Apple Rebuts NYT Tax Expose, Cites Contributions

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Apple's Tax StrategyImage via Shutterstock.

Despite suggestions to the contrary raised by The New York Times this weekend, Apple pays “an enormous amount of taxes,” the company argued in a letter published by The Times on Saturday. The highly-profitable electronics company also referenced its controversial data released in March on the number of jobs it “creates or supports” in the United States, as well as its charitable giving, as evidence of the company’s positive economic impact in areas other than direct tax payments.

“Apple has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules. We are incredibly proud of all of Apple’s contributions,” the company said in its statement.

The company added, “In the first half of fiscal year 2012 our U.S. operations have generated almost US$5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of U.S. income tax.”

Apple’s response came in the wake of an in-depth New York Times examination of how the company uses multiple legal and financial loopholes to avoid paying billions in taxes every year. Examples include creating subsidiary entities in low-tax jurisdictions such as Nevada, Ireland, the Netherlands, Luxembourg, and the British Virgin Islands, and funneling as much revenue as possible through them.

Perhaps most notorious is Apple’s creation of Braeburn Capital, a Reno, Nevada holding company created by Apple in 2006 with the primary purpose of avoiding California state corporate taxes. By routing and managing revenue through Braeburn, Apple avoids paying its home state’s 8.84% corporate tax rate, saving the company billions of dollars over the years since its formation.

The cumulative effect of Apple’s maneuvering results in over 70% of the company’s revenue being recorded in tax-friendly oversea jurisdictions, greatly minimizing its corporate tax burden.

New York Times' Apple Tax NumbersApple’s 2011 tax numbers from The New York Times are incomplete.

However, as noted by Forbes, the specific numbers for Apple’s 2011 effective tax rate referenced by The New York Times, resulting in a surprisingly low 9.8 percent, were incomplete. Apple’s $3.3 billion tax payment thus far for the 2011 tax year was, in accordance with IRS practices, prepaid based on 2010 revenue.

As revenue nearly doubled for 2011, the initial payment as it relates to effective tax rate, as interpreted by The New York Times, is significantly understated when compared to what will be a higher tax payment once the final number is settled when Apple files its 2012 taxes next year.

For its part, Apple’s complex financial and accounting methods, as they exist currently, do not break any laws, something the company was quick to point out in its statement. The company is also not alone: many other tech companies, including Google and Cisco, engage in similar practices to keep as much revenue as possible recorded in low-tax jurisdictions overseas.

In fact, Apple, Google, and Cisco have been lobbying since last year for a U.S. “tax holiday,” allowing them to repatriate their international income at drastically lower tax rates with the argument that doing so will enable the companies to spend and hire more domestically, spurring local economies.

In today’s highly charged political climate, The New York Times examination of Apple’s actions to minimize its tax burden will undoubtedly divide politicians and consumers alike, with many praising Apple for its tax prowess and others vilifying it for its perceived lack of fairness.

Comments

Lee Dronick

uses multiple legal and financial loopholes to avoid paying billions in taxes every year.

That is not against the law, the New York Times should take up the matter with Congress. I wonder if anyone has looked into the NYT taxes.

Jeff

Much of the recession is NOT caused by excessive spending as others will want you to believe. In reality, many if not most large companies have been avoiding their tax bills by using somewhat legal but highly controversial regulations like keeping funds offshore or setting up false fronts in low tax areas like Nevada. Congress has to fix the tax laws so companies pay closer to the corporate tax rate of 35% on their REAL income, not what they stash away. Even before that happens we must insist that we DO NOT allow the companies to repatriate their income at zero to low tax rates with the promise to create jobs. At a minimum, we have to give them some tax credits IF they hire and keep the new hires on board. No free ride with just a promise. It’s time companies pulled their fair share and use the absurd profits they generate for the good of the country and not just their bottom line. again, this is not just an Apple issue but almost all large companies. GE, Google, Cisco, Walmart are just a few offenders. This practice must stop.

Lee Dronick

Spot on Jeff.

zewazir

Sorry, but with the federal deficit running over a trillion dollars PER YEAR in the last 3 years, it is NOT caused by a hole in corporate taxes. Plus, who do people think end up actually paying for corporate taxes?  (DUH! The CONSUMER, including the POOR.)

The recession is caused by business not hiring, not spending on expansion, etc.; and people not spending for a large number of reasons, some of which include unemployment, under-employment, and paying down their debt.

NONE of these factors which are the ACTUAL causes of recession will be addressed by making corporations pay more taxes. Of course, none of these will be eased by further reduction in taxes either. OTOH, how many people think increasing corporate tax burdens will actually entice them to start expanding and hiring more, which is one major item needed to bring us out of recession?  (Hollow laugh - what some people are willing to believe!)

What is preventing companies from spending and hiring, and causing people pay down debt and/or to save rather than spend is uncertainty. And the critters elected to run the federal government are only adding to the uncertainty with all their talk about “making the rich pay their fair share”, (As if the top 10% paying 71% of federal income taxes on 43% of the income is not already a fair share.)* When DC critters choose to temporarily extend the tax code passed over 10 years ago, instead of making it permanent (or letting it lapse), they only add to the uncertainty of economic future. Of course, the rhetoric from the other side of the aisle does little good to ease uncertainty, either. Taxes have already been cut to the point of diminishing returns. And BOTH sides are equally guilty with the status of whether the current tax codes will stay or expire.

And, yes, a lot of uncertainty is generated by record deficits - even when adjusted for inflation - not seen since WWII. Add to that the fact that Europe has been teetering on the edge of MAJOR economic crisis due to their own long-term deficit spending, and there is little wonder new hires and economic (ie: business) expansion is sluggish at best. (Probably non-existent if one were to ignore the WH press releases in favor of reality.)

Now, if anyone can explain how increasing corporate taxes is supposed to affect ANY of these factors, please do so. Who REALLY believes making Apple - or any other major corporation - pay more taxes is supposed to result in more business spending, hiring, and general economic expansion? With the deficit over a TRILLION dollars per year, who actually believe that it is lack of corporate tax revenues preventing the government from spending MORE on their various black-hole stimulus packages?

*http://www.heritage.org/federalbudget/top10-percent-income-earners

ctopher

In general I agree with Jeff except that it’s not “somewhat legal” it is very much legal and how business is done. And if a public business decides that it wants to pay more taxes, you can bet there would be a shareholder lawsuit.

Don’t hate the playa’ hate the game.

And Lee, why didn’t you link to the Joy of Tech? You are usually Johnny on the spot!

Robin

Typical NYT yellow journalism hack attack for headlines defaming Apple just like the Foxconn lies.Google only pays 2%
on off shore revenue it is 100% legal as it is income not earned in the US so all the multi-nationals do it. it would
be a breach of fiduciary duty to shareholders to pay more.

Lee Dronick

Ctopher, I linked to that comic early this morning from the latest Foxconn story. smile

akcarver

Much of the recession is NOT caused by excessive spending as others will want you to believe.

