USA Politics (redux)

[Florestan]

Robert Michels, "Iron Law of Oligarchy."
Michels studied many mass political parties in Europe, including socialist parties, which were considered to be most democratic and least elitist. But Michels found what you are saying in almost all the parties he examined.

Gaetano Mosca observes that the formal differences in government, ie. republic vs monarchy, democracy vs. tyranny, are superficial. He sees that all the govts are oligarchical and elitist, regardless of gotl form, region, civilization etc.

The scholars called pluralists agree that there are only few powerful people in society. But in representative democracy, ordinary citizens have indirect influence on policy-making by voting and supporting among plural and "competing" power elites, ie. political parries, labor union, chamber of commerce, catholic/protestant organizations, consumer group, etc.

I recommend Irony of Democracy, by Thomas Dye, for your leisure time.

That looks interesting, thanks.

[drogulus]

     
     I am somewhat perturbed by the notions behind the Biden tax scheme.

     One notion perturbs me, and that's raising the corporate income tax.

     Is It Time to Eliminate Federal Corporate Income Taxes?

The authors provide an overview of the true purposes and incidence of corporate taxation and argue that it is inefficient and largely borne by consumers and employees, not shareholders. While the authors would prefer the elimination of the corporate profits tax, they understand the conventional thinking that taxes are necessary to help finance government expenditures—even if they disagree. Accordingly, the authors present alternatives to the corporate tax that shift the burden from consumers and employees to those who benefit the most from corporate success.

     

[Karl Henning]

Interesting, Ernie.

[drogulus]

     Biden propose tax increases which are "socialism" and tax cuts which are "welfare".

Child and dependent care. Two separate credits related to children are both part of Biden's tax plan.

The President's plan would expand eligibility for the Child and Dependent Care Tax Credit and allow up to $8,000 in credits for qualified expenses for low- and middle-income working families. The change would increase the credit from a current maximum of $3,000 to $8,000 and provide a ceiling of $16,000 for multiple dependents.

The Child Tax Credit would be made fully refundable and rise from $2,000 to $3,000 per child for children ages 6 to 17, with a larger credit of $3,600 per child allowed for children under age six. President-elect Biden announced that these changes will be included in his economic stimulus package expected to be introduced shortly after the inauguration.

     Biden cuts the taxes of Trumpistan, and not even over my objection!

[SimonNZ]

The Daily Beast have started a new podcast "Fever Dreams" shining a light on what the alt-right Qanan Maga types are currently up to:

https://podcasts.google.com/feed/aHR0cHM6Ly9yc3MuYWNhc3QuY29tL2ZldmVyLWRyZWFtcw?sa=X&ved=0CAIQ4aUDahcKEwjYwsa63NbvAhUAAAAAHQAAAAAQAg&hl=en-NZ

They also refer often to a new 6-part documentary just started called Q: Into The Storm on Netflix.


They also reminded me of the winkwink Trump gave to Q by saying the magic words "tip top tippy top" at a White House (sorry: "house that doesn't have a name") Easter Egg Roll with the surreal imagery of saying it next to a giant shocked looking bunny. Ah, the memories...

The rest of you can see a giant bunny, right?:

https://www.youtube.com/watch?v=Dhgn03mXD-A

[T. D.]

https://fivethirtyeight.com/features/the-states-where-efforts-to-restrict-voting-are-escalating/

[Fëanor]

One notion perturbs me, and that's raising the corporate income tax.

     Is It Time to Eliminate Federal Corporate Income Taxes?

The authors provide an overview of the true purposes and incidence of corporate taxation and argue that it is inefficient and largely borne by consumers and employees, not shareholders. While the authors would prefer the elimination of the corporate profits tax, they understand the conventional thinking that taxes are necessary to help finance government expenditures—even if they disagree. Accordingly, the authors present alternatives to the corporate tax that shift the burden from consumers and employees to those who benefit the most from corporate success.

IMHO, a better idea would be to attribute corporate profits through to the ultimate individual beneficiaries, then tax it at their individual marginal tax rates.  A problem with this is that the attribution process might have many steps making it administratively cumbersome.

[drogulus]

IMHO, a better idea would be to attribute corporate profits through to the ultimate individual beneficiaries, then tax it at their individual marginal tax rates.  A problem with this is that the attribution process might have many steps making it administratively cumbersome.

     That's what the authors have in mind. That's the basis of their reasoning, that the tax would be less regressive when paid by the beneficiaries. If the corporate tax was eliminated, the tax would fall on those who benefited from the increase in their income. This would not require steps. It would require people filing their income tax returns like they do now.

     I take my tax stuff to Carlton the Tax Wizard. My income from corporations is there, including any cap gains. If there's no corporate income tax my income will be higher. I will pay more tax on higher income.

[Karl Henning]

     That's what the authors have in mind. That's the basis of their reasoning, that the tax would be less regressive when paid by the beneficiaries. If the corporate tax was eliminated, the tax would fall on those who benefited from the increase in their income. This would not require steps. It would require people filing their income tax returns like they do now.

