Sunday Afternoon Open Thread | 131 comments (131 topical, editorial, 0 hidden)

I like the idea of eliminating corporate tax (4.00 / 5)

too much of 'structured finance' is about exploiting differences between corporate tax regimes in different places, or between the tax and accounting rules. This is not productive work by any meaningful definition, even though it can be very profitable.

Universal progressive income taxes together with VAT (a form of sales tax) is a lot more effective, and VAT can be made progressive enough by having different rates for specific product categories, like food.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Sep 21st, 2008 at 12:49:24 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 1)

Finland has used VAT (or Alv, as it is in Finland) in just this progressive way. ALV in Finland is 17% on food and drink, 8% on transport and books, 22% on others. Artistic performance fees are zero rated.

There is currently discussion on lowering the alv on food.

You can't be me, I'm taken

by Sven Triloqvist on Sun Sep 21st, 2008 at 12:56:22 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 0)

I'm surprised to find it so high on food.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Sep 21st, 2008 at 12:58:45 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 0)

I suspect that it was a hidden marketing subsidy to Finnish producers. But high prices are now longer tolerated, and Lidl (a German warehouse type food operation that works out 20% cheaper, but with few Finnish branded goods) is getting more customers. Lidl goes for lower value industrial sites just outside of towns, but easily accessible.

The other side of expensive food is, of course, greater consumption of cheap crap food that brings its own problems at the healthcare end. I am sure it is a very elastic equation.

One key factor to remember in deciding progressive use of taxes of any kind is that while they are designed for one frame of mass mind, the change itself will cause another frame of mass mind. This always reminds me of Mr Hulot in Mon Oncle, struggling to right a perfectly manicured bush that has lost a branch to the activities of his nephew :-)

You can't be me, I'm taken

by Sven Triloqvist on Sun Sep 21st, 2008 at 02:45:20 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (4.00 / 2)

If only one country replaces the corporate tax with a tax on revenue, or if different countries put different tax rates on revenue, you still have opportunities for tax arbitrage.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Sun Sep 21st, 2008 at 01:01:41 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 0)

So we propose a global government to implement the revenue tax.

I dunno if it'd work, but watching the Paulites lose their shit after hearing of it would be hilarious.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Sep 21st, 2008 at 01:12:02 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (4.00 / 2)

The EU has tried and failed to standarise the corporate tax base (not even the rate!) because too many of its member states are married to the race to the bottom. In fact, the fear of losing the "corporate tax advantage" is one of the alleged reasons for the Irish to vote no to Lisbon.

So, good luck globally.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Sun Sep 21st, 2008 at 01:20:18 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 1)

It's never going to happen.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Sep 21st, 2008 at 01:23:28 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (4.00 / 3)

Drew J Jones:

global government

Bingo.

Pie in the sky at the moment, but consider the advantages:

Equalisation of opportunity - people could move as freely as capital, subject to common sense limits
The instant removal of a $1 trillion annual military tax
Closing of all so-called off-shore tax loopholes, which would put yet more wealth into play for productive social investment

The current system of competing nation states is ruinously expensive.

Of course you'd need the strongest democracy in history to prevent a slide towards feudalism and oligarchy. You could create that with absolute limits on personal wealth and influence and semi-random sortition of public representatives.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Sep 21st, 2008 at 01:36:31 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 0)

Sounds like Utopia to me, and I am a fan of utopian projects. But the problem, as always, is getting from here to there.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 21st, 2008 at 05:22:29 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 0)

I think that the opportunity is minimal if you base they levy on revenue rather than profit.

Most retail transactions are going to occur on the soil of one company, and there's no way that's going to change to something that's going to occur offshore.

People buy cars and computers from distributors. So long as we operate on a principle of point of purchase, there's less opportunity for arbitrage.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Sep 21st, 2008 at 01:33:57 PM EST
[ Parent ]

well, no (none / 1)

if you bring down the corporate tax rate to 0 in your country, nobody can arbitrage against you (unless they actually provide subsidies to get to a negative tax rate).

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Sep 21st, 2008 at 02:07:38 PM EST
[ Parent ]

Re: well, no (4.00 / 2)

They can arbitrage by having a lower rate of limited liability levy.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Sun Sep 21st, 2008 at 02:08:28 PM EST
[ Parent ]

Re: well, no (4.00 / 3)

But.

Liability limitation insurance is something that can be handled on a national basis. So that Swiss RE can only issues policies on liability in the US through its US subsidiarity. So if you can create walls for liability limitation at the national border, then in order to enter a market, a company must agree to the levy as the price of admission.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Sep 21st, 2008 at 02:41:08 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (4.00 / 8)

One of the ironies of the US tax code is that in terms of absolute numbers large numbers of corporations don't pay corporate income taxes because they claim profits as personal income. The US S Corporation is the most common here.

By separating out the charge for limited liability insurance from the idea of taxation, the double taxation argument collapses, and you can defeat the neo-libs in the market. Because no private insurer is going to offer policies that limit liability to market capitalization at the rate that the government can.

Make the neo-libs eat their own shit. They want the market to provide these things, let them try to show that it can be done. Then laugh when they are forced to come crawling back to the government to ask that they be allowed the privilege of what they now feel entitled to.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Sep 21st, 2008 at 01:39:13 PM EST
[ Parent ]

I like you idea (4.00 / 5)

a lot. and I like the discourse you use to justify it.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Sep 21st, 2008 at 02:08:03 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (4.00 / 5)

Okay - but can we get one thing clear here?

