In his weekly address Saturday, Obama reiterated his call for Congress to pass legislation ending the “unpatriotic tax loophole” that allows some companies to pay fewer taxes.
“Even as corporate profits are as high as ever, a small but growing group of big corporations are fleeing the country to get out of paying taxes,” Obama said. “They’re keeping most of their business inside the United States, but they’re basically renouncing their citizenship and declaring that they’re based somewhere else, just to avoid paying their fair share.”
Even though “the vast majority” of U.S. companies pay what they owe, he added, some are able to “cherrypick” which taxes they pay by swallowing up a smaller foreign company and shifting their official address overseas.
The process is “totally legal” Obama said, but also “totally wrong.”
http://thehill.com/policy/technology/213414-obama-hits-unpatriotic-tax-loophole
Both the right issues and a great campaign issue for November.
Walgreens is about to move themselves overseas.
We have all been paying our taxes so we can have courts that enforce contracts making business deals possible, roads so supplies and customers can get to stores, an FDA so Walgreens products are safe to buy, an educated populace so there is a market to buy what Walgreens sells, and police and fire departments so that Walgreens can do business in safety.
Of course, Jeff Jacoby sympathizes with this weaseling out by Walgreens. And as long as Republicans control the House of Representatives, the tax laws that allow this desertion will remain law. I bet Richard Tisei, if elected, will support this travesty because he’s a conservative. With conservative ideology, “money, money, money” trumps “honor, duty, country.”
“That makes then bad Methodists and bad Americans”- this from a Chicago girl and pastors daughter who worked there for five years and used to respect the Walgreen family.
Jacoby and the right will blame our “incredibly high corporate tax rate” forgetting that it was higher under Reagan and Ike than it ever was under Clinton or Obama.
As usual, that with all the deductions and tricks, no big company pays an effective rate anywhere close to the published rate.
or even a negative tax.
As is usual with reports like this, there are a ton of energy companies on the list in this one.
We’ve all heard this said “Hey, it’s nothing personal, it’s business” and maybe we’ve used it ourselves. We hear it when someone gets laid off, or when a person’s retirement savings gets wiped out by the investment market. We use the phrase when business inflicts pain on others. We use it to excuse business from the consequences of this behavior, as if to explain, “It never intended to hurt you, it just did what it has to do. It only thinks of itself”. What we need to remind ourselves is the actual meaning of the phrase. Nothing personal means nothing having the qualities of a person rather than a thing or abstraction. And yet we accept that businesses can be “personal” when it suits them. We allow business to contribute to our election process, to lobby for our tax code, to decide what level of health care we flesh & blood humans can receive.
Walgreen’s, Walmart, Hobby Lobby, Halliburton are the monsters that we have created. They are the monsters that we can put back in their cages. We just have to stop feeding them for now.
…just before they send someone to the bottom of the East River.
I think profits made here should be taxed here regardless of where a PO Box might be.
AbbVie, the pharma part of the former Abbott Laboratories, is attempting to buy Shire so that they can call England home. AbbVie has a major facility in Worcester.
http://dealbook.nytimes.com/2014/07/24/to-woo-shire-abbvie-trod-cautiously-in-takeover-bid/
Why should a foreign corporation have the same rights as a domestic corporation? Why can’t we treat them as immigrants, holding them to different standards? Why can’t we make a rule that says “sorry, if you do business here, you have to pay higher taxes than US-based corporations”?
I know that’s an incomplete and unsatisfactory answer, but it is a relatively accurate extremely short answer.
and removing it in as many places as possible seems to have helped everyone in the global economy.
It has helped millions of the very poor, maybe. It has helped thousands of the very rich, certainly. Has it helped the American middle class? Unclear.
Not sure how old you are but there used (70’s/80’s) to be four categories:
1. Developed nations (at that time W. Europe, US & Canada, Japan)
2. Developing nations (All of Latin America, plus the Asian Tigers)
3. Undeveloped nations (Africa, most of Asia)
4. Communist countries
World trade has lifted all of those nations to where we have a few countries that are undeveloped, and standards are much much higher in the others mentioned. The plight on American workers is a complex problem, and limiting competition would not have resulted in the US economy we have today, and the plight of workers abroad would be far worse.
