US to have highest corporate tax rate in the world in 30 days

Discussion in 'Budget & Taxes' started by Hoosier8, Mar 1, 2012.

  1. Reiver

    Reiver Well-Known Member

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    You'd have to assume that labour demand isn't determined by the marginal revenue productivity of labour and that 'future growth' reflects a reduction in the investment hurdle (typically because of managerial preferences generating inefficient behaviour). Go ahead and try!
     
  2. BobL

    BobL New Member

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    So out of my list of sales taxes, rent, property taxes, unemployment insurance, labor and material costs (and income taxes), you agree that all are passed on to consumers except the portion of property taxes attributable to land value. I don't necessarily agree, but that's close enough for this forum.
     
  3. Reiver

    Reiver Well-Known Member

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    Read up on some economics and you'll realise your error. At the moment you're on a par with "in my opinion 2 plus 2 equals 5"
     
  4. Someone

    Someone New Member

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    There is no particular reason that it couldn't be. I have no doubt the US government could collect $2-3 trillion a year from a land value tax--the same as they do from income and payroll taxes. It would need to be a rather high tax, but it would be doable.
     
  5. Someone

    Someone New Member

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    You're not explaining the mechanism by which this happens. How does an increase in taxes change the price elasticity of the product? In what way does the tax burden on my profits increase a customer's willingness to pay higher prices? It doesn't make sense. There will always be a competitor willing to pay the additional taxes out of his profit margin in order to take my business. Competition will still keep me from being able to pass on those costs to the customer. It doesn't even make theoretical sense. The only scenario where increased taxation could actually be passed onto customers directly is a monopoly or cartel situation--which the government is supposed to try to prevent.

    I understand that you feel that it would happen, but you're not explaining a proposed mechanism that would override competition. The only potential explanation is that you feel that all businesses set prices according to a cost plus model--which itself has significant problems for traditional market-based economic analysis. If most pricing occurs by cost-plus pricing, we can throw most of what we know about economics out the window. Markets don't work, supply and demand are figments of our imagination, every government policy that we've pursued for the last 150 years is a waste of time, and the entire conservative political movement ought to just go back to the drawing board when it comes to their economic policy.

    Among other things if cost-plus is the normal mode of pricing there is no calculation problem and command economies would work just fine.

    That makes absolutely no sense. Why on earth would I drop out of a profitable business just because the government raises taxes on my profits from 27% to, say, 33%? That's a case of some seriously sour grapes there--because I'd be giving up 67% of the profit over a 5% difference in the tax rate. What's the incentive there for me to get out? I'm still making money, albeit not as much as I was before. I've pretty much got no choice but to eat that cost, or collude with my competitors and hope they abide by the agreement.

    That might happen for very marginal businesses, but any business that close to the edge of "something worth pursuing" probably isn't going to survive anyway.

    That doesn't make any sense either. If the goal is to make more money in an absolute sense, the correct response to an increase in taxes on profits is to increase production, not decrease production. It would especially make sense to divert additional capital into business expenses and wages, since those are tax deductible. Divesting capital as profits would be the last thing you'd want to do when taxes on profits are high.

    That's something I think that conservatives don't really understand--if taxes on profits are high, you want to keep investing in the company and expanding, not contract the business and divest profits.

    Which a sane country would prevent through protectionist trade policy (free trade only with countries who adhere to US labor, wage, and environmental standards) and the criminalization of capital flight. You know, like most countries do.

    Only if you ignore the obvious and take conservative pundits at their word.
     
  6. Reiver

    Reiver Well-Known Member

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    Yes there is! The LVT stuff became out-of-date yonks ago. Blaug (2000, Henry George: rebel with a cause, European Journal of the History of Economic Thought, Vol. 7, pp 270-288 ) sums it up:

    Georgism was effectively killed off by the dramatic fall in rental shares in both the USA and the UK from something like 15 per cent in the 1870s to 6 per cent in the 1960s (Andelson 1979: 88 ). Even when we include the imputed rent of owner-occupiers and allow for the stimulating effect of the withdrawal of non-land taxes, we still get no higher than 20 per cent of national income in modern times (Tideman 1994: 18, Hudson et al. 1995: 150–51). In short, whatever the other merits of LVT, the ‘all’-devouring rent thesis’ is now as dead as a doornail…[T]he growth of land rentals in a capitalist economy never was a convincing explanation of the persistence of poverty despite growing affluence and it became an ever less convincing explanation as manufacturing expanded and agriculture shrank. Land speculation never was the root cause of business fluctuations and LVT would dampen but never eliminate periodic booms and slumps; the revenue that LVT, fully and properly applied, was capable of raising may at one time have been sufficient for the expenses of government but ever since 1930 the very notion of LVT as a single tax has seemed almost laughable
     
  7. Someone

    Someone New Member

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    That's way, way better than we get with an income + payroll tax; a mere 13%. Your own source suggests that we could replace income and payroll taxes with a land value tax. Thank you for this admission.
     
