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Corporate Welfare

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I recently read my local legislators newsletter and he makes references to some of the current bills and money saving strategies. One of them is this idea of elminating corporate income tax. I'm not an economist. So can somebody explain to me how cutting revenue will help the bottom line of the state?

I would be of the opinion that when corporate income tax is done away with it will only result in the revenue enhancement of the corporate owners or shareholders. Where is the leverage that says this windfall of asset will be reinvested to create new jobs? What says that this money won't be converted to a new Cobalt boat or a trip to the Caymans? Corporate welfare is truly the march of folly.

Comments

LadyJ 4 years, 5 months ago

I forsee thousands of new corporations. In fact I know a family that just did that.

ivalueamerica 4 years, 5 months ago

Our government spends on average 1%-2% of it´s annual budget on Social welfare and between 6%-8% on Corporate Welfare.

Up to 61% of corporations do not pay taxes and 100% of the fortune 500 companies receive tax breaks and subsidies.

bad_dog 4 years, 5 months ago

I can't speak to its accuracy, but here's a link discussing how some of the largest corporations pay zero taxes. I'm sure you'll recognize the names. If they can and are doing it, I'd have to believe many others do as well.

http://thinkprogress.org/2011/02/26/main-street-tax-cheats/

George Lippencott 4 years, 5 months ago

Wall Street Journal last week. A major manufacturer of appliances by dint of creating "energy efficient” washing machines now has tax credits earned from that of sufficient scope that they will not pay taxes for the next five years.

The corporation did not do that. The Congress created the incentive to implement public policy. All tax breaks are CREATED by the Congress either as the result of campaign contributions or to a greater degree I suspect, to implement public policy without using tax money directly.

Nobody make the Congress do this. We need to focus our anger on the right people

beatrice 4 years, 5 months ago

The belief (a false belief, in my opinion) is that more corporations will relocate to a place with low are zero taxes. The more companies there are, the more jobs. The taxes come from employed individuals. It is pure Trickle Down Economics.

However, it doesn't work. Nevada has zero percent corporate income tax, and they have an unemployment and foreclosure rate far higher than almost anywhere else in the country.

Corporations are where the big, big money is. Follow the money, and which company is supporting which candidates, and you will almost certainly find out the true answer you seek.

LoveThsLife 4 years, 5 months ago

I think there is a theory that if they cut taxes for corporations then corporations will view Kansas as a business friendly state and move here thus creating jobs which provide Kansas with more income tax.

LoveThsLife 4 years, 5 months ago

Look below vertigo..I already talked about this.

deec 4 years, 5 months ago

Why not cut out the middle man and just tax the corporations?

LoveThsLife 4 years, 5 months ago

It does seem like a good theory..whether or not it actually works..well, that's an argument for the ages.

Nevada is in the hole..Texas has weathered the economy a bit better (however, they have their own issues).

I completely disagree with the education cuts that are going on.

George Lippencott 4 years, 5 months ago

Could this have anything to do with the competitive nature of business? Our corporate taxes are among the highest in the world (for those who pay them). That means our corporations are at a competitive disadvantage with other international corporation based elsewhere. Just maybe they would sell more if they could reduce the costs. Maybe that would lead to more jobs here.

There is an article that suggests that much of the alleged "cash" in our corporations is in fact off shore. They keep it there to avoid taxes here. Taxes have consequences just AS ELECTIONS DO

Cait McKnelly 4 years, 5 months ago

The fact that US corporations keep the bulk of their money in the Cayman Islands is something that, at one time, prior to deregulation would have been highly illegal. They do it because they are permitted to do it, the consequences of forty years of Republican government. Our corporations are far from being at a "disadvantage" with "international" corporations, unless those corporations are in Asia. You sure as heck don't see corporations in Britain, France or Sweden getting away with this BS. The fact that "taxes have consequences" is just another factor of "elections have consequences". There is also the fact that within the past year SCOTUS did grant "personhood" to corporations, allowing them to contribute to election campaigns. People get taxed, George. So tell me, are corporations "people" or not? They can't have it both ways.

George Lippencott 4 years, 5 months ago

Cait. The Democrats had total control for two years. If they had wanted to change this they could have. The fact is that the Democrats are in bed with corporations as much as Republicans. We will never get this fixed if we create partisan issues where there are NONE.

Cait McKnelly 4 years, 5 months ago

2 years out of the past 40 isn't a lot of time to correct a lot of mistakes, George. They went for what they could get in the shortest amount of time with the faint hope it would stick.

zenmon 4 years, 5 months ago

The republicans haven't controlled congress for the last 40 years. The democrats controlled the senate from 1933 - 1981 and from 1987 - 1995 and most recently from 2007 to present. The democrats controlled the house from 1933 - 1995 and most recently from 2007 to 2009. The presidency has been held by democrats 14 of the past 40 years. The last 10+ years have been an utter disaster and both parties are responsible, probably more so with the Republicans and two wars but dropping a truck load of cash we don't have on a new federal entitlement, bail outs, and continuing two wars isn't helping.