This is absolute nonsense. If governments (or anyone for that matter) did not spend more than they take in, there would be NO deficits. The very definition of deficit is money spent that was not taken in to begin with. The ONLY cause of a deficit is overspending.

akcarver

Apple is under no obligation to pay taxes that they can legally avoid. The very fact that our corporate tax is higher than anywhere else in the world is responsible for fewer taxes being collected. If we as a nation were to lower our corporate rate to something similar to other countries, then Apple would have no incentive to leave money overseas. I would rather have 20% of a hell of a lot of money be collected in taxes instead of 35% of nothing.

See http://finance.townhall.com/columnists/johnransom/2012/04/30/new_york_times_outs_apple_enemy_of_the_people_on_tax_sidestep for an interesting (IMLTHO) take on the issue.

zewazir

This is absolute nonsense. If governments (or anyone for that matter) did not spend more than they take in, there would be NO deficits. The very definition of deficit is money spent that was not taken in to begin with. The ONLY cause of a deficit is overspending.

While I fully agree the statement which prompted this rebuttal is in grave error, deficits themselves do not directly cause recession.  Deficits can often, and in current circumstances DO negatively affect recessions and/or sluggish economies by devaluing currency and increasing uncertainty.  But, by themselves, they are not a direct cause. (That is, until the debt burden results in default - in which case we STILL won’t be in recession, but rather outright full blown economic collapse and depression.)

akcarver

While I fully agree the statement which prompted this rebuttal is in grave error, deficits themselves do not directly cause recession

I have to clarify. I misread what the original poster said. He was referring to recessions, not deficits. Deficits are absolutely caused by overspending, but recessions may not be.

estern53

Welcome to the new economy where the wealthy corps and persons get to keep all their income free. While the poor and middle class are being told they have to make it on their own. The republicans want to kill every spending job and tax so the middel class can become poor. The reason this country did so well in the past was government spending. the deficit is a distraction. just ask any republican who served under Bush.
If you give the rich tax breaks they keep the money, it has never been proven otherwise. but give the middle class and poor tax breaks and it goes back into the economy. Apple is the poster boy of the moment but you could substitute almost any other corp in their place. Every corp gets to the top by not taking risks but by taking advantage of employees and tax loopholes.

skipaq

You have got to be kidding. The problem with debt is people and governments get addicted to spending what they don’t have. This leads to more debt; which in turn leads to a debt crisis.

Right now the U.S. pays more than $400B a year in interest. It should be even more; but the Fed plays games with monetary policy (like lowering T-Bill rates and printing money) to keep the interest rate artificially low. Do you know who pays for that? Retirees with pensions and anyone who buys anything. How can anyone say this has nothing to do with a recession?

The fact is the U.S. debt isn’t getting paid down. It is going up!!! We are borrowing more money because we cannot afford to make the payments. Those who respond that the rich should pay more taxes to make these payments should understand something. Give this “spend more addicted” government more money and they won’t pay down the debt.

Our national bill is coming due and the collectors will demand payment.

zewazir

If you give the rich tax breaks they keep the money

Yea, right. And they put it in bundles of large bills and hide it under the bed.

Why is it people cannot understand basic principles of finance? Yes, the rich keep the money which is not extorted from them by big government.  But keeping it is not the end of the story.  The rich, who enjoy being rich, turn that money around in investments so they can make more money. And those investments go into businesses which, in normal, expanding economies, use it to expand, which in turn provides more jobs.

In a stagnant economy like we have today, investments are held close to shore up the business through the rough times. Businesses do not expand because there is no reason to. People are also holding their funds close, choosing to pay down debt - or save if they have little to no debt - instead of buy new things. If people aren’t buying, business are hardly going to expand so they can sell more things, are they? The current administration proposed policies are very unfriendly to business, while the opposition has, so far, managed to keep them from screwing things up even worse with their stupidity.  So business is going to sit on their hands until things stabilize. And THAT is why we still are, basically (though not technically) in recession.

Now, in a normal economy, investments DO lead to expansion, which creates jobs, which expands the economy. But, in the course of this, the rich get richer.  For some strange reason, this upsets a bunch of people who seem to think that they deserve a part of all that wealth simply because they exist. That attitude is both encouraged and exploited by certain political factions, who get into power by promoting class warfare, turning envy of the rich into hatred of the rich. They propose stupid crap like the idea that raising taxes will end the recession, people drink their kool-aid, put them in power, and the recession continues due to these self-same anti-business policies.  And THAT, too, is why we are still, basically, in recession.

Lee Dronick

It wasn’t Kool Aid at Jonestown, it was Flavor Aid, but EVERYONE drinks it in one form or another.

estern53

Why is it people cannot understand basic principles of finance? Yes, the rich keep the money which is not extorted from them by big government.? But keeping it is not the end of the story.? The rich, who enjoy being rich, turn that money around in investments so they can make more money. And those investments go into businesses which, in normal, expanding economies, use it to expand, which in turn provides more jobs.

gee it looks like the financial fairies out today. So for the last 12 years the rich have been taxed the lowest rates ever and still no economic recovery. how come under Clinton they were taxed 5% higher than now and the economy expanded, oh right he was a a democrat so he can’t be right. We have been fed this crap for 30 years now. There has never been one study to show that taxing the rich hurts the economy. We had much higher tae rates under Eisenhower that would make todays Republicans squirm.
Meanwhile Bush comes into office squanders an 800 Billion surplus by cutting the tax rate. Then starts 2 wars and does not ask the country to sacrifice. So now with 2 trillion new debt from bush, obama comes into office with a car wreck of an economy and asks for some money to jump start the dead economy. it was too little to late. the reason unemployment rate is large is that the states are laying off thousands of teachers, police, fireman and cutting money to infastructure. because the Republicans will not authorize any more stimulus to the economy.
have you ever looked at Romney’s tax rate its 15%, why because he makes money off capital gains which the US does not consider income. its a form of income that does not help the economy. It should be counted as income just like lottery winnings.

akcarver

We had much higher tae rates under Eisenhower that would make todays Republicans squirm.

Yes, and NO ONE PAID THEM! They found ways to avoid those obscenely high taxes. Lower tax rates have been shown again and again and again to provide higher revenues. When people are taxed too highly, they will find ways to not pay the tax. Why do you think companies are setting up offices overseas where tax rates are lower? If we lowered our rates to something closer to Ireland, then there would be no reason to keep the money in Dublin rather than Denver.

estern53

Lower tax rates have been shown again and again and again to provide higher revenues

Like i said to another person who posted it, prove it. we have the lowest tax rates in history for the last 12 years and the economy still tanked. if business do not like here they should leave. But they have no where else to go.
Ask the teachers in the public schools in Cupertino how long they will have jobs. The state is running out of money because of corps like Apple are avoiding taxes. maybe there will be a fire one day at Apple and there won’t be enough fireman to put it out. Who pays for the roads so Apple can get it products to stores. Oh well they do not pay taxes so i guess they will have no road to put more iPhones in stores.

akcarver

Like i said to another person who posted it, prove it. we have the lowest tax rates in history for the last 12 years and the economy still tanked. if business do not like here they should leave. But they have no where else to go.
Ask the teachers in the public schools in Cupertino how long they will have jobs. The state is running out of money because of corps like Apple are avoiding taxes. maybe there will be a fire one day at Apple and there won?t be enough fireman to put it out. Who pays for the roads so Apple can get it products to stores. Oh well they do not pay taxes so i guess they will have no road to put more iPhones in stores.