  8. Reiver

    Reiver Well-Known Member

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    No it doesn't. It informs us that the single tax guff is old hatted to the extreme. Bit obvious really
     
  9. Someone

    Someone New Member

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    How so? 20% recovered would be better than the 13% we're presently recovering.
     
  10. Reiver

    Reiver Well-Known Member

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    The evidence is from a source that demonstrates why the Georgists have failed. They've based their position on a tax 'hope' that is based on a long gone economy
     
  11. Someone

    Someone New Member

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    By showing that a land value tax would recover more from the economy than we presently recover through income and payroll taxes with less of a distorting effect on the economy? How is that demonstrating failure?
     
  12. Reiver

    Reiver Well-Known Member

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    Tax systems would, by definition, involve multiple taxes (making their approach a complete load of hogwash reliant on hammering home owners). To understand the effects of tax we therefore have to refer to those multiple taxes, making Georgist's child-like in their old fashioned prattle (and its inconsistency with modern economic analysis)
     
  13. geofree

    geofree Active Member

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    The land value tax has nothing to do with “hammering home owners”. The land value tax makes homeownership more affordable, as it reduces the cost of purchase, transactions and financing. Land rent has to be paid regardless, why would it be better to pay land rent and taxes, when you could just pay land rent to the government and pay no taxes? Why would you pay $2 for something when you can have the same thing for $1? Your mathematical abilities are seriously lacking … you're certainly no Einstein.

    "Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice. Every line is written as if for our generation." — Albert Einstein (1879 - 1955)
     
  14. geofree

    geofree Active Member

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    No I don’t agree. I was just pointing out that taxes on economic rents (such as land value taxes) cannot be passed to consumers. Other taxes are susceptible to burden shifting, either onto producers or consumers depending on the elasticity of supply and demand.

    However, for the average wage earner what does it matter if the tax burden lands on consumption or production? Either way they are left with less purchasing power, and that is what really matters. Just so you know, I don’t support income or sales taxes.
     
  15. DeathStar

    DeathStar Banned

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    Filler post
     
  16. DeathStar

    DeathStar Banned

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    Corporate taxation should not exist. The only regulation placed on businesses should be ones on Big Land Rent that force them to be affordable to most people.
     
  17. Reiver

    Reiver Well-Known Member

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    We've already seen Blaug refer to the realiity: land value taxes cannot be used within a Georgist 'single tax' context. The folk peddling that nonsense lost their relevance by the early 20th century. And its certainly then about hammering home owners. Despite the reality of that tenure (I.e. Its about income smoothing and ensuring self-insurance protection from the risk of old age poverty) the tax would have to attack implicit rents. Just inconvenient reality for you!
     
  18. Someone

    Someone New Member

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    I believe we're talking about replacing specifically the income and payroll taxes with an LVT, not the various excise taxes. And by your own data, an LVT would perform at least as well as the income and payroll taxes; recovering at least as large a portion of the national income with less economic distortion. That seems like a good idea to me then, why does it not seem like a good idea to you?

    Also, from what I understand of an LVT, it is a tax assessed against the land only, not the improvements built upon it, so it would hit "home-owners" no harder than anyone else who owns land.

    Pretty sure that I, at least, am discussing the theoretical possibility of replacing just income and payroll taxes with an LVT, not all taxes.
     
  19. BobL

    BobL New Member

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    We finally agree on something !!

    You don't support corporate income taxes? Do I understand your statement, or are you referring to personal income taxes?
     
  20. BobL

    BobL New Member

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    I cannot agree that "There will always be a competitor willing to pay the additional taxes out of his profit margin in order to take my business."

    When corporations report earnings, it is after tax (used for P/E, etc.) If a corporation makes $1.00 and pays a 35% tax, the after tax return is $.65. If the tax rate doubles to 70 %, the after tax return if nothing changes would be $.30. Thus the return on investment (ROI) just decreased.