American workers have to see their situation go down, down, down as the situation of wealthy American investors goes up, up, up because this is good for people in other nations. I’d be quite pleased not to have “the US economy we have today.”
Nice.
I suppose you want to close the borders to immigrants as well. That also would help American workers.
We all (Americans) were better off with half the world Communist. The environment was as well. You must have been disappointed with the changes in China and Russia.
Let’s not forget a corrupt and closed India. Also a big plus for the US.
Workers in this country always have that concept thrown back at them, that they have to see their standards of living go down so that the world can improve, and if they don’t accept this, they are bad people.
Meanwhile there are about 85 people who have more wealth than 3 billion of others on the planet. But I’m supposed to feel guilty for living a middle-class lifestyle?
We are seeing a relatively rapid elimination of the middle class in exchange for others across the globe to get rapidly wealthier in a relative sense. It doesn’t need to be so fast as to hurt people in the US – given that the US middle class is actually fueling this via their consumer power.
Helping “develop” China and Vietnam for the benefit of their poor (many of whom didn’t WANT to leave the countryside) was the paramount concern and massive corporate profits just an unfortunate side effect. The Romneys and Waltons are the great humanitarians here. I’m a heartless bastard. Got it.
Sorry the world economy doesn’t operate to your specifications.
I’m the guy holding up the two big middle fingers. What’s the big plan? Retire before all this economic justice hits your industry? Tell the kids to play the Powerball.
Everyone’s smug and exempt until they’re not.
When I was unemployed I used to hate everyone with a job.
I considered turning to crime because I thought it was justified.
If we had a good rebel movement I would have taken to the hills and committed terror on capitalists.
But instead I went to grad school and got a better occupation.
I guess as long as the global economy sends everyone to grad school, we’ll be fine.
No educated people scrounging for low-wage jobs here.
Thank heavens Monsieur Merrimack is so much more capable than all those people at Adding Value.
Refinancing my mortgage at 3%.
Borrow plenty of money when I need it from Chase at 1% interest.
Stock market (and therefore my IRA’s and 401k) up dramatically.
What can I say? I used to have nothing (actually less than nothing- negative net worth) and now I have something. I’m an orphan and inherited none of it. Should I feel guilty? Should I have stayed kicking along at the bottom and complained about foreign competition and “the man” keeping me down?
You’re one hell of a bootstrapper. The entire global economic situation is just and moral because you’ve got your cheap re-fi.
An inflation-adjusted median household income that’s down 7.3% from 2000 to 2012, as total income is up, is just fine. Neither did the people in the second quintile; their share is down 5%. Not a problem that productivity and median income were intimately linked from 1947 to the late 1970s, but now the median income has barely budged in 35 years although productivity has continued upward at the same trajectory. No problem that the share of national income going to the bottom three-fifths has gone down about 20% over 35 years. It’s OK because they none of those people worked hard enough, they didn’t get enough education, they weren’t enough like you, blah blah blah.
The point, if you care to get it, is not about you not getting the things you have. It’s that it’s shitty to find oneself – for now – in an ever-smaller group of Americans in that position and be just fine with it.
I’ve been joined by millions of people who didn’t have a chance before. Sorry your xenophobia prevents you from enjoying their success.
It’s a beautiful thing so long as it doesn’t reach your recently financed house.
First-rate hypocrite.
…Which is probably why more people don’t read him.
He, of course, was speaking of racial inequality… but the point remains with respect to economic inequality.
… If I forgot to add the citation, does that make it an ‘over cite’??
Anyways, “Nobody Knows My Name”, James Baldwin.
It shows up like clockwork, whenever there’s a disagreement about inequity in the economy. Because of course anyone whose circumstances prevent them from doing what merrymacguy did don’t deserve to prosper, because they’re morally deficient.
You two dream of some US workers paradise that vaguely resembles a flawed vision of 1960s or 1970s America and that was not a great time for the rest of the world. Global capitalism gave great opportunity worldwide and it also works pretty well here for some, and not just the privileged. Sorry that is not clear to you. Also note that restricting opportunity for women and minorities was part of the middle class white male story for many years.
