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That NPR article is a very strange collection. # 2: End the tax deduction companies get for providing health-care to employees. Right now, large employers rec

That NPR article is a very strange collection. # 2: End the tax deduction companies get for providing health-care to employees. Right now, large employers receive a group discount from whatever insurance provider they choose. So to bring down healthcare costs in the US, which are 4 times that of the civilized world, this motley crew of economists suggests to eliminate the group discount. That'll work. # 3: Eliminate the corporate income tax. Yes, Joe Plumber's firm pays corporate tax in PA, but any multinational with a decent lawyer pays no tax anywhere. Incorporate in Bermuda, license the IP. In the interest of fairness one could abolish corporate tax, but one could also come down on tax oases. Why isn't that even suggested? # 4: Eliminate all income and payroll taxes We are supposed to have a consumption tax instead. The wealthier you are, the more likely are to invest. Less wealthy people do not have that luxury, what comes in goes out that month. It seems to be an attempt to shift the tax burden away form the politically connected class. It's not convincing at all, there's too many aspects missing from the discussion to be taken seriously.

Consultant32452 7y ago
For all of these it's important to remember that the federal government doesn't have to charge taxes to anyone. It can just print more money to pay its bills, inflating the currency somewhat. All taxes therefore are social policy, without exception. So, as a social policy... when Joe Plumber is considering going out on his own, how much advantage do you want to give Mega-Plumber-Co against him? Right now Mega-Plumber-Co gets the advantages of cheaper health insurance, no corporate tax, and can easily amortize the cost of certification/licensing taxes. With regards to #4 specifically, consumption taxes are the most economically efficient. This is a social policy that encourages thrift, which is bad for mega-corps but good for the individual. If the regressive nature of consumption taxes concerns you, you can just partner them with a dividend check paid to all citizens.
rayiner 7y ago
> 2: End the tax deduction companies get for providing health-care to employees. Right now, large employers receive a group discount from whatever insurance provider they choose. So to bring down healthcare costs in the US, which are 4 times that of the civilized world, this motley crew of economists suggests to eliminate the group discount. That'll work. That’s not what they’re talking about. They’re talking about the fact that when your employer pays premiums for your health insurance, that a not considered taxable income. That is regressive (higher income people get more health insurance benefits). > Yes, Joe Plumber's firm pays corporate tax in PA, but any multinational with a decent lawyer pays no tax anywhere. Incorporate in Bermuda, license the IP. In the interest of fairness one could abolish corporate tax, but one could also come down on tax oases. Why isn't that even suggested? The idea of licensing IP from Bermuda captures the media’s imagination, so there is a lot of coverage of such efforts, but it actually doesn’t add up to much. Most companies simply can’t take advantage of such tricks because they don’t deal with intangible products. Wal-Mart’s effective tax rate is 25% for example. The average effective tax rate for the S&P 500 was about 18% in Q4 2018. That’s higher than the average effective corporate tax rates in say the Netherlands. Corporate tax avoidance just isn’t a very big deal. Estimates are that legal corporate tax avoidance costs $100-240 billion in revenue across the entire OECD: https://fortune.com/2019/10/16/corporate-taxes-unpaid-g20-summit https://fortune.com/2019/10/16/corporate-taxes-unpaid-g20-su.... That’s just 1.7% of the $15.6 trillion those countries raise in taxes each year. Why does so much media ink get spilled about such a small issue? > We are supposed to have a consumption tax instead. The wealthier you are, the more likely are to invest. Less wealthy people do not have that luxury, what comes in goes out that month. It seems to be an attempt to shift the tax burden away form the politically connected class. It’s an attempt to shift to consumption taxes, which economists broadly agree are the most efficient kind of taxes. Which circles back to my original point. You perceive the policy in terms of its effect on the “politically connected class.” But there is a rational, economic reason to favor such a tax regime even if the wealthy didn’t have greater political connections. The “political connections” reasoning doesn’t hold water to me. We’ve always had rich people. But over the last 50 years, pretty much every developed country has dramatically reduced corporate and investment taxes. Are the rich more politically connected than in 1970? I don’t see any reason to believe that’s true. What has changed over that period is economic theory on taxes. That seems to be the real cause.
- HarryHirsch 7y ago
  It's not that they didn't evade taxes in Europe. You can incorporate in Luxembourg, the Netherlands and Ireland are popular tax paradises as well. Easier when you deal in non-tangible goods, which is probably why until recently corporate tax evasion wasn't such a big deal. It may well be that labour lost its negotiating power since the 1980s. The wealthy are as well connected as ever, but labour hasn't got a seat at the table any longer.