    A lower ROI keeps competitors from entering the market and reduces pressure on price increases. Prices will increase until an equilibrium is reached when competitors can again achieve a reasonable after tax ROI. It doesn’t work any other way.

    A corporate tax increase may not be reflected in prices the next day, but it will eventually.
     
  21. Someone

    Someone New Member

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    Ok, what's his option? Close the doors and collect $.00 on his investment? Because he can try raising prices, but some young whippersnapper will realize that $.30 is better than $.00 and that he can take business from the overpaid moron by accepting $.30 rather than (whatever you want to assume the old business's profits become).

    An across-the-board reduction in profits through a change in the base level of tax won't have such an effect. If the tax rate was 70% on one industry but 35% on everyone else, then it might trigger such a reaction, but certainly not if the universal tax rate for all business was 70%. That would become the new norm and people would compete hard for that $.30/dollar.

    You are fundamentally, basically ignoring microeconomics and the psychology involved here. Talking about ROI is pointless in your scenario because all businesses would have the same burden. It's not like you could get out of widget manufacturing and get into humding manufacturing in order to avoid that 70% tax. All businesspeople would adjust their perspectives accordingly and compete hard for that $.30/dollar.

    You are attempting to extend an argument against uneven application of the tax code to an argument about even application of the tax code, even if the argument itself doesn't make any sense. You can't just repeat the same boilerplate arguments even when the circumstances change. Increase in the base level of taxation is different from increasing or decreasing taxes for one particular subsection of the economy. If you want to increase taxes on just one industry, then yes it will have the impact you describe. When there is no "shelter" from the tax increase, however, you have either the choice of biting the bullet and continuing to operate, or quitting the market entirely. Because competition won't dry up just because the tax is higher, and newcomers will be willing to take a lower margin just to grab your business and establish themselves.

    It won't be, because someone will still realize that $.30 is better than $.00.
     
  22. Reiver

    Reiver Well-Known Member

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    Its a simple point: the idea of a single land tax is cretinous (even if we try and downplay the various excise taxes). We have to refer to tax systems involving multiple taxes. That will naturally include income taxes; which can be used to minimise problems such as unemployment and poverty traps (if used within a progressive framework)

    My source demonstrates why the Georgists have failed to influence the debate. They start from a premise of underestimating the need for tax systems which naturally will include non-land elements. Not surprisingly they have been sidelined (ignoring the internet wannabes of course) to specific issues, such as the use of taxation within the context of environmental policy.

    To be a sufficient 'earner' it would have to attack implicit rents. There is no way around that.

    Not possible or desirable! The simple truth is that land tax can be desirable but we have no need to refer to Georgism. We just have optimal taxation analysis which would need reference to how taxes interact. Neoclassical economics is up to such mundane tasks
     
  23. Roy L

    Roy L Banned

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    Yes, of course it does, Reiver. Now you are even baldly lying about what your own source plainly stated!
    <yawn> You blather and blather and blather with your supercilious anti-LVT hate propaganda campaign, but one thing you NEVER do is refute any of the relevant facts.
     
  24. Roy L

    Roy L Banned

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    No, it speculates. It does not demonstrate.
    No, you are lying again, Reiver, as usual. It is very common for lying anti-justice fools to claim that LVT is dependent on an agrarian economy. But even the most cursory reading of Henry George shows he is far more concerned with the community-created rent of thickly populated urban and suburban land.
     
  25. Roy L

    Roy L Banned

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    Nope. Any single tax is also a tax system. The Dutch single tax on transactions, for example, was a tax system. You just always have to lie about everything that has any connection with land rent recovery. ALWAYS.
    No, you are just telling stupid lies again, Reiver. LVT would reduce the average tax burden on working homeowners who owned only the land under their dwellings. The people it would "hammer" are those who are hoarding valuable vacant and under-used land for speculative gain.

    You just always have to lie about the fact that in the USA, the great majority of all land value is corporate-owned. You always have to lie about the fact that in the UK, the great majority of all land value is owned by a tiny, wealthy, landed gentry and hereditary aristocracy. In other countries, the great majority of all land value is owned by the top few percent of landowners and corporations. That's who LVT would "hammer." And they very much deserve to be hammered. You just always have to lie about that.
    Stupid garbage refuted above.
     

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