I only point out the refinanced home and IRAs because this is the world this President created and this is the opportunity it affords those with ability to take advantage of it. That’s why he did it. If you don’t like it you should be bashing him, not rich people.
Sorry, but it is the excessive concentration of wealth in “rich people” that is the cause of today’s malaise.
It’s not hard to figure who the “middle class” is, statistically. Take a wealth distribution and choose, say, the middle three quintiles. Then look at the lifestyle for that middle class today.
You’ll find that it sucks in comparison to the life those same middle three quintiles lived in the 1950s, 1960s, and 1970s — particularly for those who live in a major metropolitan area with higher housing and transportation costs.
It sucks because a huge portion of wealth has been sucked out of the middle and moved to the far-right tail of the distribution. That happened because of failed GOP economics — canards like “pulling ourselves up from our bootstraps”. The GOP lied about “small government”, lied about “Tax-and-spend Democrats” (the GOP, instead, borrowed and spent), lied about “Reaganomics”, and lied while they sucked the life out of the thriving consumer economy America was until Ronald Reagan.
You tell us we should not bash “rich people”. Those who face the facts rightly hold “rich people” responsible for the lion’s share of today’s lackluster economy.
You seem to think I’m saying I want to go back to the 1960s or 1970s. I don’t. I want a 2014 and beyond with a less stratified distribution of income and wealth, something that happened to exist in the 1960s and 1970s. We’ve lost it here. Other nations haven’t, or at least not as badly.
There is no inherent connection between “restricting opportunity for women and minorities” and a reasonable distribution of income. In fact, your point is wrong. African-American income followed the same upward trajectory as white income, and actually grew faster, from the mid-1940s into the 1970s, with much less growth (in both absolute and relative turns) in this unhappy era, despite anti-discrimination laws.
You appear to be trying to score partisan points with your ObamaWorld vision. No sale, or rather partial sale. Obama didn’t create this world. It’s been happening for at least 35 years. However, like Clinton, he hasn’t done much of anything to stop or change it. SomervilleTom’s comment goes into the reasons. In any event, far from cheerleading for Obama, I consider him a major failure for precisely this reason. And saying the economy should be organized differently is not “bashing rich people.” It’s saying we, as a society, would be better off with different rules.
That global capitalism has “worked pretty well” for people here beyond the privileged definitely is not clear to me. In fact, the opposite is clear to me. After a century and a half of mostly uninterrupted upward movement in real income for all quintiles of U.S. workers, the “global capitalism” era has seen the real median household income for each of the bottom four quintiles go down since the late 1970s. That’s despite a sharp rise in total real income for the nation, in productivity, in hours worked, and in educational attainment. Working harder and getting less. Yeah, that’s a great deal.
Slow month for blogging apparently
are contradictory statements.
I completely disagree with your conclusions and I would add that the causes of income inequality and the effects of global economic trends are debated by Nobel laureates without firm conclusions.
My general point here is that global taxation issues are not easily solved and the number of companies headquartered in the US will head towards zero if it is not figured out. All I here is a lot of rhetoric that sounds more like protectionism, which never worked in the past and in general (my opinion) is bad.
You can keep your simplistic world and historical views.
As far as the President is concerned he has accelerated the stock market and borrowing with the low interest rates coming from the Fed. He should have nominated someone besides Yellen if he wanted to change that. This policy stimulates stock buybacks and takeovers rather than business investment and more jobs.
I see no contradiction in the two statements you quoted. Wealth concentration, as measured by instruments such as the GINI coefficient (imperfect, but good enough for this discussion) has been increasing since the Reagan era. As it goes higher and higher, its impacts become more and more pronounced.
President Obama could have emulated FDR (the last President faced with a similar crisis) and addressed this core cause of our long-term malaise, just as FDR did. President Obama instead chose to placate his own 1% sponsors.
You’ve heard nothing “protectionist” from me. Many of our first-world trading partners use tax policy to keep the net GINI coefficient within reasonable bounds within their respective national economies — and do so without onerous tariffs or “protectionist” policies.
