Stephen Green (aka Vodkapundit):
We’re Number Two!
The US might have the highest corporate taxes in the developed world, but if you include all the world’s nations we drop all the way down to #2.
That’s right: The UAE has a higher corporate tax rate than the US. And only the UAE.
Although Illinois, California, and New York are all helping us to catch up!
But how bad is it, really? Take Apple. To date, Apple has no debt. Zero. And a whole lot of black: About $145 billion in the bank. The problem is, most of that is in foreign banks, because Apple makes lots of money overseas. And it has already paid taxes on those profits to the governments of China, Mexico, Germany, wherever. That money has been taxed already.
But Uncle Sam does things a little bit differently. Uncle Sam taxes the money you make overseas, just as soon as you repatriate it. Even though that money has already been taxed.
Maybe you’ll think I’m crazy for saying this, but I don’t even like to get taxed just one time, much less twice.
So Apple, the company with record profits and zero debt, is engineering the largest corporate bond sale in history. Apple is about to go $17,000,000,000 into debt, even though they have many times that sitting in foreign banks.
What they’re doing in essence is borrowing against their overseas holdings to finance its capital rewards program here in the United States.
Because it’s a helluva lot cheaper to pay investors 5%, give or take, than it is to pay Uncle Sam 35%.
Now any other country — certainly every sane country — would shake Tim Cook’s hand and say, “Nice job, selling all those phones in China. Now why don’t you bring that money back here where it belongs?” And then Cook would do just that. Instead, his company has to issue debt to pay for the profits he can’t afford to bring back home, where it could be financing all kinds of new jobs.
This is what Democrats call “tax shelters for millionaires and billionaires.”
Some people have a lot of money. That’s because capitalism is kinda like a lottery, only with better odds of winning. In a lottery everybody pays in but only a few get anything back. In capitalism, everybody who participates in the workforce gets something back. The only people who lose are the ones who invest money and lose it. “Failing to win” is not the same as losing.
The “problem” is some people win a lot more than others.
Let’s say you’re unemployed and homeless. Then you meet this senior citizen named McDonald who has a farm. Old McDonald tells you that if you work for him for 10 months he will pay you $1,000 per month now and $20,000 at harvest time. Meanwhile he will let you live for free (if you want to) up in his loft, and his wife will feed you three meals a day.
You are broke, homeless and hungry so you take his offer. It’s just the two of you working as you help him plow, plant, weed and irrigate. Come the fall you help him harvest his crop and take it to the buyer. Each month he has given you $1,000 just like he promised.
It was a really good year and the buyer gives Old McDonald $1,000,000 for his crop. How much does Old McDonald owe you?
b) $20,000 plus a nice fat bonus
d) I am suing that cheap slavedriving bastard for exploiting me and making me live in sub-standard housing!
The correct answer is “a” – Old McDonald owes you the wages you contracted for, nothing more.
Capitalism isn’t perfect, but it works. For most of human history “prosperity” meant “not starving to death”. Even prosperous people often went hungry before winter was over.
We do need a safety net for children, the old, the disabled and the temporarily unemployed. Yes, I am worried about the undue influence caused by concentrations of wealth. But killing the golden goose is not the answer. Wealthy people need us to buy the products their factories make. They also need us to work in those factories to make those products they want us to buy.
When I was a kid I was told to eat my vegetables because there were starving kids in China and India. Now I’m supposed to worry about China and India stealing our jobs. I guess we’re supposed to let them starve.
Let me close with a favorite quote from Lazarus Long (Robert A. Heinlein):
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as “bad luck.”
Filed under: Economy, Taxes | Tagged: Economy, Taxes | 46 Comments »