You really aren’t paying attention are you? You are clearly confusing national income tax rates and state corporate rates. They aren’t the same thing. California has OBSCENELY high corporate tax rates, so companies like Apple resort to going to states like Nevada and Texas, where the taxes aren’t so high. If California were to lower their rates, then it would not be cost-effective to do that, and California would get more money than they do today.

And Apple pays HUGE amounts of money in taxes. They have many stores in California, generating massive amounts of money in the form of sales taxes. Their employees in those stores pay income taxes, both state, federal, and in some cases, possibly city taxes as well.

Here’s another way to look at it. Let’s say Safeway has a case of Pepsi for the regular price of $10. I think $10 is too much to pay, so I go without the Pepsi, and Safeway gets no money from me. They then decide to put the Pepsi on sale for $8 a case if you buy three at a time. I feel that that’s a better price, so I buy the three cases. Safeway now gets $24 from me, instead of the $30 I was unwilling to pay for the same soda. Lower prices (or taxes, in the case of a government) increased their revenue. It works every time.

Judge Learned Hand, who has been quoted more often than any other lower-court judge by legal scholars and by the Supreme Court of the United States, in the case of Gregory v. Helvering, said:

?Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one’s taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands.?

estern53

You are clearly confusing national income tax rates and state corporate rates.

I think you are confusing what federal taxes do fo the states. The reason there are sate income taxes or sales taxes is because the share of the Federal aid to states has dropped.
its the reason sates are laying off so many teachers and why tuition has increased 90% because we have cut federal taxes so much. the deficit is easy to correct if you raise revenue.
Of course their is nothing sinister just a moral obligation for the greater good. if you would like to go back to the days of no taxes and most people in poverty then so be, pay no taxes. who cares if roads do not get built, our children can’t read or we have no clean water or policemen and firemen disappear. the rich will provide for us in some magical way because we will not tax them.

Lee Dronick

I will stay out of the politics here at my favorite Mac and Apple website. I just want to say that the situation is not a simple one, nor is the solution (of which there may be several). We don’t want the cure to kill the patients or the doctors.

zewazir

Amazing, the sheer ignorance of real finance.  OOOOH! Tax rates are “the lowest ever” and we still do not have economic recovery. I wonder why? Punishing success is a damned poor way to encourage success. (And, completel ignored, of course, are several facts including corporate tax rates are still among highest among developed nations - go figure. Not to mention what things were like BEFORE there was a federal income tax (so much for “ever”); also skipping over the fact that Kennedy and Reagan significantly lowered taxes which DID result in increased revenues, as well as the oft-ignored fact that Clinton raised taxes followed, just coincidence of course, by the dot-com collapse.) Yea, the “finance fairies” are out in abundance alright - all of them whining about how unfair it is that billionaires and corpoarations only pay 71% of federal income tax revenues.

AGAIN: tax rates are NOT (By a whole CRAP load) the only factor in economic health. Cut taxes while also holding onto or enacting a bunch of anti-business policies, and guess what? Businesses will STILL choose to not expand because other factors still create a hostile environment to expansion. Cut taxes TEMPORARILY (thank you democrats!!) and business will minimize expansion efforts, waiting to see what happens when the temporary cuts expire. Why spend a bunch of money expanding when there is the threat that government policies will end up forcing contraction later?

Extend those temporary cuts TEMPORARILY while the economy is lagging due to other policies failing badly, and business has DOUBLE the reason to wait to see what is going to happen before spending a bunch on expansion. Extend taxes temporarily while espousing the ideal that taxes SHOULD be going up (but those nasty Republicans won’t let them) and business has TRIPLE the reason to wait to see how things play out. Add in other factors, like bans on new drilling for domestic offshore oil (fuel prices as well as trade deficits affect every business one can care to name), plus promises of ever tighter regulations and controls on a huge variety of industries, especially energy (another factor that affects all businesses, as well as individuals) a fascist-like hostile takeover of a major corporation after handing out a few billion dollars to prevent a bankruptcy that happened anyway, and a whole pot full of other anti-business crap spewed out by Obama and his democratic cronies, and we have more reasons than not for an economy to just sit there, no matter WHAT the current tax rates are.

Tell a man “Hey, give me a bit of time, and I’m going to rob you blind!”, do you REALLY expect them to stand there waiting for the axe to fall, or are they going to get the heck outta Dodge and go where no one is threatening them?

Winston Churchill once said “A nation trying to tax itself into prosperity is like a man standing in a bucket and trying to pull himself up by the handle.” Yet all we have heard for over 3 years now is “TAX! TAX! TAX! TAX!” (coupled with “It’s those Republicans!” - kinda like we see here….)

Not to mention that the federal deficit DOES have a downward pull on economic recovery - yet we have record deficits that are still rising. Obama’s proposed budgets have been so bad, he can’t even get other democrats to vote for them. We have one of the most business-hostile administrations in all U.S. history sending money like the valueless paper it is, and all people can do is whine about people who are already paying over two-thirds of federal income tax revenues “not paying their fair share”.

No wonder the economy still sucks.

estern53

No wonder the economy still sucks.

The reason business do not expand is they have no new demand, with so many people out of work because governments have stopped spending. Why expand if you have no demand.
Look at the UK, Spain, Greece ect to see how trying to reduce a deficit and cut government spending looks like. its called depression. herbert Hover tried the same thing.
The US is soon to be just a Government of the wealthy, by the wealthy, for the wealthy.

skipaq

If you want to see what borrowing so that you can spend more than you can afford then by all means look to Greece, Spain and Italy. The reason they are cutting has to do with no one wanting to loan them more unless they cut.

On the other hand, you would have been wiser to suggest Canada. They have made some hard choices to get their budget under control and it has paid off. I would also suggest that you consider the handful of states like New Jersey who have done the same. California could learn something from them.

If more debt is such a good thing then why not sign up for all the loans and credit cards that you can and max it all out. You will be rolling in prosperity. For those who want higher taxes for this government to waste; don’t take any deductions on your next return.

zewazir

The reason business do not expand is they have no new demand, with so many people out of work because governments have stopped spending. Why expand if you have no demand.
Look at the UK, Spain, Greece ect to see how trying to reduce a deficit and cut government spending looks like. its called depression. herbert Hover tried the same thing.
The US is soon to be just a Government of the wealthy, by the wealthy, for the wealthy.

