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Doggett fighting for fairness on Tax Day!

Doggett fighting for fairness on Tax Day!

On Monday, Congressman Lloyd Doggett, a long-time member of the House Ways and Means Committee, releases a GAO report showing the continued advance of corporate tax expenditures that allow corporations to pay little or no taxes year after year.

“Of the many Americans who are right now getting their taxes ready to file, I doubt there are very many that think they will be able to pay a mere nickel on the dollar.  But there are many of America’s largest corporations that continue lobbying the Administration, and this Congress to let them pay a nickel on the dollar in taxes on a significant portion of their earnings.  Over a three-year period, 30 Fortune 500 companies devoted more of their monies to lobbying this Congress than they did in paying taxes to the Treasury. Some have a negative tax rate. Many of our largest corporations are paying effective rates that are single digits.
On Monday, he will again propose legislation to deal with the way corporations can so easily avoid tax liabilities in the US. A press release from Doggett’s office lists the following pieces of legislation to be introduced:

  • The Stop Tax Haven Abuse Act aims to close several different loopholes by deterring the use of tax havens for tax evasion and strengthening the enforcement of our tax laws.  The bill would also require SEC-registered corporations to report annually on the number of employees, sales, financing, tax obligations, and tax payments on a country-by-country basis, shedding more light on the extent of use of tax havens.  This bill also provides for additional penalties for failing to disclose offshore holdings and for promoting abusive tax shelters.
  • The International Tax Competitiveness Act addresses a large and growing area of tax abuse: the practice of developing a trademark, patent, or copyright in the U.S. and then transferring that intellectual property abroad to avoid taxes on the vast income it generates.  This bill would treat income from the U.S. intellectual property as U.S. income and tax it accordingly.   
  • The Fairness in International Taxation Act would end the current practice of treaty shopping to avoid U.S. taxes.  The United States has tax treaties with a number of trading partners that reduce the amount of taxes that a U.S. based entity owes on interest and royalties paid to a foreign parent.  Since many of these foreign parent companies are set up in tax havens, these companies now bypass U.S. taxes by routing the payment through a tax-treaty country that then just transfers the funds to the tax-haven parent.  This bill would end that legal fiction and say that you only get the tax-treaty discount if the parent company is actually located in a tax-treaty country.

Doggett has tried to get Congress to act on corporate loopholes for more than a decade.  The lobbying money has enormous influence.  Just as in the gun control arena, where a majority of Americans want stronger gun controls but the manufacturer of weapons want lax provisions, most Americans think that corporations ought to pay a larger share of taxes but Congress is heavily influenced by lobbyists who wine and dine staffers and provide numerous purported “educational” briefings on what Big Business wants.

Each of these legislative proposals has merit.  Of particular interest is the “international competitiveness” provision, which would finally make some inroads in corporations’ ability to move intangible properties developed in the US into tax haven countries in order to eliminate taxes.  We have for too long relied on an outdated transfer pricing mechanism for this kind of transfer.  It doesn’t work, since no company would ever actually sell intellectual property that is the core of the company’s business.  These cross-border transfers of IP are shams, and we should finally legislate to prevent this .

 

http://ataxingmatter.blogs.com/tax/2013/04/doggett-fighting-for-fairness.html

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Piestein

by Sandwichman  (re-posted with author’s permission):

In his Essay Concerning Human Understanding, John Locke affirmed, “I do not question but that human knowledge, under the present circumstances of our beings and constitutions, may be carried much farther than it hitherto has been, if men would sincerely, and with freedom of mind, employ all that industry and labour of thought, in improving the means of discovering truth, which they do for the colouring or support of falsehood, to maintain a system, interest, or party, they are once engaged in.”

In Takings: Private Property and the Power of Eminent Domain, Richard Epstein, henceforth Professor Piestein, gave the quintessential demonstration of how to employ “all that industry and labour of thought… for the colouring or support of falsehood.” In his “philosophical preliminary” chapter, “A Tale of Two Pies” Professor Piestein purported to illustrate, with a drawing of two pies, a Lockean perspective on “how natural rights over labor and property can be preserved in form and enhanced in value by the exercise of political power.”

