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I don't particularly care what team the money was spent on. The problem is that money comes with strings attached, and that is inherently a problem.
I agree with you. But what you said in this post is different than what you said before in that we have a spending problem, not an income problem. What we have is a deficit problem, and to think it's a spending-only issue or an income-only issue is a mistake in my (professional) opinion.
My biggest beef with both sides is their strict adherence to believe it's a spending-only problem or an income-only problem, and it's the reason we can't get anything done. The biggest hurdle to overcome in Washington is getting both sides to admit it needs to be a combination of spending cuts and tax increases to get our deficit problem under control. Right now neither side will do it and it leads us to zero progress.
A bigger problem is that the politicians strict adherence to one side of the problem or the other is that they've convinced the populace that a bunch of untrue facts are indeed true. I just shot down the meme that "if we confiscated all of the wealth of the top 1%, it still wouldn't be enough". I can shoot down meme from the left too. But people believe these things like they are gospel, when in fact they are false. People spout "we are taxed too much, if we just lower taxes, revenue will increase" based off of the theoretical Laffer Curve without consideration to WHERE on the curve we already are (the empirical evidence suggests we've already passed the peak of the curve to the left, meaning that taxes are too low *if* your objective is find the optimal tax rate that maximizes total revenue).
Too many false beliefs in our political environment, not enough facts.
I don't particularly care what team the money was spent on. The problem is that money comes with strings attached, and that is inherently a problem.
Well, I realize it is an oversimplification, but any time you spend more than you make it is a spending problem. Year after year of spending more than we made has now created a debt/deficit problem.
Its a matter of perspective. You could easily say that spending more than you make is an income problem. As in, "the problem is that I don't make enough income".
To merely say it's either ignores the fact that we are able to influence both.
And I DO believe in the Laffer Curve and believe that there is a limit to how much you can increase tax rates in a global economy and still increase revenue.
Because those are the political points du-jour. So it's not surprising you see them repeated ad-nauseum.
I believe in the Laffer Curve too. The existence of the theoretical Laffer Curve isn't really in question. What people debate is WHERE on the Laffer Curve we are. Empirical evidence suggests we are left of the peak. Do you have evidence to the contrary?
I would LOVE to buy a 56' viking sportfisher but know that I can't increase my income enough to pay for it. Similarly we can't increase national revenue enough to pay for all the things the electorate wants.
I had this discussion with WC... woe is me...
But we can increase the revenue enough to actually tackle some of the real problem: deficit spending. I concur cuts have to be part of the plan too.
And I might add that I'm not a fan of oversimplifications of anything. Your oversimplification ignores the other controllable variable in the equation (just like saying it's an income problem does). The problem is the result, not the value of the variables in and of themselves. "X" amount of spending or "Y" amount of income will never inherently be too much or too little - because their relative value depends on the other variable.
By making this oversimplification, you invite oversimplified minds to come up oversimplified solutions which don't work in the real world.
Would you consider GE, Google, etc. to be a good example? They are international companies that manipulated their businesses to "make" and claim their profit in lower tax countries in the world...
Also, something else I pointed out many times before, the whole comparison with the house economy is simply not realistic. The government does have a direct way to increase income (through taxing). You don't have such direct way to increase your salary.
Except we DO have the ability to increase our income enough to pay for it. If the sole objective was to pay off the national debt ("buy the boat" - this boat costs $15.03T based on the National Debt Clock at 11:39am central on 11/21/11) then we would merely have to confiscate 75% of the net worth of the top 1% richest Americans.
Again, I don't suggest we do that or think it is remotely a good idea. But we COULD do it. To say we "can't" in the same way you "can't" increase your income to buy that boat is flat out incorrect.
I'm not exactly sure what you are asking. Can you clarify?
I'm not talking about the taxes paid by any one person or company (and neither is the Laffer Curve). The Laffer Curve deals with aggregate tax revenue and overall tax levels.