One of the main reasons we see recessions more and more often, each time with slower and less effective recovery is because dependence on government spending to keep the economy going is a fool’s errand. We simply can NOT afford to continue to print more valueless money and spend it wildly. The idea that the government must keep the economy going through deficit spending is what has us in crisis now. Europe has followed Keynesian economics longer, and deeper, than the U.S. and they are currently trying to keep from folding entirely because they have reached the upper limit of deficit spending.  Do we have to reach that point before Keynesians will finally admit their model just plain SUCKS?

We can literally watch the effect of Keynesian policies throughout history.  Government spending goes up to “stimulate” the economy. At first, it responds well, because debt is relatively new and not too bad. But as soon as government spending eases off, the economy slows down. So we go through another spate of higher spending, and the economy picks up - for a while - and slows down again with spending cuts.  Problem is, every time spending is increased, it has to be increased just a bit more than the last time to offset the effect of growing debt. Another problem is the effect of the spending does not last as long, so the cycle of artificially induced economic growth to economic contraction grows shorter.

So the economic geniuses in charge decide that government deficit spending is not doing as well, so they start encouraging personal deficit spending as well through banking policies that require lending institutions - especially credit card companies - to extend credit o ever-lower economic, all in the name of “fairness”, but in truth just one more way to artificially stimulate economic growth through accumulating debt.  Well, this works OK for a while, until, of course, people are maxed out on their credit and start defaulting.  So the geniuses install new policies that require mortgages to be handed out to people who cannot realistically afford one. And to offset the immediately apparent stupidity of that move, they rewrite banking laws to allow sub-prime lending, and the ability of banks to sluff off the dangers of high risk loans to other financial institutions. A double whammy of artificial economy for which we are currently paying the price.

We are now at the point that our total national debt exceeds our GDP.  Congratulations, Keynesians!  You’ve royally screwed us to the point of no return.  You’ve gotten us to the point the federal government could tax us all at 100%, and STILL not be able to pay of the debt.  And let’s not mention that even if we DID go back to the Clinton tax rates, it would cut less than 20% off the democrats proposed deficits over the next 8 years.

And that does not include the boondoggle of ObamaCare, which was advertised as reducing deficit spending when passed, but is now estimated to add several MORE trillion to the debt in the coming years.

Bottom line: government spending is what got us to the current situation.  The proposal that MORE government spending will somehow get us out is beyond stupid.

BTW: We’ve had a government of the wealthy, by the wealthy, and for the wealthy, and it has been here long before Hoover showed up. You complain about tax loopholes?  Well, guess when they were written, and guess which party was responsible for the majority.

zewazir

The reason business do not expand is they have no new demand, with so many people out of work because governments have stopped spending.

And one more point: governments have stopped spending?  Try looking at the national deficit the last three years.  They make the Bush and Reagan years of spending look like they were run by Ebeneezer Scrooge.

estern53

And one more point: governments have stopped spending?? Try looking at the national deficit the last three years.? They make the Bush and Reagan years of spending look like they were run by Ebeneezer Scrooge

Ahh the old if obama inherited a 2 trillion dollar debt then it must be his line of reasoning. everyone knows that 2/3 of the deficit was caused by bush. regan even left office with the country in a huge debt. Clinton left office with a surplus that Bush went to spend on tax cuts for the wealthy and then started 2 wars without asking anyone to make a sacrifice. As we are seeing the supply side voodoo economics is faling world wide.

here is a news headline “The latest evidence that government spending cuts are driving the eurozone deeper into recession came Wednesday with a report on soaring unemployment in the zone’s weaker economies.”
it has never worked letting corps off the hook for taxes in hopes of them hiring again. its about demand and when people have no money there is no demand and no growth. Just look at Europe they have been doing exactly what the republicans want and we are going to fall off a cliff for good. When government stimulates the economy the money comes back in tax revenue. Governments are not businesses so they can afford deficits.

zewazir

Ummm, there is a vast difference between debt and deficit.  Deficit spending is ALL on the current incumbents of the WH and congress, for they are the ones doing the current spending. The debt is over 16 trillion dollars - more than our total GDP.  The DEFICIT is how much is added each year, and Obama’s administration has added more than a trillion dollars each and every year of his term in office, and is heading to spend more than twice in 4 years what Bush did in 8.  Bush outspent revenues by somewhat over 2 trillion dollars - including the bank bailouts.  Obama outspent Bush his first two years in office. That is one major reason democrats lost control of the House, and lost a big portion of their majority in the Senate. Democrats gained control of congress campaigning against Bush’s out-of-control spending, then went on to do even more out-of-control spending. But it does not matter WHO is doing the spending, the fact is it is a major factor in our current troubles. Bush’s spending was a significant factor in why the tax cuts did not have the effect that Reagan’s tax cuts had.  And Reagan’s tax cuts, though more successful than most liberals will ever admit to despite a 4-year recovery from worse economic conditions than we face now, were not as successful as Jack Kennedy’s tax cuts because Reagan’s cuts were significantly offset by Reagan’s commitment to outspend the Soviet Union into the ground. (Which was also successful.)

OTOH, the economy thrived under Clinton DESPITE MAKING SIGNIFICANT SPENDING CUTS! How does THAT play into your theory? And of course, let us not ignore the entirely coincidental fact that the economy started to contract shortly after Clinton decided the feds needed a larger cut of said thriving economy. At which revenues actually went down instead of up, and their projected budget surplus never actually happened.

Here is a clue: when someone is deeply in debt, they are going to have to cut back on their spending.  Of COURSE it is going to have a negative impact. (DUH!) OTOH, continuing to spend more than one makes simply makes things worse when the time comes to pay for everything that was purchased on credit. That is no different for countries. When countries can no longer sustain their debt, such as what is happening in Greece, Spain, and others, they have to cut back, or default on their debt. One or the other must eventually happen. Deficits cannot accumulate forever. That cuts in spending deepen the current recession is an unavoidable consequence, rather like pain is an unavoidable consequence of major surgery. But, like surgery, the alternate, which is total economic collapse, is far worse than the pains of the necessary surgery.

The idea that countries can indefinitely spend money they do not have “because they can afford deficits” is EXACTLY why Europe is currently in crisis, and why we are headed that direction at break-neck speed. To think that the way out of a debt crisis is MORE DEBT is stupidity added upon stupidity.  In fact it is the living definition of insanity: doing the same thing over and over while expecting different results.

As for “it has never worked letting corps of the hook for taxes”, all that statement shows is a profound ignorance of history.  Jack Kennedy made significant cuts in taxes, and less than a year later tax revenues were up over 30%. Years later, Reagan made some tax cuts, and the economy went from double-digit inflation and double-digit unemployment to solid growth in less than 4 years, to include significant gains in tax revenues. OTOH, Bush-I raised taxes, and revenues went down.

One other thing: Europe has NEVER followed the idea of “voodoo economics”, yet their economy is tanking worse than ours.  European economy has long been based on the principles you are supporting, and THAT is what is failing big time. Claiming that Europe is an example of failed conservative tax policies is plain ridiculous.