     I take my tax stuff to Carlton the Tax Wizard. My income from corporations is there, including any cap gains. If there's no corporate income tax my income will be higher. I will pay more tax on higher income.

Sensible. No wizardry there.

[Fëanor]

     That's what the authors have in mind. That's the basis of their reasoning, that the tax would be less regressive when paid by the beneficiaries. If the corporate tax was eliminated, the tax would fall on those who benefited from the increase in their income. This would not require steps. It would require people filing their income tax returns like they do now.

     I take my tax stuff to Carlton the Tax Wizard. My income from corporations is there, including any cap gains. If there's no corporate income tax my income will be higher. I will pay more tax on higher income.

What am I missing?  Doesn't your personal income from corporations depend on dividend disbursements?  (I'm not familiar in any detail with US taxation.)  If dividends amount to only a portion of the corporation's profit, wouldn't tax on the rest of profits could be indefinitely postponed in the absence of a corporate tax.

Here in Canada double taxation is much reduced by a 'corporate tax credit' on dividends of Canadian corporations.

[BasilValentine]

I guess Q got it wrong. To everyone's utter shock and amazement, it seems it's republicans who are doing the sex trafficking! Matt Gaetz is under investigation for it. Hard to believe such an upstanding individual could be involved in such activities.

Here's the NY Times article:

https://www.nytimes.com/2021/03/30/us/politics/matt-gaetz-sex-trafficking-investigation.html


Here's Rachel Maddow's background piece and reading of various sources:

https://www.youtube.com/watch?v=kyfKaM_Z7PE

[drogulus]

What am I missing?  Doesn't your personal income from corporations depend on dividend disbursements?  (I'm not familiar in any detail with US taxation.)  If dividends amount to only a portion of the corporation's profit, wouldn't tax on the rest of profits could be indefinitely postponed in the absence of a corporate tax.

     I pay capital gains taxes, too. But look, I'm not trying to maximally capture tax dollars. I want to capture (or extinguish, really) those dollars that go to high earners as a way to keep taxes on productive activity low. That means reducing the downward pressure on worker income and upward pressure on consumer prices.

     Ultimately all taxes are on the income of someone. Regressive elements of taxation tend to be inefficient. By lowering too high taxation on low incomes demand is raised, making it rational for businesses to invest and create jobs instead of ballooning their stock price. And if they do that, their stock price will go up anyway, but with positive sum consequences for the economy as a whole.

[Fëanor]

     I pay capital gains taxes, too. But look, I'm not trying to maximally capture tax dollars. I want to capture (or extinguish, really) those dollars that go to high earners as a way to keep taxes on productive activity low. That means reducing the downward pressure on worker income and upward pressure on consumer prices.

     Ultimately all taxes are on the income of someone. Regressive elements of taxation tend to be inefficient. By lowering too high taxation on low incomes demand is raised, making it rational for businesses to invest and create jobs instead of ballooning their stock price. And if they do that, their stock price will go up anyway, but with positive sum consequences for the economy as a whole.

Where I agree completely 'Demand' will benefit from lower income folks paying lower taxes, and that in turn would stimulate business to make productive investments.

(Apart from my still being confused), I'm not sure how eliminating corporate taxes will either help the poor or encourage enterprises to invest productively as a result.  Lower corporate taxes may mean higher dividends but will still go mostly to the wealthy, albeit that they are subject to their higher tax rates.

With no taxes, corporations won't necessarily invest their higher retained earnings productively.  Instead, corporations may save in same way as individuals by buy purchasing existing assets -- but that is not productive investment.  This is the fundamental flaw in "supply-side", a.k.a. "trickle-down" economics that I personally call "Bribe the Rich".

[drogulus]

(Apart from my still being confused), I'm not sure how eliminating corporate taxes will either help the poor or encourage enterprises to invest productively as a result.  Lower corporate taxes may mean higher dividends but will still go mostly to the wealthy, albeit that they are subject to their higher tax rates.

     Corporations pay tax by keeping wages low and prices high. NY Fed Chairman Beardsly Ruml made the case in 1946:

     The Bad Tax

Taxes on corporation profits have three principal consequences — all of them bad. Briefly, the three bad effects of the corporation income tax are:

    1. The money which is taken from the corporation in taxes must come in one of three ways. It must come from the people, in the higher prices they pay for the things they buy; from the corporation's own employees in wages that are lower than they otherwise would be; or from the corporation's stockholders, in lower rate of return on their investment. No matter from which sources it comes, or in what proportion, this tax is harmful to production, to purchasing power, and to investment.

    2. The tax on corporation profits is a distorting factor in managerial judgment, a factor which is prejudicial to clear engineering and economic analysis of what will be best for the production and distribution of things for use. And, the larger the tax, the greater the distortion.

    3. The corporation income tax is the cause of double taxation. The individual taxpayer is taxed once when his profit is earned by the corporation, and once again when he receives the profit as a dividend. This double taxation makes it more difficult to get people to invest their savings in business than if the profits of business were only taxed once. Furthermore, stockholders with small incomes bear as heavy a burden under the corporation income tax as do stockholders with large incomes.

