In response to a follow-up comment on my "Sickening" post below, by db, I wanted to concur that the tax plan announced yesterday is both unimaginative and dumb. It is shocking that the big brains in the White House would even announce it.
http://online.wsj.com/article/SB124144387757983265.html
It feels like they just got together for five minutes, put something together and rushed it out to the podium to pump up the populous by sticking it to the evil corporations of America!
Again, I don't care which side of the political isle you sit on, but this is the kind of crap that will eventually make America a non-competitive, subservient, former super power. I am not just talking about the likelihood of the double taxation (foreign and domestic), yes Mr. President most companies based in places like Ireland and Bangalore actually do pay taxes there, driving US companies permanently overseas; but, about the lack of thought process and real caring for future generations in US policy making today.
Would it not be better to get at the root of the problem here, the mammoth and almost incomprehensible US Tax Code?
For example, if as Mr. Obama quips, he wants to keep jobs in Buffalo rather than Bangalore, why doesn't his team come up with a tax code that still provides needed revenue, but also incents businesses in Buffalo to keep jobs there. One way would be a modified version of the Fair Tax, where not just final goods are taxed with a Federal sales tax, but goods all along the manufacturing chain are taxed. Multinationals might want to keep operating units in the States as a result, due to no wage or income tax, and there would be more employed people buying things, and paying taxes. It would also capture tax revenue from the companies that are not doing business in a country but are merely there to avoid taxes (see BVI).
It is so obvious that having a US company taxed at the local level of its subsidiary (e.g. Ireland) and then back in the US is an unsustainable model for the competitiveness of US multinationals, that I can only assume the President's suggestion yesterday will be re-worked.
I came into this year an optimist, but with the nutty suggestions and assertions coming out of Washington recently, it is becoming more difficult to see the change we were promised. I prefer substance and real ideas than interest backed populism.
Let's find real answers! Please.
-2outof4
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unfortunately, cheap populism sells. here's the wsj's rebuttal to obama's plan, though I think they should have hit harder.
ReplyDeletehttp://online.wsj.com/article/SB124157636504090459.html
How about doing away with the corporate income tax altogether and eliminating the preference on capital gains and dividend income. This way there is no double tax to shareholders on that income and it simplifies the tax code by eliminating the chapter on corporate income tax.
ReplyDeleteWhile we're at it, I think that we should seriously consider eliminating all tax preferences from the code (e.g. morgage interest deduction, dependant deduction) and lower the nominal rates across the board.