Swiss Banks; State tax subsidies to corporations
by Linda Beale
crossposted with Ataxingmatter
Swiss Banks; State tax subsidies to corporations“>
Busy day today, so just a note to point out an interesting blog posting at Money.co.uk on Swiss banks and the impact of banking secrecy on tax evasion. It’s Demystifying Swiss Banks, May 15, 2010, money.co.uk.
Just another reason that tax reform and bank reform go together. Banks serve corporate and high wealth individuals by creating derivative products that arbitrage tax and regulatory requirements, and by permitting them to move resources to tax havens that serve no function other than offshoring profits. Will Congress enact a strong enough reform bill? Or will it spend more of its efforts on “extending” the costly Bush tax cuts yet again?
Another interesting piece in the New York Times on Companies we keep, and pay for”, Jim Dwyer, NY Times, May 14, 2010. Since corporations have no loyalty to locale anymore–not even to the US, much less to a particular state or city–it is foolhardy for states and cities to mete out huge subsidies to keep a particular corporation in town in the hopes of creating new jobs (or keeping old ones). It would likely be much more beneficial for the community to use that money to do something directly beneficial–like fixing bridges, funding computers in schools, hiring more police, teachers, gardeners, and greeters. That money would create instant jobs, and those jobs would create instant demand for things people have to have to live, like food shelter, clothing, and other consumer products. That would help fund local businesses, and that would be a much better use of state and local subsidies, since it would tend to help ordinary people instead of the Big Muckety-Mucks (as my Dad used to say) that get the main dough out of the deal from corporate tax subsidies.
I’m glad you mentioned locational subsidies. Together with tax breaks, direct subsidies, tariffs and “earmarks”, they form part of the US’ system (if you can call it that) of industrial policy. I like to point out this seldom-mentioned set of industrial policies to people who complain that the US has no industrial policy. It does, just not a very well-considered one.