I really wish they would sell the building Congress resides in and let them telecommute for meetings/votes from their own district. It would certainly make it more difficult for lobbyist's and our congressional reps/senators would stay in the community they represent. Our reps wouldn't have to maintain two residences and they wouldn't rack up tons of travel costs on our nickel.

jhawkinsf 4 years, 5 months ago

Corporations, as I understand them, provide goods and/or services. Whether or not you agree with whatever tax structure employed, I think the appropriate terminology should be corporate "workfare". Much in the same way that as a condition of public assistance, work is required, that is "workfare". As long as corporations are providing goods or services, the tax breaks should be called corporate workfare.

Scott Drummond 4 years, 5 months ago

Tonight's cynical and shameful action in Wisconsin shows how pervasive the corporate corruption of our government has become. So now employee rights are further diminished. What will the vultures want next? Shame on all who support the destruction of our once great Middle Class. Shame!

Scott Morgan 4 years, 5 months ago

The business of America is business. Cutting corporate taxes, or better yet going to a flat corporate tax will only stimulate the economy. It's very very simple. Who hires? The Government and private sector.

Put money in the hands of people who create non-government jobs.

Government workers suck tax money, even the silly comments from some government employees of late stating "they pay taxes too." No, you pay money to the government so they can pay you. Might as well not tax government employees.

Private sector jobs generate tax dollars. Corporations employ private sector employees. Simple isn't it.

Lawrence is a great example of a small city which is far far too dependent on tax dollars. KU and the public schools are by far the largest employers. Just think of all the private sector real dollars it takes to keep Lawrence, well for lack of better words, Lawrence.

It's a shame our president isn't letting us know how socialist nations, especially European socialist nations are failing.

Scott Drummond 4 years, 5 months ago

No, the business of the United States of America is not business.

Cutting government regulation and taxing of business does not stimulate the economy. It promotes the hoarding of wealth by the few and great harm to the services provided by our government. The business of the USA is governing, by the way.

Government workers make private enterprise possible. They train workers, they enforce contracts, they protect property, they conduct research, they allow our transportation system to move, money to flow freely and fairly and protect citizens from the great harm that would result from unrestrained greed and business.

Lawrence is a great example of the great wealth created by a strong and educated public workforce. Public funding dollars are what it takes to keep Lawrence, well, Lawrence. They are also what made Lawrence, Lawrence. Private sector dollars are responsible for the commercial cancers of South Iowa and the sprawling, vapid wasteland west of Iowa. Private sector dollars destroyed a historic building so that we might have an unneeded and apparently unviable Borders book store for a decade.

Denmark, Finland, the Netherlands rank 1, 2 and 3 in life satisfaction. Each is socialist. It is, indeed, a shame how little discussion of this reality there is in the capitalist mainstream media.

jhawkinsf 4 years, 5 months ago

Just to clarify, the business of the United States "government" is to govern. The business of the USA is whatever you think it should be.

jafs 4 years, 5 months ago

Well, government is the word for it, not businessment.

That certainly makes a strong case that governing is the primary function of government.

thebigspoon 4 years, 5 months ago

Liberty, how in the world do you reach your conclusions? If there are fewer dollars available to buyers, there are fewer sales. In that case the corporations who produce the goods have a higher cost of production per unit, and must raise prices to cover that cost, therefore making things more expensive. Otherwise they go out of business. Not a very pretty argument for decreasing the amount of dollars in circulation. That is your free market in action, and should be very familiar to your libertarian senses. I'm not saying that all products for sale should be bought, either, just that those that are purchased have to have a way of making a profit for the company producing them, or they go out of business. And that is what a short supply of dollars really does.

Scott Drummond 4 years, 5 months ago

"These are the values inspiring those brave workers in Poland ... They remind us that where free unions and collective bargaining are forbidden, freedom is lost. " RONALD REAGAN, Labor Day Address at Liberty State Park, 1980

RoeDapple 4 years, 5 months ago

In other news, radio legend Mike Murphy died today . . .

true_patriot 4 years, 5 months ago

That figure is way low. Depending on how it gets defined, somewhere between 20 to 40 percent of national spending is corporate welfare. Even at the low side of 20% it utterly dwarfs social safety net spending and is generally not the most efficient way to spend tax dollars, having a much lower return on the dollar than targeted projects that create jobs while putting America ahead in terms of new technologies, manufacturing, or education.

Even spending it on extended unemployment benefits to help states out right now returns $1.40 per dollar spent (a fantastic return on investment) vs less than a dollar return on corporate welfare and only 40 cents on the dollar for tax cuts for the wealthy (a rotten return on investment).

riverdrifter 4 years, 5 months ago

Mike Murphy was a great guy. He had so many friends that I'm sure they'll need uninformed guards at his funeral. I'll miss him.