Bottom line: we have been on a credit economy since slightly before WWI - that includes most of the world. The well has bottomed out, and it is time to pay for all we have borrowed.  Yes, it is going to hurt.  But we can either bite the bullet NOW, or we can let it all fall down in total collapse - which will hurt a hell of a lot more.

estern53

And Reagan?s tax cuts, though more successful than most liberals will ever admit to

So what History books are you reading Reagan raised taxes 8 times.
There was a surplus when Clinton left office.
“The Congressional Budget Office reported budget surpluses of $69 billion in 1998, $126 billion in 1999, and $236 billion in 2000,”
As for Europe Spain did not even have a government deficit problem. they are in trouble because the banks there followed our model of lending money to everyone. so they could all reap the fees. then they bundled up the mortgages and sold them to countries like greece. Greece’s problem is the same we have here no one wants to pay taxes but still have services. I doubt there is one member of congress who will go back to their voters and tell them that water works project or bridge or defense contrat will not be coming their way because he wants the budget balanced. So no jobs for his district. yet they persist in lowering taxes.
The reason we have had such a thriving economy after WW2 with much higher taxes was because of Government programs that paid for education and gave loans to buy homes. that money went back into the economy to build the houses and furnish them but I guess that does not figure into your line of thought.
I suppose i could vote for romney just so i can see the US tank.

zewazir

No, there was a PROJECTED surplus. It never appeared, primarily because the so-called surplus was based on revenue projections that were already failing when the budget was published. (ie: when Clinton raised taxes, revenues went DOWN, but the budget projections assumed they would rise instead.)  All one has to do is look at the national debt to see that the “surplus” never happened. Hint: if debt goes up, there is no “surplus”. Even if the surplus was spent rather than used to pay down debt, there would be no addition to the debt unless the government had to borrow more to cover their spending. If government is borrowing to cover spending, there is no surplus. It is that simple. The debt increased all 8 of Clinton’s years, therefore there was no surplus during any of those years. Try not to buy into TOO many lies of the federal government.

One other point about Clinton’s so-called balanced budget.  The only reason it even came as close as it did is they were borrowing the Social Security Trust Fund to do so.  Again: when one must BORROW money, one’s budget is NOT balanced, let alone in surplus. Remember Gore’s “lock box” proposal for the SS trust?  It was one thing I fully agreed with him on.

I do acknowledge that we came as close as we have since before WWII to a balanced budget. Even without raping the SS trust, the deficit was lower (in terms of %age of GDP) than any other time in recent history. This was due to actual CUTS in spending. It was the last congress we had that even came within artillery range of conservative principles, instead of just spouting rhetoric about it, then spending money we do not have like drunken sailors.

But, I point out once again, that DESPITE the cuts in spending that occurred during that time, the economy thrived. It KICKED ASS - a fact which kind of puts a crimp in your theory that the government must spend, spend, spend to keep the economy afloat.  What Clinton did best in those years is LEAVE THINGS ALONE. He didn’t screw it up with heavy regulations and tweaks and other little interferences the federal government is infamous for. (Frankly, Clinton was more a fiscal conservative than Bush ever dreamed of being.)  The biggest mistake he made was thinking the feds needed a bigger cut, which put the brakes on the economy at just the wrong time. Had he not done so, the projected surplus just may have actually happened, or at least a paper-balanced budget (with our future retirements tossed in, that is). Instead, with higher taxes came lower revenues, and the budget projection of a surplus ended up being just a fantasy.

zewazir

And I do understand why we had a “good” economy after WWII. (I put “good” in quotes because it only SEEMED to be good at the time. But because it was a credit economy, it eventually has to be paid for later, at much greater cost.  “good” is relative when looking at the large picture.)

The problem is people believe that such spending can go on forever. I could vastly increase my standard of living right now, by going out and buying a bunch of things I desire on credit. But that would not last long, would it? Credit economies simply can NOT go on forever, any more than an individual can just keep adding credit cards, using cash advances from one to make payments on another. Eventually it will all come tumbling down. The question for us is, do we just go on as before until it comes tumbling down on its own, or do we start easing things down so it’s not a major fail when it does collapse?

You can point fingers to specific items which contributed to the accumulation of various national debts all day long, but in the end analysis, Europe is in trouble because they have literally run out of money to borrow to prop up their economies. A credit economy is a FALSE economy. That is why, despite periods of growth, economies world wide have been grossly unstable for the last century-plus.  Credit spending is and always will be unstable because debit spending cannot be sustained indefinitely.

Greece is in big trouble because they are so deep in debt lenders are realizing they have a big change (almost certain) of defaulting on it. We can discuss ad-infinitum WHY their debt is so large, but the bottom line is the debt IS so large it cannot reasonably be paid back. Therefore no one wants to lend them any more money - it’s simply throwing more fantasy after already failed fantasy. Every time the rest of the Union bails them out, it is with more and more reluctance, more and more debate, and with stronger and stronger admonishments that they MUST get their budget balanced if they want continued help. They could raise taxes, but that won’t even come CLOSE to closing the gap with spending, while putting the brakes on ANY chance of economic growth.

Spain’s problems are somewhat different, with moderately different causes, but the same end difficulty: debt so deep, it can no longer be sustained. But let’s look at what you propose put Spain in that situation. “Banks lent money to everyone” as you say.  In short, they were building on a credit economy, and (SURPRISE!!) that credit economy ended up being unsustainable, and came crashing down around their ears. How about that! Spending money they didn’t have got them in trouble.  And despite that, you propose that spending MORE money they don’t have is going to SOLVE that problem?

Wealth is not something one just creates by writing new laws.  Yet that is EXACTLY what you are supporting: the creation of wealth through legislative actions.  “Hey! We’ll just spend a few trillion more and everything will be fine….  What? We don’t HAVE a few trillion more? Why, yes we do, we’ll just borrow it.”

Problem is, in order to borrow it, it must be created out of thin air, because no one else has it either.  Enter the federal reserve and world bank: masters of printing money that has no value except that which is artificially added through the various laws that spend it. It is a false economy, a fantasy economy, and it cannot go on forever.

Tell me: why is it a bad idea to simply print a whole stack of $100 bills and just hand them out to people by the shovel full?  I mean, people with stacks of $100 bills would (almost all) run out and spend them on all the things they’ve been desiring. Other would pay off their current debts, which would free up some of their income for purchasing.  Why would that not work? IF the government can simply pull money out of their nethers the way they have been doing, and hand it out (the way they’ve been doing), why is it a bad idea?  (I HOPE you realize it’s a bad idea…..)

