s? Is there a conclusion to be drawn from them? Are you saying that the US raises more from corporate taxes than other countries? And even if we are, would that not be expected from a country with our level of military spending, infrastructure, social programs, etc.?

Graph (2) - "US corporations are taxed less than their foreign rivals."

I believe they're just referring to federal taxes. And opinions vary as to whether they're too high, but they are not the highest in terms of what companies actually pay, and it's a bit disingenuous to complain about the 35% rate if no one actually pays that much.

I'm not convinced you've read the articles you cited. Here are some quotes from the first two (I didn't read the others, in the interest of full disclosure).

From the Reuters article:

In a reflection of how the tax code's complexity leaves many issues open to question, corporations sometimes dispute the way Citizens for Tax Justice calculates its numbers. Some of the companies singled out took exception to the findings. GE spokesman Seth Martin said: "For each year cited by Citizens for Tax Justice, GE paid income taxes in the U.S., as well as billions in other state, local and federal taxes in the U.S." He added, "CTJ inaccurately uses the current tax provision - a book accounting number - to make definitive statements about our U.S. income taxes. This is not the same as the cash income tax that we pay for a given year."

From the Forbes article (emphasis added):

By moving its parts business away from the U.S., Caterpillar managed to shift 85% of its international parts revenue to Geneva, thus avoiding U.S. taxes on $8 billion in profits.

Do you think Chinese companies should pay U.S. federal income tax on their Chinese profits?

You are able to shift profits to places where you, an American company, don’t pay taxes. That is not right,” said Sen. Levin to Cook. He asked Cook: “You’re not bringing the $100 billion in foreign cash home unless we reduce our tax rates?” “I have no current plan to do so at the current tax rate,” said Cook.

The Forbes article is a pretty good indictment of the high federal income tax rate, on the whole. Thanks for sharing.

Not only do American companies shy away from earning profits here, but the tax code explicitly disincentivizes foreign entrepreneurs from expanding in the U.S.

The reason the bellyaching over "companies not paying taxes" is not valid is because people don't understand the territorial system of taxation, people don't understand subnational taxation, and people don't understand non-income taxes. Further, people really don't understand tax accounting and don't take into account all taxes that may be levied on a U.S. company. For the most part, these items do not make it into any of the articles ripping companies for "not paying taxes" mostly because it doesn't fit the narrative that corporations are evil, tax-avoiding entities that want hard working Americans to pay all the taxes (nevermind that more than half of Americans don't actually pay any federal individual income tax). If you would like to discuss, in further detail, what the percentages actually mean, we can do that.

Are there "loopholes"? Let's discuss what that word means. Loopholes imply that a company is doing something bad. Let's take one example. Federal bonus depreciation allows a company to deduct 100% or 50% of depreciation when an asset is placed in service in the first year, as opposed to "normal" depreciation which may be 20% or 5% or something else. The purpose of the law is to encourage companies to purchase depreciable assets (like machinery and equipment) so as to stimulate the economy. These deductions will give the company a large deduction in year one, but smaller or no deductions in subsequent years. Is this a tax loophole? Many in the media and at the Center for Tax Justice (or whatever the hell it is called) would say yes. I would classify it as a tax preference item: something Congress passed and the president signed to benefit companies that do a particular thing. The company is not doing anything bad by taking advantage of that tax preference item; after all, that's what Congress and the president wanted companies to do. Are tax preference items bad? It depends on who you ask and why the tax preference items are there in the first place. Some people may like the bonus depreciation deduction because it encourages investment. Some people may not and say that investment was going to occur with or without the bonus depreciation deduction. But the last people I would blame are companies (unless, of course, those companies lobbied Congress and/or made campaign contributions with the express purpose of getting that deduction passed). In any event, it's not a loophole. The term "loophole" should be banished from the lexicon when discussing actual laws that were passed by Congress where the express purpose of the law is what the company is doing.

The other big problem with these articles is that they completely ignore territorial taxation. Generally speaking, a country will not tax a company on its profits earned in other countries. Country X may not tax a company based in Country X on its profits in Country Y. If the company has a loss in Country X, but a wild profit in Country Y, it could look like the company is not paying "it's fair share of income tax."

