May
7
Thanks For Clarifying That
Filed Under Economics | Leave a Comment
The official website of the POTUS, whitehouse.gov has a blog up that details all the wonderful things that The One is doing to make our lives better. With Obama’s recent initiative to eliminate off-shore tax havens generating some feedback, the Obamablog sought to address it with a little Q&A in this post, including the following clarification:
kylekunkler: Ending deferral (when US already has 2nd highest corporate tax) will only hurt US MNCs and cost jobs! http://tinyurl.com/coofnd
Jason Furman: Kyle, you are correct that the United States has the second highest statutory tax rate in the world, the official rate published in the tax code. But the United States also has more loopholes and special tax preferences than many other countries. As a result, the United States has a much lower effective tax rate. If you look at corporate taxes as a share of GDP they are below those of most major economies. The result is a tax code that is complicated, inefficient and unfair. One of major causes of these problems is the way that we tax – or more often do not tax – the foreign earnings of American companies. The administration’s plan is intended as a major, first step in addressing this problem.
Oh, I get it. Thank you for clearing that up, Mr. Furman! While the United States is supposed to have the second highest rate (statutory), all the loopholes that Obama will get rid of are keeping the actual rate paid (effective) down. But no need to worry, Obama’s brilliant plan will get rid of all those loopholes and tax havens to make sure your fears are perfectly legitimate, Kyle. Thanks for asking!
The article that the questioner cites is actually a very interesting one from Bloomberg, explaining one of the tactics that businesses use to avoid paying taxes:
Once the assets were in the haven, the U.S. parent company borrowed from the subsidiary. The interest payments were deductible in the U.S. and tax-free in the haven, the GAO said.
So the administration’s plan is to simply make this practice illegal or at least more difficult. But my main objections to that logic are:
- Companies will now have even more incentive to move their operations overseas altogether, as opposed to just a portion.
- Other countries may see this as a quasi-protectionist measure and attempt to restrict international trade.
- Just like the old laws, any attempt at government restriction will be easily manipulated by powerful and wealthy elites, like large corporations. The new laws will only hurt those not powerful enough to gain access. Such is the problem with big government.
Just because the government tries to restrict actors in the economy, like multinational corporations, from acting in their own self-interest does not mean that they will stop trying. As we can see, even with complicated laws in place, the companies still found a way around it. Whether it be regulations, taxes, fees, or counterproductive subsidies, government action will always force the private sector to allocate more resources to compliance and evasion (as the Bloomberg article illustrated) than to more worthwhile activities. And people wonder why productivity of American workers has declined over the years! Individuals are still working just as hard (if not harder), but at tasks like creative accounting and compliance that don’t produce anything like an assembly worker does.
P.S.: And that’s still not addressing the hypocrisy of an administration full of tax cheats shaming those who used legal channels to avoid paying taxes.
Feb
6
Obama Tax Evasion Form Letter
Filed Under Uncategorized | 1 Comment
I asked in an earlier post whether tax evasion under President Obama was becoming an epidemic. The answer is clearly yes. In addition to Timothy Geithner and Tom Daschle, Obama nominees Nancy Killefer and Hilda Solis also have tax issues. Being that I am a patriotic American and want America to succeed, I thought I’d offer President Obama an efficient way to handle these tax situations via the Barack Obama Tax Evasion Form Letter:
President Barack Obama
1600 Pennsylvania Ave NW
Washington, DC 20500
(202) 456-1414(Insert Date)
To Whom It May Concern:
It has recently come to my attention that (insert name here) whom I have nominated for Secretary of (department) had some (small/significant/obvious) unpaid (income/business/witholding/estate) taxes. I can assure you that this was just a simple (oversight/mistake) and was corrected (years ago/while I was filling in this field in Microsoft Access). I stand firmly behind Secretary of (department) nominee (name) and look forward to their continuing service in helping me make more wealthy Republicans pay their fair share and do their Patriotic Duty. There is no need to probe further into this issue, as my team has already done all the investigating necessary, in keeping with our message of (hope/change). Pay no attention to the Cabinet member behind the curtain!
Evasively Yours,
President Barack Obama
Don’t worry, Barry, you are free to use this form letter. I don’t mind!
Feb
2
Tax Evasion Under Obama an Epidemic?
Filed Under Uncategorized | 2 Comments
Earlier this week it was revealed that Obama Health and Human Services secretary nominee Tom Daschle had neglected to pay some taxes, much like Treasury Secretary Timothy Geithner. The article showed the dangerous precedent towards law-breakers in high positions being set:
Republicans grudgingly acknowledged that any serious damage to Daschle’s chances for confirmation in the Democratic-controlled Senate are unlikely given that Timothy Geithner’s nomination for treasury secretary, held up after it was revealed that he had failed to pay more than $34,000 in taxes, eventually was confirmed by a 60-34 vote.
Why is it that the Democrats routinely demonize millionaires who do not want to pay high taxes, yet are, in fact, millionaires who do not want to pay high taxes?
But, as we were told with fellow Obama nominee Tim Geithner and House Ways and Means chairman Chuckie Rangel, this was just an “oversight.”
With “oversights” like this, its clear Daschle is uniquely qualified to control the nation’s health care.