Consultant32452 7y ago

For all of these it's important to remember that the federal government doesn't have to charge taxes to anyone. It can just print more money to pay its bills, inflating the currency somewhat. All taxes therefore are social policy, without exception. So, as a social policy... when Joe Plumber is considering going out on his own, how much advantage do you want to give Mega-Plumber-Co against him? Right now Mega-Plumber-Co gets the advantages of cheaper health insurance, no corporate tax, and can easily amortize the cost of certification/licensing taxes. With regards to #4 specifically, consumption taxes are the most economically efficient. This is a social policy that encourages thrift, which is bad for mega-corps but good for the individual. If the regressive nature of consumption taxes concerns you, you can just partner them with a dividend check paid to all citizens.

rayiner 7y ago

> 2: End the tax deduction companies get for providing health-care to employees. Right now, large employers receive a group discount from whatever insurance provider they choose. So to bring down healthcare costs in the US, which are 4 times that of the civilized world, this motley crew of economists suggests to eliminate the group discount. That'll work. That’s not what they’re talking about. They’re talking about the fact that when your employer pays premiums for your health insurance, that a not considered taxable income. That is regressive (higher income people get more health insurance benefits). > Yes, Joe Plumber's firm pays corporate tax in PA, but any multinational with a decent lawyer pays no tax anywhere. Incorporate in Bermuda, license the IP. In the interest of fairness one could abolish corporate tax, but one could also come down on tax oases. Why isn't that even suggested? The idea of licensing IP from Bermuda captures the media’s imagination, so there is a lot of coverage of such efforts, but it actually doesn’t add up to much. Most companies simply can’t take advantage of such tricks because they don’t deal with intangible products. Wal-Mart’s effective tax rate is 25% for example. The average effective tax rate for the S&P 500 was about 18% in Q4 2018. That’s higher than the average effective corporate tax rates in say the Netherlands. Corporate tax avoidance just isn’t a very big deal. Estimates are that legal corporate tax avoidance costs $100-240 billion in revenue across the entire OECD: https://fortune.com/2019/10/16/corporate-taxes-unpaid-g20-summit https://fortune.com/2019/10/16/corporate-taxes-unpaid-g20-su.... That’s just 1.7% of the $15.6 trillion those countries raise in taxes each year. Why does so much media ink get spilled about such a small issue? > We are supposed to have a consumption tax instead. The wealthier you are, the more likely are to invest. Less wealthy people do not have that luxury, what comes in goes out that month. It seems to be an attempt to shift the tax burden away form the politically connected class. It’s an attempt to shift to consumption taxes, which economists broadly agree are the most efficient kind of taxes. Which circles back to my original point. You perceive the policy in terms of its effect on the “politically connected class.” But there is a rational, economic reason to favor such a tax regime even if the wealthy didn’t have greater political connections. The “political connections” reasoning doesn’t hold water to me. We’ve always had rich people. But over the last 50 years, pretty much every developed country has dramatically reduced corporate and investment taxes. Are the rich more politically connected than in 1970? I don’t see any reason to believe that’s true. What has changed over that period is economic theory on taxes. That seems to be the real cause.

HarryHirsch 7y ago
It's not that they didn't evade taxes in Europe. You can incorporate in Luxembourg, the Netherlands and Ireland are popular tax paradises as well. Easier when you deal in non-tangible goods, which is probably why until recently corporate tax evasion wasn't such a big deal. It may well be that labour lost its negotiating power since the 1980s. The wealthy are as well connected as ever, but labour hasn't got a seat at the table any longer.