On your first response to Graph 1 (and probably Graph 2 as well), I would say a better measure of how much companies pay in the United States is to determine how much actual revenues are received by U.S. governments from taxes on businesses. I say "governments" in the plural because the more states raise in revenue, the less the federal government has to pay. So one would have to take into account all state income taxes, certain federal and state personal income taxes (e.g. taxes on dividends and capital gains and taxes on pass-through entity owners), and certain federal and state non-income taxes (e.g. excise taxes, sales taxes, etc.). And one should do that with every country. I don't know a good comparable. I think GDP is a poor comparable due to the international nature of business and the territorial nature of taxation, as well as the relative GDPs of countries varying wildly (as I illustrated in my last post).

On your second response (to Graph 2), what came first, the chicken or the egg? Did companies shift operations (and profits) outside the U.S. and then the U.S. got a 35% tax rate (Let me digress on that fallacy too - The U.S. does not have a 35% tax rate... it also taxes dividends, so corporate profits are taxed twice)? Or did the U.S. get a 35% tax rate and then companies shifted operations? Does this not matter with respect to this narrative? I think it matters a whole lot. The U.S. has a tax system and tax rate that is not competitive with other countries. So companies move operations and profits outside the U.S. And then U.S. citizens and members of Congress complain that companies don't pay "their fair share." And now I'll make a poor analogy. My wife cooks me dinner and I eat it. I proceed to get horribly ill. I tell her I'm not eating her dinners again. Then she complains to everyone that will listen that I don't appreciate her cooking.

Finally, this idea that Republicans are primarily responsible for tax preference items is just not correct. President Obama signed multiple tax exteners and Congressional Democrats voted for them. Democrats are as much responsible for this as Republicans, they just do a better job pretending their not.

[Phatscotty]

During the time period, the wealthy have become vastly more wealthy than the poor.

Your graph doesn't reflect reality.

but even the poor have also become vastly more wealthy themselves. In some ways the poor today are so much better off today than the poor 50 years ago, 100 years ago, 200 years ago. Materialisticly and quality of life considered, the poor are exponentially better off. It's hard to understand or really see the difference because it's all relative. The poor in my country today mostly have an automobile, most have a refridgerator, most have television, most have cell phones, almost all of them have clothing, virtually none of them starve to death and all have access to emergency healthcare services. There was a time no too long ago when a poor person would consider that kind of lifestyle to be heartily rich indeed.

[_sabotage_]

We can say all kinds of crap. I can say the minimum wage hasn't increased in real terms for 4 decades and you can say, but for the same price you get a PS4 instead of a Nintendo.

Progress. There are very few countries where the same concept hasn't been valid.

But I like to compare like things. Do you feel it's easier to become a small business owner in the US now or at earlier times? Is a steep hierarchy better than a flatter one? Should the emphasis be on attaining a strong market leader or creating a environment of competition?

[BigBallinStalin]

Part of the discussion problem is many of the posters in this thread want to talk about "rent-seeking" which, according to Wikipedia is a term closely related to "rational choice" or "public choice: theory:

the subset of positive political theory that studies self-interested agents (voters, politicians, bureaucrats) and their interactions, which can be represented in a number of ways, such as standard constrained utility maximization, game theory, or decision theory.[1] Public choice analysis has roots in positive analysis ("what is") but is often used for normative purposes ("what ought to be") in order to identify a problem or suggest improvements to constitutional rules (i.e., constitutional economics) s:

and that has a basic thesis

.

Its basic thesis is that when both a market economy and government are present, government agents provide numerous special market privileges. Both the government agents and self-interested market participants seek these privileges in order to partake in the resulting monopoly rent. Rentiers gain benefits above what the market would have offered, but in the process allocate resources in sub-optimal fashion from a societal point of view.

I agree with the crittcism of this theory as outlined in the Wikipedia article, basically the theory does not match reality

In their 1994 book Pathologies of Rational Choice Theory, political scientists Donald P. Green and Ian Shapiro argue that rational choice theory (of which public choice theory is a branch) has contributed less to the field than its popularity suggests.[24] They write:

The discrepancy between the faith that practitioners place in rational choice theory and its failure to deliver empirically warrants closer inspection of rational choice theorizing as a scientific enterprise.[25]

Linda McQuaig writes in All You Can Eat:[citation needed]

The absurdity of public-choice theory is captured by Nobel Prize-winning economist Amartya Sen in the following little scenario: "Can you direct me to the railway station?" asks the stranger. "Certainly," says the local, pointing in the opposite direction, towards the post office, "and would you post this letter for me on your way?" "Certainly," says the stranger, resolving to open it to see if it contains anything worth stealing.

http://en.wikipedia.org/wiki/Public_choice

I tend to subscribe to the reality that , flawed as it is, America is a democracy .and there soudl be government of the people, by the people for the people.