The neolibs don't give a crap about markets, or about small government, or about any of the other talking points they vomit up regularly. There's a cadre of useful idiot apparatchiks who have been through the MBA mill who will repeat - and believe - this nonsense on cue because it makes them feel grown up. But the real players know the talking points are a show for the gullible and have no more substance than a McCain stump speech. (You think it's a coincidence that Bush, Palin and McCain lie about everything?)

The real aim of this kind of 'conservatism' has always been to loot national economies using whatever ideological or military excuses come to hand. This isn't conservatism, it's old-fashioned imperialism, with the empire as the entire planet.

The 'crisis' was manufactured by Greenspan, Gramm, Paulson and others. Greenspan may be a toad but he's not stupid, and the regret and woe which he's wailing out now, have to be contrasted with the palid and oily reassurances about the bubbleicious state of all things financial he spewed out during his term.

He was lying then, and he's still lying now. He knew damn well what was happening, and he didn't just ignore it, he helped engineer it.

So this is not a financial crisis, it's a constitutional crisis. It doesn't need a financial remedy, it needs a restoration of the constitution, and jail terms for the thugs who deliberately ran the car into a wall so that they could make an insurance claim on a shinier one.

No amount of financial re-engineering is going to fix this problem unless law and order are restored, and most of the population decides that Wall St's 'serious people' are thugs and criminals in sharp suits. Once that reality has sunk into public consciousness and cleaned out some of the festering corruption from the Anglo political systems, it may be possible to start legislating fixes. But the real need now is for pressure on Washington and London to start moving back towards genuine populist democracy.

Obama may make some tiny baby steps in that direction. But it needs a much wider cultural change, and even with the current sense of outrage among some of the left in the US, I'm not sure that we're done with the disasters yet.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Sep 21st, 2008 at 05:23:25 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 0)

I'm not sure that we're done with the disasters yet.

I make no claim to clairvoyance, I don't read tarot cards, but I've got this grand gut feeling that the bigger disasters are just waiting offstage, regardless of what transpires this week.

... start moving back towards genuine populist democracy.

Do we do this before or after we find and slaughter all of the ultra-rich Republican types, because while they're still alive, they will use ALL of their substantial resources to keep things going just the way they are now.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 06:52:06 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 1)

TBG

There's a cadre of useful idiot apparatchiks who have been through the MBA mill who will repeat - and believe - this nonsense on cue because it makes them feel grown up.

They also believe it because it makes them feel employed. One would have to have a gag reflex set at infinity to work for these folks and not believe the official line.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Sep 22nd, 2008 at 12:00:02 AM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 1)

I think you're underestimating the degree to which many at the top believe their own propaganda. For example, I am close to certain that Greenspan does. Cheney a bit less, but to a large degree probably does as well. The fact that they consciously lie and steal is not evidence against belief. In general I tend to believe that people overestimate the cynicism of the elites, in any system, of any persuasion. Very few people are happy thinking of themselves as bad guys. Tough guys, people who are willing and able to cut corners to do what needs to be done - yes. And also feeling they deserve a bit extra for the wonderful and important job they're doing, that too. But pure mercenary opportunism isn't that common on the big stuff. When there are contradictions between actions and internal ideology, they rationalize things to themselves as necessary exceptions.

by MarekNYC on Mon Sep 22nd, 2008 at 01:20:50 AM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (4.00 / 2)

Ummm... just checked.

The first reference to a Limited Liability Levy I can find was thanks to Colman's provocation which gave rise to this debate back in January 2007

Iraqi oil etc

complete with the obligatory fisticuffs with HiD.

More recently in the

Risk Risk

thread on 5th April this year I posted this

Well what happened is that partners did (and still do, in the large number of professional partnerships still left unconverted to LLP's)insure themselves against these risks using Professional Indemnity Insurance.
These premiums started to rise rapidly, and led to the demand for limitation of liability. The government refused until they were essentially blackmailed into doing so when PriceWaterhouse and Ernst & Young paid City lawyers Simmons & Simmons around £1m in respect of the legislation that went through in Jersey in 1997 for a Jersey LLP.
Prem Sikka tells the story.
Essentially the UK government is handing out free insurance - as they do to every shareholder in a limited company.
ie the LLP does not quite "do way with that" it socialises what were private risks.
In my view, there should be a "Limited Liability Levy" or tax applied to gross revenues of any entity which has limited liability.
Jersey actually got one thing right in the end. They insisted on a bloody great bond being lodged by LLP's (either £5m or £10m) and this somewhat limits their appeal as a vehicle.....

Plus a good few more references by me in the last couple of weeks....

So, more power to MfM's elbow in developing the argument so much better than I could, but I think I can claim precedence on the concept...

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Sep 21st, 2008 at 09:58:23 PM EST
[ Parent ]

Re: I like the idea of eliminating corporate tax (none / 0)

I just assumed MfM was building on what you had written on this site over (apparently from your search) the last 20 months...

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Mon Sep 22nd, 2008 at 06:44:38 AM EST
[ Parent ]

Sunday Afternoon Open Thread | 131 comments (131 topical, 0 editorial, 0 hidden)

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