With no taxes, corporations won't necessarily invest their higher retained earnings productively.  Instead, corporations may save in same way as individuals by buy purchasing existing assets -- but that is not productive investment.  This is the fundamental flaw in "supply-side", a.k.a. "trickle-down" economics that I personally call "Bribe the Rich".

     That's right. Worker income trickles back up to the businesses that pay them. Carrots are better than sticks, so anything that benefits their workers (also known as "customers") will keeping a virtuous cycle of wages, jobs and profits rising. If you want to get corporations to invest productively and not passively, cut the workers taxes.

[71 dB]

Corporations are taxed pretty much everywhere in the World.

If taxing corporations was super-bad, I don't think this was the case.

[Fëanor]

     Corporations pay tax by keeping wages low and prices high. NY Fed Chairman Beardsly Ruml made the case in 1946:

     The Bad Tax

Taxes on corporation profits have three principal consequences — all of them bad. Briefly, the three bad effects of the corporation income tax are:

    1. The money which is taken from the corporation in taxes must come in one of three ways. It must come from the people, in the higher prices they pay for the things they buy; from the corporation's own employees in wages that are lower than they otherwise would be; or from the corporation's stockholders, in lower rate of return on their investment. No matter from which sources it comes, or in what proportion, this tax is harmful to production, to purchasing power, and to investment.

    2. The tax on corporation profits is a distorting factor in managerial judgment, a factor which is prejudicial to clear engineering and economic analysis of what will be best for the production and distribution of things for use. And, the larger the tax, the greater the distortion.

    3. The corporation income tax is the cause of double taxation. The individual taxpayer is taxed once when his profit is earned by the corporation, and once again when he receives the profit as a dividend. This double taxation makes it more difficult to get people to invest their savings in business than if the profits of business were only taxed once. Furthermore, stockholders with small incomes bear as heavy a burden under the corporation income tax as do stockholders with large incomes.

IMO, Beardsly Ruml's thinking is a bit dated.

In the first place (income) taxes are not just like operating expenses.  They are applied after profits are earned.  A business will always have the same incentive to minimize operating expenses and maximize revenues whatever the tax rate;  accordingly managerial decisions are not distorted regarding expenses and revenues.

Business rarely give workers better wages simply because they are earning good profits whether before or after tax.  Workers are primarily paid according to the wage rates determined by supply & demand for labor.  However it's true the unions may be able to bargain for wages or benefit higher that they would otherwise be if the company's after-tax profits are high.

Granted, if different business are taxed differently based the nature of the business or its location this may effect management decisions.

Double taxation can be reduced or eliminated by various devices.  I gave Canada's 'Corporate Tax Credit' as an example.  The argument he makes about small income stockholders is minor because most stockholders are fairly well-off.  But note I've all ready said my preference, if it were practical, would be to attribute corporate profits through to the ultimate individual owners to be taxed at their individual rates.

     That's right. Worker income trickles back up to the businesses that pay them. Carrots are better than sticks, so anything that benefits their workers (also known as "customers") will keeping a virtuous cycle of wages, jobs and profits rising. If you want to get corporations to invest productively and not passively, cut the workers taxes.

Yes, I agree.  If workers have more disposable income the 'demand' that creates gives businesses the incentive to invest;  if you give businesses money, (thru lower taxes), they do not necessarily have an incentive to invest.  Instead they 'save' which means hoarding cash or speculating in existing assets.

[71 dB]

Ilhan Omar Reveals Progressives Had NO STRATEGY On $15 Min Wage

https://www.youtube.com/v/URCR9vcIGBI

[Spotted Horses]

Ilhan Omar Reveals Progressives Had NO STRATEGY On $15 Min Wage

https://www.youtube.com/v/URCR9vcIGBI

It took me about 30 seconds to conclude that this guy is an imbecile.

[71 dB]

It took me about 30 seconds to conclude that this guy is an imbecile.

It is not about anyone being an imbecile. It is about the progressives in the Congress not fighting enough and not knowing what they are doing. Politics is about having a strategy and using your leverage. Others who don't agree with you won't give you anything unless you force them to give you something. The progressives haven't been using their leverage the way people who voted for them want them to use. The progressives have been a disappointment.

[drogulus]

     

Corporations are taxed pretty much everywhere in the World.

If taxing corporations was super-bad, I don't think this was the case.

     My concern is the US environment where escaping the tax distorts decisions about business location and has a negative effect on domestic employment.

     Some of the good I aim for could be accomplished by lowering the tax to where businesses have no incentive to relocate. But I have more in mind. Much of the anti-tax energy on the Repub side comes from business lobbies. If there's one thing I dislike more than a bad tax it's regressive taxation, which Repubs love, bless their terrible wasted minds. Ending the corporate tax would be a huge gut punch for them.

It is not about anyone being an imbecile. It is about the progressives in the Congress not fighting enough and not knowing what they are doing. Politics is about having a strategy and using your leverage. Others who don't agree with you won't give you anything unless you force them to give you something. The progressives haven't been using their leverage the way people who voted for them want them to use. The progressives have been a disappointment.

     The problem is that the progressives don't have the leverage people who voted for them want them to have.