Elizabeth Warren for President- she will work for you, and for America.

You don't need 100% cognitively capable actors for the implications of public choice theory to hold.

That was probably the weakest criticism of economics in the UNIVERSE.

Unsurprisingly, you conclude with LIZ WARREN FOR PREZ!!! when your 'evidence' could've equally supported other politicians (to whom you probably think public choice theory applies). Way to be crazy!

[tzor]

We can say all kinds of crap. I can say the minimum wage hasn't increased in real terms for 4 decades

I would say something different. I've seen enough international studies to indicate that the percentage of the minimum wage compared to the mean wage for a given demographic will be a strong indicator to the general rate of unemployment to that given demographic. Now this gets complicated because it's hard to pick the right way to view these demographics, but in fact the average US hourly wages haven't increased in real terms for 4 decades either and we are still not at the point where we were at one point in the 70's.



There is a really interesting and evil aspect to the minimum wage laws and that is the secret powers of unions. Unions often make special contract arrangements and adjustment to the laws to enable them to have workers BELOW the minimum wage, giving an advantage to business who wishes (or needs) to hire workers below the minimum wage (through using their special union workers). (L.A.’s Higher Minimum Wage for Hotel Workers Really a Tax on Non-Union Labor)

Two hotel industry groups are suing in federal court of the massive wage hike Los Angeles is putting into place for workers at large hotels. The Los Angeles City Council is mandating a $15.37 minimum wage for hotel workers for hotels with at least 300 workers.

Actually, a correction: The jacked up minimum wage applies unless the workers are unionized and agree through collective bargaining to lower wages.

[_sabotage_]

Tzor,

Your point is valid as are hundreds of other points which could be made.

A guy asked me, where'd the money go (in reference to the collapse)? This is the beauty of the scheme and our compliant media/government. People don't get that the money was never there.

The banks invented that worth. They traded that invented worth and took home bonuses year after year based on the fees for trading that invented worth. Or, they created a pyramid scheme. And when the pyramid had been fulfilled and the bottom gone, the banks were rewarded for it.

People don't get that the rating system, the regulators, the politicians were complicit. They don't get that this invented worth was leveraged against real value and by letting the bottom drop out of the crap, real value was dropped as well. They don't get that while the banks were getting $16 trillion in secret bailouts, real value was at a modern low. That while the average Joe was running scared, the financial institutions were rolling in money they were given for making those people run scared.

And I know they don't get it because we have just formalized this form of robbery.

When the most productive means a system has is robbing itself, then the system is fucked. When the means to rob the system are granted to the few who have the tools to do so and are the recipients of robbing the system, the system is fucked. When those who rob the system are rewarded for it and their method is formalized, the system is beyond fucked. We could discuss minimum wage and all kinds of stuff, but it seems pointless when any forward movement that can come from earnings can be legally thwarted by a small group who can use the rating system to make what should have been a dangerous gamble appear safe, which can print money and devalue savings, which can mess with the housing market and destabilize the most common major investment the average Joe will ever make.

[tzor]

It should be clear that there are people who abuse the system.

In fact, they would abuse any system and there always exists someone who is abusing any existing and current system.

Go to Cuba, and you should be able to find people who are abusing the system. (It's not a problem unique to Capitalism, abusers will abuse anything.)

In this case it involves the relationship between two groups, banks and the government (and we can consider the Fed as a "bank" for this discussion). Elements in the bank depend on elements in the government and vice versa. The government is allowed to spend money it doesn't have, and banks are allowed to take "risks" without having to worry about the consequences. If it is done right, it is hard to spot all that dirt under the carpet.

But, on the other hand, they are not the real problem. The real problem is when government policy stifles innovation. They often do this because they falsely believe they are playing a zero sum game. And that is a completely different problem.

[Fewnix]

To all Cc ''ers and everybody everywhere

https://www.youtube.com/watch?v=XwRIBpw7EwU

And now back to our regular programming.

[tzor]

You know, I really think a Rand Paul / Elizabeth Warren debate would be interesting.

[_sabotage_]

Those are the innovations of our society though. This is our financial innovation: creating financial instruments out of nothing and then applying value through legislation. Putting millions through the legal system is our innovation. Perpetual war, a defence budget larger than the next 35 countries combined, 32 of which are our allies. NSA, TSA, Arab spring style revolution. We innovate, we just innovate suffering.

Paul/Warren debate, it would be interesting but of little practical importance.

[tzor]

Paul/Warren debate, it would be interesting but of little practical importance.

Debates have little practical importance and none of them are real debates anyway.