Unfortunately, the U.S. is rapidly approaching the same point Greece (and others) have already arrived at.  We have already mortgaged the economy of our children, our grand children, and our great-grandchildren. How many more generations do you want to mortgage?

estern53

And I do understand why we had a ?good? economy after WWII. (I put ?good? in quotes because it only SEEMED to be good at the time. But because it was a credit economy, it eventually has to be paid for later, at much greater cost.? ?good? is relative when looking at the large picture.)

i guess you do not like the answer like most conservatives, you get out of debt by raising revenue:ie taxes. All we have to do is get rid of the bush tax cuts. then reduce Defense spending by 50% and we are back in the black. SS and medicare are separate taxes they can be adjusted as well. As for your comment about having a “kick ass economy ” in the 90s it was another stock market fueled phony economy based on lies. When it collapsed (which had nothing to do with tax rates) Bush came in office and helped set the stage for the real estate bubble. The conservatives got glass / siegal act overturned and bush who never ran any company successfully bankrupted the US.

If you do not know by now we produce nothing in this country. its been a credit based economy for 30 years now. the rest is history. Right now China owns us. We can no longer create new jobs in this country because everyone is afraid to spend. the Chinese plow tons of money into government subsidized projects that helps hire people. we watch our bridges and rail system collapse. The reason apple is in China is because the US stopped investing in infrastructure. All the workers and engineers Apple gets in China for free are paid for by the government. no wonder they do not build factories here, The US does not give a damn about education or infrastructure. Education is only for rich kids. the rest can go to hell. When i was growing up a pell grant paid for your education today it makes up less then 10% of my daughter’s tuition. let me know when your ready to come up with a reasonable plan that does not hurt the middle class. We once had a country that took shared sacrifice seriously. now its all for me and screw you.

zewazir

There IS no plan that will not hurt the middle class.  Nor the poor, nor the rich.  Credit economies cannot last, and that is why we’re where we are at.

You keep on about raising revenues (good idea) by raising taxes (eh, not so much.  Look at what happened to revenues when Clinton raised taxes.  Look at what happened when Daddy Bush raised taxes. Both times they raised taxes during an unstable economy, and both times it backfired with lowered revenues and recession. We’re ALREADY in a recession, an no one yet has indicated how raising taxes will get us out without resorting to more government spending, which has been demonstrated as just one more stop-gap on the way to third-world status.

Also, it who you want to tax more.  Corporations and businesses derive their taxes from their revenues.  Guess from whom businesses get their revenues.  That’s right. Consumers.  You, me, your daughter in college, my daughter in 4th grade.

Now, I have no problem with eliminating tax shelters, loopholes, and deferments for individuals. When it comes to that, I’d like to see tax deductions limited to three total: personal deduction calculated to bring tax liability to zero for people below 150% of the poverty line, and capped deductions for retirement savings and healthcare savings. I would possibly support an education savings deduction also, but cannot figure how to prevent people from using it with no intention of spending it on education. Once those standard, same-for-everyone deductions are in place, then tax ALL personal income, regardless of source at a standard 12%.  By eliminating shelters an loopholes for individual taxes, revenues would go up while total tax burden for middle income brackets would drop slightly. (They would go WAY up for the very top, which, of course, is why a true, fair, flat tax will never get passed.)

Meanwhile, drop corporate and business income taxes to zero while setting up a series of fee structures to account for use of infrastructure. WE are a credit economy because we have pushed away our manufacturing base to places more friendly to manufacturing.  If we want a REAL economy back, we have to get back our manufacturing base, and that means making the local economic environment more friendly to manufacturing.  And that starts with (but, does not END with) taxes - at the very least NOT raising them.

akcarver

There are many many calls here to raise taxes on the “filthy rich” and “evil, money grubbing corporations.” Listen up folks. THERE’S NOT ENOUGH MONEY THERE! For a rather detailed explanation on why just raising taxes won’t work, see http://www.youtube.com/watch?v=661pi6K-8WQ.

I like zewazir’s plan for tax simplification a lot. My wife and I sat down a while ago and figured out what we consider to be a very good plan. Allow each adult man and woman in the country a personal deduction of $10,000. For each child they have, they would be allowed an additional $5,000 deduction. This would mean that before any taxes are owed, a family of four would have to earn $30,000. EVERYTHING above that level should be taxed at a flat rate, I propose 15%, no matter how you obtain it, whether through wages, salaries, and tips (most people out there), or through capital gains or whatever. So someone like Alex Rodriguez, who makes $25,000,000 more or less, would pay a tax of $3,748,500, while a family of four, with two wage earners at the median US income of $31,111 each (source: http://en.wikipedia.org/wiki/Median_household_income) would pay $4,833.

estern53

Meanwhile, drop corporate and business income taxes to zero while setting up a series of fee structures to account for use of infrastructure.

the problem is Corps are already paying next to nothing in taxes. Just look at Apple sitting on 1 billon in cash. Look at GE 0 in corp taxes paid. So it would not change a thing and the gripe that raising taxes harms the economy is not based in any factual evidence. the government can not control supply and demand. the sole reason for the drop in the economy during the Clinton years was the internet bubble burst and that had nothing to do with tax rates but with the liars on wall street who created it. if you do follow statistics then you wil notice that after the Bush cuts taxes were enabled the country went into the slowest job growth in history and personal income dropped. Again it had nothing to do with taxes but an unregulated banking industry.
if you keep insisting there should be no more taxes then you are part of the problem not part of the solution.

estern53

So someone like Alex Rodriguez, who makes $25,000,000 more or less, would pay a tax of $3,748,500, while a family of four, with two wage earners at the median US income of $31,111 each (source: http://en.wikipedia.org/wiki/Median_household_income) would pay $4,833.

Unfortunately the family of 4 at $31, 111 is currently paying less in taxes. your flat rate tax raises their tax burden. A flat rate tax hurts the poor and lowers taxes for the wealthy. i am all for closing   the loop holes on the wealthy and have a graduated tax structure that caps off at 40% if you make over a million a year. i doubt there is any one who needs over a millon a year to survive.

zewazir

So someone like Alex Rodriguez, who makes $25,000,000 more or less, would pay a tax of $3,748,500, while a family of four, with two wage earners at the median US income of $31,111 each (source: http://en.wikipedia.org/wiki/Median_household_income) would pay $4,833.

You forgot the personal deductions in your calculations. With a $10,000 per adult, $5,000 per child personal deduction, the family of 4 would only pay $167 in taxes.

The plan I have discussed with others base the personal deduction on about 150% of the poverty rate (That’s about what they do now with regard to child tax credits and earned income credit) so that would come out to about $14,000 per adult and $8,000 per child, in which case the family of 4 making only $31,000 would be able to reduce their taxable income to zero, as would a family of 4 making up to $44,000.

@estern53:  By closing loopholes, the effective tax rate on the rich would go WAY up.  Currently, due to the various methods in which a rich person can shelter their income from taxation, a person making $25,000,000 probably actually pays taxes on less than half their actual income, depending on its source. For instance, if that income were 100% derived from dividends, the taxes would be zero. If we get rid of all tax shelters, it would pretty much automatically double or more their total tax burden even when paying the same RATE as everyone else.