Fiddling with the stock market is not the issue, as far as I know it neither hurts nor helps. More helpful would be some mix of the following:
– Dramatic increase in the federal estate/gift tax, above some high floor ($5M, for example).
– Dramatic increase in the short- and long-term federal capital gains rate, above some high floor ($1M, for example).
– Eliminate federal tax benefits for offshore wealth (both corporate and personal).
– Restore the highest marginal federal income tax rate to 70%, for incomes above some high floor ($750K joint/$500K single, for example).
– Cap deductions to some maximum, such that only the highest bracket taxpayers are affected.
– Remove the FICA ceiling, so that it applies to all income.
I’m not sure whose “simplistic world and historical views” you refer to. The fact that economic experts (even Nobel laureates) debate “income inequality and the effects of global economic trends” is not, in my view, a justification for paralysis. Nor is it a justification for continuing to impose an essentially religious economic dogma on the US, in the face of overwhelming evidence that the dogma is failed.
That same debate was also occurring when Ronald Reagan started talking about “Reaganomics”, “Supply-side Economics”, the “Laffer Curve”, and the rest of the GOP lies. The GOP foisted those upon us without the benefit of approval from those Nobel Laureates (in fact, my recollection is that the Nobel laureates of the day largely dismissed and ridiculed the proposals of the incoming Reagan administration). We tried the experiment, and the data is in.
The GOP economic dogma failed. The patient nearly died, in fact, and is now on extended life-support.
The wealth GINI coefficient is a reasonably objective measure of wealth concentration. The income GINI coefficient is a similarly objective measure of income concentration. There is no reality-based debate about the difference between those two measures in the US and in our first-world allies and counterparts (presumably we have little desire to emulate the economy of South Africa). The US wealth GINI coefficient, particular, is significantly larger than that of our peers.
The bottom line is that in my view you advocate continuing the failed policies that have created this issue, and you cite the same failed (and essentially religious) arguments to support those policies (“bootstraps”, indeed. What’s next, “job creation”?).
Don’t you understand? Our worldviews heretofore have been simplistic. Totally unlike the wisdom that “protectionism…is bad.” The Nobel prize once went to a libertarian guy who said markets are perfect. So obviously we can’t do anything. We can’t, as a people, take action. An Austrian-school economist might disagree with the action. If we must err to one side or the other, we must err on the side of the current policies.
I’ve also learned that saying that your statement that concentration of wealth is a problem and my statement that it’s been going on for 35 years are contradictory after all. Really. The major changes in tax, regulatory, and trade policy and the erosion of the union rate here (but, somehow, not in Canada or Germany) since 1980 have nothing to do with it.
I’ve further learned that low interest rates are the only cause of stock buybacks. It’s definitely not the case that they both share the same cause: pessimism about the potential for growth in the consumer economy due to low household demand. And buybacks have nothing to do with companies sitting on record levels of cash instead of doing anything productive with it. Yellen should raise rates even though doing so always has slowed, not increased, economic growth.
We can’t possibly tax corporations. They’ll just move their official HQ to some tax shelter while keeping all of their executives here. They get to profit from the markets and legal infrastructure here, and even practice their religion here, but if we tax ’em, it’s off to incorporate in the Carribbean. And there’s nothing we could, or should, do about that. We can’t tax rich individuals either. Who cares what every other developed country does? This is America. Everyone else should borrow at 8% to get more education and hope there’s a job waiting afterward. If there’s not they weren’t virtuous enough and they should STFU.
The way our economy is arranged today is inevitable. And, moreover, it’s awesome: Merrimackguy hasn’t been screwed yet and even got a low-interest loan.
I’ve seen the light. Why can’t you?
I am not entirely sure that once can really affect GINI coefficient with tax policy– probably because I live somewhere off to your right– but you are right that these are different policy proposals than the denunciation of free trade above, which appeared to advocate for tariffs and import restrictions.
I do not think the latter would have changed anything other than to make people poorer– if you can make a T-shirt in Shengzen for a tenth of the cost of making the same shirt in the US, the shirts will not be made in the US. If tariffs and import restrictions try to force Americans to buy shirts made in the US, then most shirts in the world would be made in Shengzen, and Americans would have to make do with low-quality, expensive shirts.
