When they talk about high US Taxes

The right is always talking about high US corporate tax rates.  You could compare us to places that have legalized slavery and always make us look uncompetitive.  Instead lets compare us to a successful industrialized country, one that is essentially eating our lunch in the marketplace.  Let's look at Germany.

First let's start with the VAT (Value Added Tax).  That is essentially a sales tax, that is tacked on to each transactions at each level.  The rate is generally 19% but for certain foods, books, magazines, flowers, some transportation, it is 7%.  And some things are exempt.  Doctors do not charge VAT tax, nor do public theaters, museums.  This is not a complete list of things that have a reduced or waived VAT tax, but you get the idea.

The tax is charged by the seller. The manufacturer pays it on the raw materials they buy.  The distributor pays it on the finished goods they buy, the consumer pays it.

Let's take the case of the manufacturer.  On a quarterly basis they will pay the tax that they charged to their distributors, minus the tax they paid buying raw materials.

Then there is the corporate tax rate.  According to taxrates.cc the combined (federal and local) tax rate for corporations is 33.3%.  This is actually a rough summary of three different taxes applied to corporate income.  And unlike US corporations, German corporations are taxed on their world wide income, minus of course any taxes paid on income in other countries.  So they cannot hide their income in low tax countries.

Now let's talk about the other two facets of this.  How are German companies doing under this burden, and what do the German people get for their money?

Well, you know that in manufacturing and exports, they are beating us in the marketplace and have been for years.  So paying employees a decent wage, a mandatory 25 vacation days, and taxes on their world wide income does not seem to have stoped them from doing well.  And look at CEO salaries, well in 2009 Deutches Bank CEO Josef Ackermann had a total compensation 9.55 million euros.  He was the higest paid CEO in Germany that year.  It does not compare to some of the packages US CEOs were getting in that same year, but he is still getting rich.

And what do the people of Germany get for these taxes?  How about universal health care, pensions, and tax-funded child, housing, and educational allowances?

So our taxe rates are not, and never have been what is killing our manufacturing, destroying our middle class.  Rather it is the blind faith that if you only appease the oligarchy that owns this country enough, that they will eventually share a few crums with the rest of us. 

You want to see jobs moving back to this country?  Stop giving businesses a free ride to hide their profits overseas forever. When you give them economic incentives to send your job overseas, what do you expect?

What they mean by entitlements

Whenever you hear the deficit being discussed, you hear the party on the right discussing entitlement reform, or reducing entitlements.  Sadly, you also hear some of this crap coming from the lips of those who have promised to protect us.  So let's talk a little bit about what they are really talking about.

First of all, who do you think is in that room while they are negotiating what should be cut and what should not be cut.  Let me give you a hint.  There is nobody in that room that will ever need medicare or social security.  They are vested in the federal health and retirement plans in just 5 years.  These are the same plans that they would like to strip from people who do actual work. And of course there is nobody in that room with a net worth of less than a million dollars. 

So, in their viewpoint, what are entitlements?  That's easy, that is anything the government does that benefits you, that does not also benefit them.  They don't need social security or medicare.  They must be entitlements.  Unemployment benefits?   Same thing.  How about Aid to Families with Dependent Children, WIC, food stamps, college grants (or public education in any form), veterans benefits?  None that applies to them.

What you will not hear them talking about is them raising their own taxes, cutting their own salaries and benefits.  Nor will you see them cutting out the loopholes and tax giveaways that their corporate masters receive.

You don't matter.  Your role in this picture is to provide cheap labor then hurry up and die.  And they will raise the specter of welfare mothers cranking out children to increase their income or overpaid government employees (only the ones not in the room) to convince you that they are only taking food out of the mouths of the undeserving.  But of course to them, the undeserving is you.

And if you buy into that, then you deserve what you get.

If corporations are just like people

Over the years there have been supreme court decisions that have looked at corporations as having similar rights (but somehow, none of the responsibilities) of a person.  Well, perhaps we should take that to the next step.  If they are a person, perhaps they should be treated more like a person.

Interest deductions?  We get to deduct our home mortgages, so I guess it is fair that you can deduct the interest on your factories and office buildings.  And if you would like to take out a line of credit on those, well that would be deductible too.  But interest on bonds, and other sources of capital?  Well when we whip out the credit card to make purchases, or even the loan we take out to but a new car, now of that is written off our taxes, so why should it be written off yours?

Now if I own a small business, even as a sole proprietorship, I can write off the salaries and benefits and taxes I pay to and on behalf of my employees, so those would be remain legitimate deductions.  How about dividends?  Well, using the sole proprietorship model (and admittedly bending it some), any money I take out of the company is income to me, and I pay taxes, social security, all that stuff.  So dividends are just income to the owner, and the owners should pay the same taxes as any other business owner pays on income from their business.

But wouldn't that defeat the whole purpose of the corporation?  Bullshit.  The purpose of a corporation is to permit the formation of capital while limiting the liability of the investors to the money they put in.  Put another way, if you open a bar, and that bar runs up a pile of debts, well, you have run up a pile of debts.  Your creditors can go after your bank account, your house, your car, anything you own.  If a corporation runs up a pile of debts, the creditors can look only to the assets of that corporation.

The morons on the right are always talking about running the government the way you run your family budget, as though that made any sense at all.  So let's test out their theory.  We will require that corporations be run that way, and if it works, well then maybe we will consider running the government that way.

Bruce got a tax cut

Ok, so this is old news.  Back when Cheney was in charge, I got a tax cut.  I make a comfortable six figure income,  always get to go someplace nice on vacation, in general, I have a comfortable life.  Like I needed a tax cut.

My kids, however, all of them have a more hardscrabble life.  None of them are starving, but none of their lives are anywhere close to as easy as mine.  They didn't get a tax cut.

What's wrong with this picture?