Cait McKnelly 4 years, 5 months ago

How much you want to bet Phred shows up?

Cait McKnelly 4 years, 5 months ago

On second thought, maybe Phred should consider that Mike Murphy was a Catholic Irish American. Getting drunk and throwing other people around is part of what they call a "funeral".

Cait McKnelly 4 years, 5 months ago

‎"One should keep in mind that if you push masses of people, you should expect that they will push back." Anon.

tbaker 4 years, 5 months ago

I think it was sometime during the 8th grade I learned governments do not create jobs. They do not create wealth and capitol. They take it. The willingness of entrepreneurs (or corporations) to invest their capital, combined with consumer demand for goods and services creates jobs. The government plays with the cost of doing business. It subsidizes some industries it likes, and jacks up costs for others it dislikes.

Right now, depending on the research you want to believe, there is $13-15B in US-held capitol currently off-shore in more tax-friendly economies due in very large part to the fact the US is tied with Japan for having the highest effective rates of taxation in the world. Now I believe taxing any form of income is both immoral and stupid, but if we eliminated just one form - corporate taxes - the US would become the most business-friendly place on earth with the stroke of a pen. Instead of leaving, business would move to the US. This would create jobs. Remember, "corporate" taxation is not a burden born by some rich fat cat in a mahogany paneled corner office, it is a cost of doing business spread across all the stockholders , (people's 401K, IRAs, Granny's mutual fund, teacher pension funds, etc) It hits employees through lower wages and consumers with higher prices. Corporate taxation hurts everyone across the entire income spectrum.

To answer the author's question, when jobs are created, all the other forms of tax revenue all the different echelons of government collect are increased such that whatever net revenue is lost by the elimination of the corporate tax is more than made up by the increase in every other tax. President Obama's Council of Economic Advisor's recently reported that a corporate tax reduction has a 1 : 3 effect. For every dollar corporations save in taxes, the economy at large (GDP) increases by three. Instead of one person paying state sales tax, personal property tax, realestate tax, state income tax, federal income tax, payroll withholding tax, social security and medicare tax, etc, etc, - now you have three.

No brainer...

Cait McKnelly 4 years, 5 months ago

" .....due in very large part to the fact the US is tied with Japan for having the highest effective rates of taxation in the world."

Not sure where you got your information but CNN says the exact opposite.

"As it so happens, U.S. taxes are light by international standards, roughly tied with Japan as the lowest among G-7 nations."

http://articles.cnn.com/2010-12-17/us/jonathan.mann.us.taxes_1_tax-cuts-boston-tea-party-americans?_s=PM:US

You need to click away from those ultra right wing sites a little more, son. They're rotting your brain.

tbaker 4 years, 5 months ago

"U.S. companies face the second highest statutory tax rate among the 30 members of the Organization for Economic Cooperation and Development (OECD). The U.S. rate was 39.1 percent in 2009, including federal and state income taxes, according to the OECD."

Since this 2009 quote from OECD, Japan has announced it will lower it's corporate tax rate 5 points making the US the country with the highest corporate tax rate in the world.

Most of the competition faced by U.S. businesses comes from businesses headquartered in other OECD countries. Having the highest corporate tax rate discourages investment in the US. Why start a new business in the country with highest corporate tax rate? It makes it difficult for U.S. companies to compete in foreign markets, and it provides strong incentives for corporations to avoid and evade taxes.

CNN indeed...wise up.

tomatogrower 4 years, 5 months ago

Nice theory, tbaker, but that hasn't worked in reality. The corporations are using their tax breaks to move jobs out of the country. Tax them big, but give them tax breaks when they create jobs. US jobs first, then tax breaks. We are doing it backwards.

camper 4 years, 5 months ago

I'd also like to see a link to your source regarding tax rates in foreign countries. In fact the US has one of the most generous tax rates without even considering credits, and loss carryforwards and carrybacks that are very advantageous.

notajayhawk 4 years, 5 months ago

" I'm not an economist. So can somebody explain to me how cutting revenue will help the bottom line of the state?"

After the Bush tax cuts, autie, did corporate tax revenues increase, or decrease?

georgeofwesternkansas 4 years, 5 months ago

Autie calls it corporate welfare, I call it a jobs program.

Pay taxes or reduce the number of employees. What do you wand Autie? Can't have it both ways, unless the government makes a law that you have to buy my product.

QuinnSutore 4 years, 5 months ago

Interesting - when corporations get welfare they make jobs, and when people get welfare they punch out more babies.

So it's nice to see we're investing our money in areas that will have a return and not more liability.

itwasthedukes 4 years, 5 months ago

Do I smell class warfare? All corporations are run by fat cats? Some how the corporation pays taxes? People pay taxes! Do you think the corp doesn't pass on the tax to the consumer? This is why America is failing. Poorly educated people that just want something for nothing.

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