I am likewise not convinced that tax policy from and after 1980 is the sole cause of the inequality that is the problem. The world of equality you are nostalgic for existed only for a decade or two, post-war, when the US was the only functioning industrial power on the planet. By the 60s, when the rest of the world finally began to have infrastructure again, things became steadily less marvelous. Before jobs were lost to outsourcing to China, jobs were lost to German and Japanese competition. The heyday of Detroit and Pittsburgh ended well before Reagan.
The last few decades has not been a disaster for the American manufacturing industry, which has grown, but has been one for the manufacturing workforce. That is because what once required 10,000 unionized factory workers a full week to produce can now be produced in a day by a dozen skilled technicians. I suppose one can structure tax policy to favor labor over capital, which is in essence what you propose (at least in part), but I am not particularly sure that any government can effectively legislate against the tide of economic forces as great as technology and automation.
In other words, I think that the fundamental problem isn’t so much that rich people don’t pay enough taxes, but that huge numbers of high-paying manufacturing jobs simply no longer exist– rather in the same way that the huge numbers of stabling and livery jobs ceased to exist a century ago. Tax policy won’t replace them.
For awhile, cheap debt allowed the construction industry to replace them, which was peachy until the bubble burst.
I think you are more fact based and less polemical than MG has been on this subject. That said, I refer you to the German mixed economy and ask why can’t we have that here? I think they made a conscious choice to embrace ordoliberalism rather than neoliberalism, and it’s why their economy and society are more stable. We transitioned from Fordism to neoliberalism and are still paying the price.
I won’t pretend we can re-cork the bottle of globalization, I honestly think we can’t. But , we can mitigate the neoliberal order through better regulation, tighter control of corporate profits, cooperative ownership, white collar and low scale service unionization, and a basic income. We can also give every new trade agreement far more scrutiny than we gave NAFTA.
The German economy is based on massive export surpluses. I am not sure that the model would scale up to the size of the US economy, because every surplus has to have a deficit somewhere.
As it stands, the stink side of the marvelous German economy falls on the rest of Europe, which must have too-high interest rates because of Germany.
But this is BMG and I have to use grenades to fight against waves of anti-capitalists.
I can’t afford grad school, and my BA from a top 5 ranked US News school has netted me an average of 40k a year. I remember some arrogant libertarian on the debate team callously suggest that workers just ‘need to learn another skillset’ if they get outsourced. My uncle just got his pink slip, and he isn’t a Detroit autoworker but a Salem State Educated IT instructor. His wife had to go back to work, he can’t put all his kids through school, he had to sell his house and downsize, and he is arguably just going from the upper middle class to the middle class. My other uncle has a teaching degree and can’t find work, and the ones who are carpenters would be SOL without a union. Thank God my parents get Social Security or they’d have had to work till they died, no nice pensions for them.
And the sad thing is, I did hear some talk blaming illegals or other countries for our problems, that’s how big corporations keep getting to win these fights. These jerks don’t even pay taxes, and insist that we have to give up what little safety net we have left since it is unsustainable. Thank God for unemployment and for Obamacare for me when I was on hard times this time last year, thank God for SS and Medicare for my parents.
Go ahead though, keep acting like Gekko, the last Gekko you nominated lost by nearly 4 million votes. Bring it on!
It’s a sad day when people criticize others for raising themselves up on their own merit. As I mentioned above, when I was probably in a worse spot than you, I was ready to join the revolution. Just had a low probability of success so I took a different path.
PS Enjoy the one off anecdotes. Both my parents died when I was young, in the same year. What’s the point? Not sure but I thought I’d throw that out there.
Started the one off anecdote that proved the rule. Also, if you came out in the go go 90s or even the first half of the 2000s you entered a far better market than me. I am sorry about your parents and sorry I told you to screw off, you are right to expect better than that.
The environment is doing better now? The industrialization of China has been good for it? Shipping goods all the way around the globe is good for the environment?
If you think this is the moral way to go, why don’t you sign up to make a grand a year? Or do you just have special skills that justify your income?
but I won’t.