Also, tax rates should NOT be based on how much people like you think they “need”. That is nothing less that class warfare envy trying to disguise itself as “fairness”. (Though how one can define treating people differently under the law as being “fair” is beyond me.) You can research it anywhere you like, but the bottom line is that the top 10% of the wealthy in this country receive about 43% of the total income generated, and pay 71% of total federal income tax revenues, while the bottom 40% pay close to zero, while the bottom 20% actually MAKE money off the tax system via refundable tax credits. How the heck much more do the rich need to pay in relation to the poor for you to think it is “fair”?

It’s not about what people “need”. It is about the LAW treating every single citizen of this country EQUALLY, regardless of race, gender, creed, or economic status.

zewazir

the problem is Corps are already paying next to nothing in taxes. Just look at Apple sitting on 1 billon in cash. Look at GE 0 in corp taxes paid.

Apple paid over $8 billion in taxes (Do remember the Times article of $3 billion was proven to be false - typical for the NYT) So what if Apple is sitting on a large cash reserve? They still paid a bundle in taxes. It is truly sad how people can look at tax burdens in the billions and still claim it’s too low. Should the rich pay ALL taxes?

I don’t know where you got the $0 for GE (The NYT perhaps?)

OTOH, a fee structure in place of taxes would make sure the corporations pay for the infrastructure they use, whether they are operating on a profit or loss. (After all, we as individuals have to pay for using infrastructure, regardless of how much we make).

Taxes on profit are simply paid by the consumer anyway, so reducing that would reduce overall prices while also allowing more to be retained for expansion.  Reduced prices would allow people to purchase more, thus justifying expansion through increased demand.*

*This, is of course, dependent on other factors.  In a stable economy, lowered prices would yield higher demand, would result in businesses expanding to meet the demand.  OTOH, in the business-unfriendly, unstable economy of the current federal government, people are fearful of the future, so they tend to save what they don’t spend on the lower prices, and businesses also tend to put any extra away for if/when the tax-the-hell-out-of-them crowd manages to screw people over in favor of their class warfare policies.

zewazir

if you keep insisting there should be no more taxes then you are part of the problem not part of the solution.

“If you’re not for us, you’re against us”?  Typical.

akcarver

akcarver said:

So someone like Alex Rodriguez, who makes $25,000,000 more or less, would pay a tax of $3,748,500, while a family of four, with two wage earners at the median US income of $31,111 each (source: http://en.wikipedia.org/wiki/Median_household_income) would pay $4,833.

You forgot the personal deductions in your calculations. With a $10,000 per adult, $5,000 per child personal deduction, the family of 4 would only pay $167 in taxes.

No, I didn’t. If you look at my post again, you’ll see that I said that both parents were working (the new normal, unfortunately) and both were making the median income.

zewazir

No, I didn?t. If you look at my post again, you?ll see that I said that both parents were working (the new normal, unfortunately) and both were making the median income.

So their HOUSEHOLD income would be $62,222?  Sorry, that was not clear to me. In which case a family making $62K would pay 15% on $42K - which is about what that bracket pays now.

So we are on the same page, just using slightly different numbers for deductions and tax rate. The tax research group I am with came out with 12% as being adequate to increase revenues on the same hypothetical income data. (which was based on IRS reports for 2008.) And we felt the approximate 150% poverty level currently used for earned income credit cutoff to be reasonable for calculating personal deductions of $14,000 per adult, $8,000 per dependent. We also proposed capped deductions for certain types of savings to encourage people to save for their healthcare and retirements, thus easing the burdens on medicare and social security.

But we are basically working with the exact same idea: have a base income set aside so people in poverty don’t pay, and otherwise eliminate all other shelters and deductions except the two, then tax all income at the same rate.  It would be fair, REAL fair, as in treating all citizens the same, and still increase overall revenues.

Additional advantage: if all personal income is taxed at the same rate regardless of where and how it is derived, it would remove the incentives the wealthy currently have to leave large portions of their cash in offshore banks.  If it’s taxed regardless, may as well bring it home where it can do some good.

estern53

a fee structure in place of taxes would make sure the corporations pay for the infrastructure they use, whether they are operating on a profit or loss.

So the corps will be responsible for the national highway system and the rail roads woohooo

estern53

in the business-unfriendly, unstable economy of the current federal government, people are fearful of the future, so they tend to save what they don?t spend on the lower prices, and businesses also tend to put any extra away for if/when the tax-the-hell-out-of-them crowd manages to screw people over in favor of their class warfare policies

if that were the case but its not. Business are not spending because there is not enough demand. Consumers are not spending because they have no money and they do not want to use credit. this what the economy looks like when people buy just what they need, healthcare, food, shelter and education. Without help they do no make enough to spend. Why don’t you ask your rich friends to help make up for the lack of demand

estern53

t?s not about what people ?need?. It is about the LAW treating every single citizen of this country EQUALLY, regardless of race, gender, creed, or economic status

So your not proposing a true flat rate tax. with a true flat rate tax there are no deductions everyone pays the same percentage. So what makes what you are proposing different from the current graduated falt tax with deductions.

zewazir

So the corps will be responsible for the national highway system and the rail roads woohooo

Their share - which they already do through the gas tax. A perfect example of what I mean.

Other infrastructure according to usage, and which public funds keep it going. (ie: if it is a municipal infrastructure, the feds don’t charge a fee, but the municipality does.)

zewazir

So your not proposing a true flat rate tax. with a true flat rate tax there are no deductions everyone pays the same percentage. So what makes what you are proposing different from the current graduated falt tax with deductions.

Ummm, there is no such thing as a “graduated flat tax”.  Tax rates are ether graduated (as in they go up as income goes up) or they are flat, in which case there is a single rate that stays the same regardless of income. Graduated taxes are inherently unfair because they treat people differently according to how much they make.  Flat tax is fair because it treats all citizens the same - a little item that is actually required (but ignored) by our constitution.  (See the 14th Amendment).

Deductions, still fall within the realm of flat tax, as long a said deductions are the same for everyone.

FLAT - as in same for all.
Graduated: as in rises with income.

THAT is the difference.

zewazir

Consumers are not spending because they have no money and they do not want to use credit.

Actually, consumers are paying down credit - which means they DO have money over and above meeting the basics.  And let’s not mention, of course, the millions of iPhones and iPads being sold, which has made Apple the richest corporation on Earth, and whose tax burden - and the lies told about it in the NYT and repeated by other lame-stream liberal media outlets - prompted this thread.  People barely able to feed themselves as you imply do not go around buying iPads.

The FACT is there is money out there.  Not as much as usual by a big margin, but it is there.  However, due to fear of the future, people are hording it, either by paying down debt, or by increasing savings. You do know that if the current tax laws expire, the taxes for a family of 4 making $45,000 will increase by 83%, right? Who is going to spend money, or increase debt, when there is a good chance that good ol’ Uncle Sam is going to come striding up and take and extra $2700 from a family that is existing at less than 150% of the poverty level?

