Global Tax Bamboozle

Tax rates don’t impact economic behavior.  Leftwing shibboleth

George Rebane

Let’s start with an eternal truth, forever hidden from the lightly read and leftwing ‘economists’ – corporations don’t pay taxes, their customers do.’  Today SecTreas Yellen is Team Biden’s point on the easy job of convincing the G-7 countries to establish a globally applied minimum tax on corporations that do business across national borders.  A 15% minimum on some line in a company’s income statement is being bandied about.  The EU countries are ecstatic about the prospects of taxing American companies for revenues generated withing their borders.  “The deal represents an intersection of Europeans’ longstanding dream to tax American tech companies and the Biden Administration’s attempt to bamboozle lawmakers into passing a competition-killing corporate-tax hike at home.”

But the whole idea for such a tax is a bad one from start to finish. (more here) Our anti-American Left sees it as a twofer – more revenues to support increased vote buying at home, and subrogating our Congress’ taxing powers to an international bureaucracy will take America another step away from sovereignty and toward a global government.

The bamboozle is particularly pernicious for the nation’s consumers, particularly those who are  both ignorant and poor.  For them the availability of needed goods and services will go down as their prices go up.  And all this is happening as they cheer on their scumbag politicians for delivering another tranche of social justice in making the corporations pay their fair share of taxes.  It’s actually a double tax on the corporations’ customers who then will have to pay higher prices and correspondingly higher sales taxes.

The international tax agreement, in whatever form it takes, will have a snowball’s chance in hell of getting through Congress.  And what winds up getting through will be gamed to a fare-thee-well by the big corporatists.  You can bet the farm that their margins and, therefore, share prices will not be impacted.  What our socialists don’t understand is exactly how the corporations will game whatever new corporate tax policy is imposed here and abroad.  (Readers recall a fundamental Rebane Doctrine tenet - The bad part of capitalism is that they will always game the system, the good part of capitalism is that they will always game the system.  A corollary of this is that the corporatists have already gamed whatever change is planned for the system.)

Bottom line, don’t let any of this impact decisions on the disposition of equities in your portfolio.

Comments

[scenes]

It seems to me that one thing that greases the skids towards universal taxation schemes has been the strong tendency towards digitization of money...and the tendency will always veer to a requirement.

An interesting thing to think about is the influence of digital currencies using purely government gateways on financial policy. Borrowing can get darned arcane but I can see where the pressure comes to have international central banks...I suppose that the large banks are already a form of that. Given that there are four Chinese banks the size of JPMorgan, you can see who will be driving the car.

[scenes]

Gaming of the rules aside, I was musing this morning about how the news presentation of a 'global tax' is rather like naive views of a 'flat tax' for income. The rate tables are the simplest part of a tax system and by simply adjusting them you really achieve very little.

Just imagine the worldwide auditing apparatus and synchronization of an infinite number of pages of tax law you'd have to put in place. I was amusing myself looking through websites showing overviews of corporate tax law by country. There are international accounting standards but the devil's in the details.

In the long run, maybe all you need is a huge new bureaucracy combined with an international currency where all financial transactions of any type go through a single clearinghouse. With enough computer power, tax law can be as complex as you like.

Galt's Gulch will be replaced by Kaczynski's Cabin.

[Scott O]

scenes 5:50 - "In the long run, maybe all you need is a huge new bureaucracy combined with an international currency where all financial transactions of any type go through a single clearinghouse."

The CCP is working on it.
The Davos crowd will assist.

[scenes]

Apropos of nothing maybe, but my magpie brain pulled in this one while poking through tax rules.

"New York Forces Citizens to Pay for ‘Stargazing Permit’ to View Night Sky in Public Parks"
https://www.newsbreak.com/amp/n/1495933656351

It's a beautiful thing.

[Scott O]

scenes 6:53 - Well, do you have any idea what it costs to pay someone to stay out late at night to enforce the permit rules?
And of course, someone to supervise that person.
Heck - there's probably a nice office downtown to house the 'Office Of Stargazing Regulation'.
You wouldn't want the City of New York to devolve into lawlessness would you?

[The Estonian Fox]

Scenes @6:53AM.

They make you show ID for stargazing too. Maybe they can place some ballot boxes out there to double-up duty.

Why would you need an ID to look at the stars? Of course, I'm not one to speak. Years ago when I had my 'scope set up, I required my own kids to show ID. My 3-year old was pissed! She didn't even know how to spell 'ID'. Still hasn't forgiven me. But at least she can't vote me out of office (as dad).