Although you wouldn't be addressing the deficit problem. That clock won't be stopping if you pay off the debt. It would certainly slow it down considerably, given the reduction of interests, but you would still be spending more than what you're bringing in. Unless you obviously made that confiscation an actual policy (bad idea).
In that (hypothetical & not-actually-suggested) example, my goal wasn't to reduce the deficit, it was just to pay off the debt. And I succeeded. If my goal was to balance the budge (assume it is static where it is now - $1.3T), then I could similarly tax the top 1% at a rate of 61% and I'd have it paid off. Again, "this is an oversimplification" not to mention it's also a terrible idea.
The Laffer curve addresses the "pain threshold" where higher tax rates result in the taxpayer altering their behavior to lower the taxes they have to actually pay and thus decreasing tax revenue even with higher stated tax rates. As a corporate example GE manipulated it's business in order to post profits in foreign subsidiaries who were subject to lower tax rate than the US, therefore the US got zero taxes from GE. If the US tax rates had been lower than the foreign subsidiaries they would have manipulated their business in order to take the profits in the US and pay the taxes on their profits here. at an individual level, it's much like the Beatles denouncing their British citizenship and moving to the US in the 60's when the UK was taking 95% of their gross income in taxes...We live in a global economy and people and businesses have choices.
Exactly.
That can be solved by closing the loophole. If they made their money in the US (and by all means that's where the bulk of the money came from), then they should be paying US taxes. It has nothing to do with the Laffer curve.
But then we go back to peddling influence for money and the reason such loopholes exist.
Are you sure about that?
take GE again...lets say you initiate a 40% "no loophole" corporate tax.
GE is an international company that is constantly deciding what and where to invest in.
Given an apples to apples choice of investing in a country that taxes them at 9% as opposed to investing in a country that taxes them at 40% the choice is pretty simple and punitive tax rates do nothing but drive businesses offshore.
I think you have a gross misunderstanding of what the Laffer Curve states. Laffer curves are a hypothetical thought game based on the income-elasticity of tax rates, and is really just an extension of the elasticity of the supply of labor on wages.
What you are doing is trying to evaluate international compe iveness of tax rates in a static environment. So, the Maldives (for example) has a 10% corporate tax rate while the US has a 35% corporate tax rate so GE (for example) claims all their income in the Maldives. You suggest that if we merely lowered our corporate tax rate to 9.9%, then GE would claim their income here (assuming no other transaction costs associated). But what if the Maldives lowers their corporate tax rate to 9%? 5%? 1%?
Since the Maldives (in this hypothetical example) are not supplying any real services to GE, their incremental cost to have GE claim their income in their country is zero, and thus would be economically happy with a corporate tax rate on GE of ANY amount over zero. The US, on the other hand, actually bears a cost of GE existing and having hundreds of thousands of employees in the United States, so they simply cannot economically justify a corporate tax rate of 0.01%.
If you view Governments are service providers to the countries that do business there, the US will almost *never* be able to compete internationally on the "price" (tax rate) they charge their "customers" (businesses).
The solution isn't necessarily to get into a "price" war with other countries, it's to stop exempting countries from playing these games. In the end, I think we *would* be better served by having a lower nominal corporate tax rate while eliminating the loopholes they tax, which would result in a higher effective tax rate.
I'm absolutely sure. They did report a $14.2 billion worldwide profits and $5.1 billion profits in US income alone.
It's not that complicated, the US is the country where people actually has the money to spend. They just can't sell what they make at the prices they can sell in the US. They're all accounting shenanigans, much like Haliburton moving their HQ to Dubai.
If they want their hand on those $5.1 billion, then they should pay taxes on them. Right now, they get the cake and eat it too. And it's entirely an accounting sham that can be closed tomorrow if politicians wouldn't be in their pockets.
If you try to pull what GE did, you'll have your ass hauled to the IRS and charged with tax evasion. Which is exactly what happened with those UBS customers a while back.
GE can pull it off because they're GE.
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