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  • The Tax Punisher

    President Obama’s new corporate tax proposals cover two issues: tax evasion and tax punishment. He may have it half right.

    The tax evasion part is relatively easy. When U.S. taxpayers maintain foreign accounts with foreign financial institutions, Obama wants the financial institution to tell the Treasury about the accounts in the same way domestic institutions keep Treasury informed. This is quite an unacceptable intrusion into personal privacy, but it is just one of the inescapable pitfalls of having an income tax system. The one bit of good news is that all those rich liberals who voted for Obama thinking they could hide their income abroad will now have to pay their taxes. The best way to get rid of a bad law is to enforce it strictly.

    The tax punishment part involves punishing U.S. companies that try to compete globally by investing and producing overseas. U.S. tax policy in this area is already about the most punitive, most anti-competitive among all industrial nations, and President Obama proposes to make it more so.

    The “reasoning” behind this policy is the same as that behind raising tariffs to ward off exports and protect jobs at home. Protectionism through the tax code is every bit as self-defeating and foolish as is protectionism through tariffs and import quotas. The idea is to discourage foreign investment by U.S. companies, and then maybe they’ll invest more at home. The reality is they would invest less abroad and at home.

    And lest we forget, this proposal is yet another breaking of his promise not to raise taxes on individuals with incomes below $250,000 in income. (The first was when he raised the tax on cigarettes; the second was his proposal for a new cap-and-trade tax regime.) Corporations don’t pay taxes, people pay taxes, through lower wages in some cases, and lower returns to worker’s pensions and other saving in others. True, a lot of rich people own shares in U.S. corporations. But a lot of union pensions are invested in those companies, too. Collecting more taxes from U.S. corporations means less income to workers’ pensions, fewer jobs and lower pensions, too!

    Posted in Ongoing Priorities [slideshow_deploy]

    13 Responses to The Tax Punisher

    1. Marsha, Wheeling WV says:

      I believe tax punishment is illegal; this is a form of tyranny and I believe is not allowable under the constitution. I also believe this is a form of slavery and involuntary servitude.

      I think you could construe the 13th amendment would show that undue taxes cause servitude and/or slavery to the government, yes and a violation of the IV amendment unacceptable intrusion of personal privacy.

      Interesting thought; I will think about it more, a violation of the 13 amendment.

      I don't see under Article II where he this president has the right to threaten anyone or can dictate congressional oversight. I also, thought Congress is the only branch that can officiate and get money form sources? I understand these are proposals and we must be vigilant at stopping any tyrannical proposals. He took an oath to protect this country not to dismantle the country with a supreme Executive branch (a violation of the constitution).

      The men in his office (office of the President) have a threat every other day against someone. I think, he thinks he is doing the peoples work? Tyranny is not the peoples work.

      I know he knows it; He needs to review his powers under Article II of the Constitution. This is not Moscow. Congress needs to come out and censure him for over reaching powers of thought and admonition from the Executive branch. Or totally ignore him until he controls his dictatorial tendencies. Again we need to let our legislators know this that we are disturbed about his over reaching into areas that are not of his concern. He needs to read his job description. It isn’t domestic.

    2. John, Greenwich says:

      Reduced dividends are not higher taxes. By the definition used here increased pay for the CEO is an additional tax burden on Americans with incomes under $250k. It's this kind of bizarre reasoning that makes conservatives a laughing stock every day. Grow up.

    3. Sarah, Alaska says:

      I concur!

    4. Marsha, Wheeling Wes says:

      Follow on to my previous entry. The more I think about slavery and servitude and the 13th Amendment the more I think I am right about forcing or strong arming companies to open their books.

      Slave – one under the domination of a specified person or influence. One bound in servitude as an instrument of labor. From my prvious posting I referred to the 13th amendment.

      I am very concerned over the over reaching taxation of government and the Supersizing of the Executive branch and the intrusion into the legislative arena. I do not think this administration has thought through there verbage or they are power hungry and will try and intimidate. We are not a Banana Republic. Treatening people is illegal. As I said this is not Moscow or Chicago, ILL politics.

    5. Crafty b, Illinois says:

      Wow…. just… WOW!

      If this doesn't take the cake for "Misleading, Lying, Half-Truthing Blog of the Year", I don't know what does!

      He's "breaking a promise" with this? I guess you were just coincedentally not paying attention when, about a thousand times during the primary and general election campaigns Barack Obama stated very, very, VERY clearly that he intended to close these loopholes? I guess keeping an explicit, clearly spoken promise means breaking a foggy, twisted, illogical "promise" that you heard when he said (which he didn't) he'd not do anything that you could possibly turn into a rube-goldbergian, 5-degrees-of-separation "tax increase" on the little guy.

      And to say that he's somehow punishing companies that invest and produce overseas is nearly criminal in it's bold-faced deceptiveness. If a company is actually producing and/or investing overseas, then the US won't tax income from that investment or production.. that's ACTUAL INVESTMENT OR PRODUCTION… but when a company is funneling billions of dollars through a file cabinet in the Caymens without actually doing any value-added business there for the explicit purpose of laundering income, well, that's just tax evasion.

      You know, there's a building in the Caymans that's not much bigger than my house… It's the "headquarters" for 18,000 international corporations. Do you think that building is "investing in and producing" anything other than shelter from taxation?

      Why would you want companies that profit in America to evade taxes in America? Why do you disengenuously make our government out to be the big, bad guy when they simply expect companies doing business here to pay taxes here? Why should I pay more in taxes to our government for my pittance of a salary than a massive global corporation that makes billions in this country?

      Why do you hate America?