That fear includes business. (You DO understand, don’t you, that the vast majority of jobs are created by small businesses, whom are equally targeted by Obama’s ignorant tax policies?) While lack of demand is also putting a crimp on things (about the only thing you got even remotely correct), few businesses would risk expanding at this time even if demand were up. There is still that pesky deal with democrats wanting to screw them over for having the unmitigated gall to be successful. Because, as everyone knows, if you’re in the top 10%, paying 71% of federal income taxes, that is just SO grossly unfair to the poor who are paying nothing, and even getting back from a tax system they didn’t even pay into.

zewazir

BTW: are you aware that the railroads own their right-of-ways, and are therefore responsible for their maintenance, right? The only thing the feds run relating to railroads (into the ground as usual) is Amtrak.

estern53

the top 10%, paying 71% of federal income taxes

that is true but the reason they shoulder the tax burden is because 50% of the population makes under $32,000. maybe if that top 10% did some job creating and gave raises to their employes instead of hiding all their income in tax shelters in the Cayman islands people would have more spending power.

zewazir

And just maybe if the federal government didn’t keep insisting that the 71% of taxes on 43% income is somehow unfair, and that taxes need to go higher for those making above $250,000, so the federal government can pay fat-cat bureaucrats their bean-counter salaries, or toss 890 billion of it down a black hole, then they wouldn’t feel compelled to hide their money from the federal robber barons.

Besides, I said before that eliminating individual tax loopholes would bring in even more money from the wealthy, even paying at a lower rate. So, in the end, it’s not about taxing the rich less. What I have a problem with is the insistence on taxing BUSINESS, which has the net effect of driving jobs offshore to more business-friendly climes. After all, that is what the big complaint that started this thread, about how Apple’s tax burden is, according to some, too low.  I say it’s too high, all corporate taxes are too high even with the shelters in place, and being too high is why we have such a poor and struggling labor market.

BTW: watch how you use statistics. The factoid that the median annual income is $31,111, does not account for the fact that several million households have TWO of those median incomes, meaning they are actually living off over $60,000 - a mark I and my wife have yet to reach.

estern53

The factoid that the median annual income is $31,111, does not account for the fact that several million households have TWO of those median incomes

this fact comes from the IRS. it not about how many people live in a house but how much income was declared.
Do you know the average government worker makes $40k per year. you are so caught up by government spending and what it does for the economy that you fail to see the forrest before the tree. Sure there are some individuals who make obscene amounts to you. I see that too but in the private sector. Where big companies layoff workers who make 40k and reward the ceo with multi million dollar pay checks, when all the CEO has to is take a cut in pay to keep people in their jobs. We no longer have any morals in our society. All for one and all for me.Should be put on our currency.
the reason companies create factories in china and elsewhere is because the labor is cheaper or the infrastructure is better not because of so called high taxes. We don’t spend the time in this country to invest in Education. Education is free in most of world through college but not here. When this country wakes up it may be to late.

zewazir

Wrong: that factoid comes from the Dept. of Labor and Statistics.  The statistic being referenced is “average wage” NOT “average household income”.

Corporation export jobs for two basic reasons. One reason is labor costs, which includes both wages and other associated costs to include taxes, insurance, and benefits.  The second reason is regulations. Where regulations (or lack of) allows manufacturing process to be done cheaper, that’s where we will find more manufacturing jobs.

As to taxes - it’s semi-related to, but only partially, to jobs. The main reason companies keep their money off shore is to keep their taxes low. That money then does good for the economies of the countries where it is kept, because no matter where they keep their money, it is going to be reinvested in business of some type in order to generate more money.  It does not do OUR economy any good because our business-unfriendly policies make it fiscally wiser to keep the money elsewhere than to bring it back home.  Now PART of this is enabled by keeping manufacturing offshore.  But not all of it.  Corporations were exercising this option long before exporting jobs became popular through free trade agreements.

And it is NOT “so-called” high taxes. Corporate taxes in the U.S. are among the highest of developed countries. Countries with lower corporate taxes are, amazingly, also countries that have more corporate activity taking place - not necessarily manufacturing, because there are other factors involved with where corporations choose to send their manufacturing - but corporate business, which includes the handling of their profits. The money is kept where taxes are low, and that money generates additional economic activity, which in turn creates jobs, as well as tax revenues, even though at a lower rate. How about THAT strange coincidence?

zewazir

One other item: the tax policies (and other business-unfriendly policies) of this nation are often thought of as relating to corporations. But they also hit small businesses - those people who employ the vast majority of wage workers in this nation. It’s one of those “law of unintended consequences” things. Small businesses do not have the opportunities of major corporations to move their operations offshore, or keep some of their profits in offshore accounts to shelter them from taxation. And that ends up as a MAJOR advantage to larger corporations, and a MAJOR DISadvantage to small business. The larger the corporation, the more advantages being able o keep things offshore generates. This in turn allows major corporations to grow (relatively) unhindered, gobbling up their competition because our policies - to include how we tax them - put their competition under severe disadvantages.

In short, our tax policies, as well as others, PUNISH small business while favoring major corporations. The problem is, there are only two remedies to the advantages of major corporations over small business our trade policies and tax policies create. Method one, which seems to be favored by many in one form or another, is to enact a series of protectionist policies in order to “encourage” - through threat of punishment - major corporations to keep their operations onshore. Unfortunately, protectionist policies have been tried in the past, and caused more harm than good, not to mention would be a violation of several treaties. (Major treaties are not something we can just unilaterally toss out - not without causing all KINDS of international problems.) We start punishing our own corporations for offshoring their operations, and we will create havoc.

The second method would be to encourage corporations to keep operations onshore by creating more business-friendly taxation and regulation policies here at home. Ease taxes. Rewrite regulations, such as those which protect the environment, to be more efficient while still accomplishing the major goals of said regulations.  And just flat get rid of regulations which were written to push some political agenda, and have no other practical value. The advantage of the second option is not only would such actions encourage corporations to keep operations - and thereby their money - onshore, but it would quit punishing small business in the vain and misguided effort to punish corporations.

estern53

The money is kept where taxes are low, and that money generates additional economic activity, which in turn creates jobs, as well as tax revenues, even though at a lower rate. How about THAT strange coincidence?

So the caymen islands or some other third world country must be doing very good by your estimates. Maybe we should all move there since coporations in US are keeping all their money there.
I have owned my small business for over 25 years and when it comes to expensives. Taxes are at the bottom of the list when we need to expand. Its about demand. If you ask any business they will tell you the same. The conservatives are anti business. They help kill jobs by stragling the states by killing federal aid..Then the states in turn lay off thousands of teachers, ploiceman, fireman ect.  If you do not have customers with money you cant stay in business plain and simple. If our tax codes are so evil then why does everyone come here to try their luck. The US has the least restrictions for business and if fail you fail you can go bankrupt and start all over again. i travel alot and spend a lot of time in Europe and business are hit up hard there for taxes. Yet no one complains because they see their tax dollars at work.

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