Here is what Professor Piestein’s pies looked like. Sandwichman coloured them in to make them prettier:

And here is what Professor Piestein wrote about his pies:

The larger pie indicates the gains that are possible from political organization. The outer ring represents the total social gains, while the dotted lines indicate the proportion of the gain received by each individual member. The implicit normative limit upon the use of political power is that it should preserve the relative entitlements among the members of the group, both in the formation of the social order and in its ongoing operation. All government action must he justified as moving a society from the smaller to the larger pie.

A couple of questions go unasked and, of course, unanswered by Professor Piestein.

Why should we assume that the unequal endowments are the consequence of natural rights rather than a backward projection of the inequalities imposed in political society by its rulers? Second, even if the unequal endowments had been present in nature, why should that make the more fortunate individuals entitled to a proportionately larger share of the social gains, since they are, after all, social gains? In The Natural and Artificial Rights of Property Contrasted (1832), Thomas Hodgson wrote:

Laws being made by others than the labourer, and being always intended to preserve the power of those who make them, their great and chief aim for many ages, was, and still is, to enable those who are not labourers to appropriate wealth to themselves. In other words, the great object of law and of government has been and is, to establish and protect a violation of that natural right of property they are described in theory as being intended to guarantee.

What would Locke say? I’ll not waste your time with a pile of extraneous exegesis and superfluous hermeneutics. Number VIII of Locke’s Essays on the Law of Nature was titled, “Is Every Man’s Own Interest the Basis of the Law of Nature? No.” Number VIII was the source for several of the arguments in Chapter Five, “Of Property,” in Locke’s Second Treatise on Civil Government.

What part of the word “no” did Professor Piestein not understand?

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Comments (6)

  1. well, i call this percent paresis.

    even assuming the honesty of Piestein’s belief that “the normative limit upon the use of political power is that it should preserve the relative entitlements among the members of the group..”

    this would deny the possibility that you might, say increase the absolute wealth of say group e by a factor of two by increasing the absolute wealth of group d by a factor of three. OH, God, no, folks in e would say, “you have reduced our “relative entitlement” relative to group d! unfair, unfair.”

    but i like the word “entitlement.”

    it might also be pointed out that percent paresis affects both “sides” of the so called Social Security “debate” (it’s not a debate, it’s a well funded campaign of lies feebly resisted by well meaning folks who don’t know what they are talking about either).

    These debaters have convinced themselves that a raise in the percent of income devoted to Social Security is an unfairness of decisive magnitude. One side calls it a “regressive tax” (illustrating another use of words without understanding), while the other just implies that any tax raise is a crime.

    No one can think deeply enough to see that while the percent taxed is increasing, the absolute income to the taxpayer is increasing… both before and after the tax… while the percent of your life paid for by the tax… merely a systematic way to defer using part of your income… is also increasing.

    sorry to run on, but i am not entirely sure that Lock was right about the “labor of thought..” i don’t see any evidence of thought at all.

  2. i should add, in fairness, that if the proportions in my argument went the other way, and you could double the wealth of the poor by tripling the wealth of the rich, the “left” would cry foul and insist upon “equality” even if that meant equal poverty for all.

  3. If I could figure out who the left (or who the right) I would be a happier camper.

  4. Hi Sandwichman:

    Great post and I quickly googled “extraneous exegesis and superfluous hermeneutics.” Next cocktail party . . .

  5. Thanks, Bill,

    Nothing quite says “redundant” like “superfluous hermeneutics”!

  6. Dan

    as to “right” and “left”, see my earlier comment about the use of words to avoid thought.

    (arright, i could carry this too far and end up insisting that “manager” was just another word for “worker” and so we can eliminate that word from the language….

    sound like 1984?)

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