No sense arguing with global economy deniers.
Critics. But who’s counting?
Strong social safety net,strong manufacturing base, strong exports, strong protectionist policies, strong unionization, and what do you know-a better economy than the US. Germany is the anchor that is keeping Europe afloat. Or Canada, which still has strict banking laws, higher unionization, more trade barriers, and a strong safety net. America is a harder place to succeed because we have chosen to reward excess greed at the expense of the common good.
We have been doing it for a long time, and once all the big corporations flee to some safe haven overseas, the whole country will look like a giant Detroit. Once China overtakes us, where do we think the vulture capitalists will go? What loyalty do they have here? Once this market dries up, another one can take it’s place. Once our workers are disposed of, they can find more somewhere else. I agree with the neocons and neoliberals on one thing-we choose decline. I just happen to think we choose it by following their advice.
Isn’t Germany the anchor of the European Union, an entity specifically designed to break down economic barriers? I’m not an expert, but I have to thank merrimackguy for bringing the other argument which I had not heard for a while, though I distinctly remember Al Gore mopping the floor with Ross Perot on Larry King with this topic. We need to be vigilant of course, but in principle free trade ultimately benefits everyone and is frankly an acknowledgement that our world is smaller and movement more convenient now than in former times. There’s absolutely nothing that says free trade and strong labor or environmental protections have to be mutually exclusive.
Apparently they are the third largest exporter in the world, and their balance of trade is so favorable that the Obama administration is critiquing it for undermining the EU.
There was a time when candidates for major office in both parties were committed to American manufacturing, a favorable balance of trade, and willing to take on the Japanese in the 80s and the Chinese in the 90s. Those days are gone.
And really, Perot was largely right about NAFTA. It failed to produce a Mexican middle class, failed to stem Mexican immigration to the US, and largely created a situation where American built parts for American market goods were built by Mexican labor. A situation benefiting American management at the expense of workers on both sides. It was tremendously beneficial for Canada, but has been largely a mixed bag for the US, according to this quick summary.
While Perot’s dire predictions may have been overstated, the benefits that Gore promised have not materialized at all, save for the benefits to American corporations and their shareholders, and perhaps, to the overall Canadian economy.
Also very limited path to citizenship. Are you advocating that here?
Latent Tea Party tendencies apparently.
and they outlawed the Nazi Party. Surely we’re not advocating that here! Blatant logic failure in evidence.
Thanks for clarifying; so then the route to go might be to discuss reworking those trade agreements since things have changed.
At a time, it may have made sense for us to have “free” trade with Switzerland, allowing US companies to sell in Switzerland and Swiss companies to sell in the US. But the game has certainly changed when the rules allow US companies to declare themselves as Swiss companies to escape taxes on their US sales.
Eliminate the corporate income tax entirely, and instead tax the income of individuals when the corporation makes dividend distributions.
I’ve long thought fines should be dealt with that way, punishing the individuals rather than the corporate person. Perhaps taxes could be done at a similar rate.
On its face, that seems like a reasonable thing to do – we would need to explore the rationale and reasons for a corporate tax to begin with.
I think there are a few drawbacks to doing things that way:
1) On a state level, this might change the distribution of taxation. If the corporation is based in Massachusetts but the owners live in Florida, then wouldn’t Florida collect the dividend taxes even though Massachusetts provides the infrastructure for the corporation to operate? You could try and make the tax paid to the corporation’s state, but it would be very unpopular to force stock owners to file returns in any state which houses a corporation they own a share of.
2) I am under the impression that ordinary dividends are already taxable at the shareholder’s rate, and that in response to this, corporations rarely pay them anymore, instead choosing to do stock buybacks which inflate the share prices. The owners then sell their more valuable shares and pay a lower capital gains rate.
3) It makes sense for the profits from corporations to be taxed at an even higher rate than ordinary income (in exchange for the limited liability and other benefits they receive), but many people can’t grasp that concept, and they have also latched onto the idea that passive income should be taxed passively. In other words, once corporate taxes are eliminated, this allows people like Romney to bring back their “don’t tax the job creators” cry, and the amount of tax collected from the wealthy would drop.