    6. Marsha, Wheeling WV says:

      John G. above dated May 4, 2009 says lowered dividends aren't taxes. Question his logic in what he said.

      I don't think the author of this article was talking about dividends being taxes. What businesses do is pass on the 23% or higher taxes that the government charges on them in the form of a higher cost of the product. The owners will make their profit no matter what (the preferred stock holders; not common stock holders or 401 K holders – you), if cost out ways profits then a lower dividend will be distributed minus future cost needs (the board makes that determination; not you the common stock holder and the first in the chain are the owners/preferred stock holders). So if the profits are affected by taxes then the common stock holders will be affected more greatly than a preferred shareholder. If the taxes make it unprofitable for a company to stay in business they will close down and then liquidate and you the common stock holder may get nothing and/or very little that is your risk. The owners will get the leftover money after the creditors have gotten their money.

      Government fees of any kind are taxes whether they come from state or federal legislative agencies. Fees in any name are taxes. Many different taxes exist: sales taxes, user taxes, corporate taxes or tariffs, income taxes, etc. A tax is a tax is a tax. Unless it is used for U.S. constitutional reason at the federal level then it should not be collected. The constitution has a very narrow scope of what the federal government has control over. All other issues belong to the states.

      Re-distribution is re-distribution. William Bradford understood that with the Mayflower compact and how badly it failed.

      Through out history you can point to tyranny. For those governments that promoted excessive taxation and tyranny end up in the ash heap of history along with those of power and so do their children's children.

      If these corporate tax proposals are approved you will see the loss of jobs in this country. Businesses in a capitalistic environment will make their profits if they feel they aren't they will move on and you will be out of work. With no viable work base you will live like the French with excessive costs, low incomes and excessive joblessness along with substandard medical care. And the Jon dons will come into town every so often and round people up and take incarcerate them for disruptive behavior without habeas corpus. I guess the French know best as a socialistic country.

    7. Don says:

      If taxing businesses at higher rates is okay, then why not tax at an even higher rate? Yay, everyone wins!

      Taxes are not collected in a vacuum. It will affect jobs, profits, productivity, etc. Corporations will leave for better tax and regulatory environments. It's already happening.

      You liberals don't get it and never will. When this era of socialization ends, you will just believe that Obama did something wrong, that it wasn't the agenda it was somehow a flaw in the implementation. Business leaders are only now realizing the magnitude of our folly.

    8. Marsha, Wheeling WV says:

      Crafty B. they will leave and you won't get the money anyway. Mark my words. Read your constitution, We are a Republic.

    9. Marsha, Wheeling WV says:

      J.D. Foster, thank you for keeping us abreast of what is going on. I agree with most of what you say. Tyranny is Tyranny. The President can't do anything without the legislator.

    10. Crafty b, Illinois says:

      Marsha, Wheeling WV writes:

      Crafty B. they will leave and you won’t get the money anyway. Mark my words. Read your constitution, We are a Republic.

      Marsha… they will leave where? Do you think GE can operate their business out of the Cayman Islands? I'd like to see the caymen islands consumer/finance/employee market support a GE. Do you think they can stop doing business in the US and survive?

      You act as though these businesses are doing our country a favor by their very existence.. you've got it backwards. Our country is doing these businesses a favor by OUR existence. Our country can survive without these businesses (not without the markets they serve… but the individual businesses). If any one of these companies "leaves", trust me, another will spring up to fill in the hole left in the market and the company that "left" will shrink or fail.

      They won't leave. This is the wealthiest country on the planet, and it's not going to stop being that way anytime soon. You act as though there's no benefit to companies being here. The highly educated, business-savvy workforce, consumer-driven economy, centers of finance, stability of monetary system, social stability, all things which our Federal Government either provides altogether or at least heavily subsidizes with, yes, TAX DOLLARS… all things these companies benefit from massively… but when it's time for them to pay their share, you want them to evade taxes with a sleazy, complex offshore shelter scheme?

      Corporations are treated legally as individuals in this country. And like individuals, they have a civic duty to uphold. And part of that civic duty is to pay their fair share of taxes to support the system which they depend on.

    11. Joseph Pitre, Oberli says:

      Want a chance to get rid of taxes? Ron Paul 2012

    12. Marsha, Wheeling WV says:

      Crafty B, largest markets in the world do not exist here. I think some of them have already moved read the news. A lot of our jobs are going to India. China is funding a lot of research, New Zeeland has gotten into space traffic. If you socialize everything we will not be in the drivers seat very longer. When more get handouts than work production stops and the country will decline. Review your history…. William Bradford proved socialism doesn't work in the 1600's, the kibbutz haven't worked, Europe with its drive to socialism has caused it to decline. Sharing the wealth doesn't work. Those who work want to keep what they make and that includes business owners who risk their wealth to start their business. Getting to the basics families shun dead beats in their own families.

      Taxes are only a civic duty for the limitations within the Constitution not for health, welfare, education, or what else are the whims of those who want to take from the working and give to those who think they are getting the raw end of the stick. I don't be grudge anyone who makes it big or has great wealth. Make your own wealth.

      Owners risk everything to start their businesses. The one with the greatest risk should also reap the greatest rewards.

      I have a problem with businesses receiving corporate welfare to stay alive not using legal shelters. I believe in a flat taxes anyway. Businesses do not pay taxes you do through high cost items.

      Most of your representatives have shares in these corporations and they recieve dividends. They are protecting themselves, beware anyone in Washington telling you they will fix it. They write laws to protect themselves.

    13. Pingback: The Hill’s Blog Briefing Room » DAY’S END ROUNDUP

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