Should Progressives Play "All or Nothing" With the End-of-Year "Tax Extenders"? Yes.

[TexasTowelie]

by Gaius Publius

I wrote recently about the lame-duck battle-- behind the scenes and in the press-- being waged over end-of-year "tax extenders." I offered a progressive strategy (repeated below) for maximizing the number of "good" tax credits that would be extended ("renewed&quot , like credits for renewable energy and expiring-in 2017 expansions of the Earned Income Tax Credit.

But to fully understand what this amorphous "package" really contains, let's take a closer look; it will be useful to know exactly what's at stake. Are these "tax extenders" really "a little of this and a little of that"-- something for the Rich and something for the Rest? Or are they "a whole lot of this and not much of that at all"? Bottom line-- the package contains very few taxes that benefit the middle class, and a "bonanza" that benefits the very very wealthy.

How Slanted is the Expiring Tax Package Toward "Business" and the Wealthy?

There are about 55 expiring tax cuts in the full package, but only a few of them genuinely benefit the poor and middle class (unless you think every "business incentive" automatically benefits workers). Joshua Holland at BillMoyers.com (Gaius Publius' emphasis throughout):

The 55 {tax} cuts, known on Capitol Hill as “extenders,” expired at the end of 2013 but in the past have been renewed retroactively on a bipartisan basis with little fanfare. Altogether, according to the Congressional Budget Office, they could cost the federal government $46 billion in revenues in 2014 and as much as $700 billion over the next 10 years. While some of the breaks would help working people, 90 percent of them would benefit the bottom lines of large, US-based multinationals.

Your first take-away-- ninety percent of these tax breaks, or roughly 10-to-1, would benefit "large, US-based multinational {corporations}"-- meaning the very very rich. Recall that just as corporations loot the economy, the rich loot those corporations via their compensation committees while workers are regularly squeezed. Thus most of the benefit of these "tax breaks" flow to CEOs and their ilk. This whole story is about sweetening the bottom line of what Bernie Sanders calls the "billionaire class."

See more at: http://downwithtyranny.blogspot.com/2014/12/should-progressives-play-all-or-nothing.html

[JustAnotherGen]

1. Kick and Rec

[joeglow3]

2. Some bad reporting there

"S&P 500 companies currently have $1.9 trillion parked in offshore tax havens."

-Sure, if by tax haven, you mean EVERY OTHER COUNTRY in the world. What does that say about our corporate tax structure if the author considers every single other country in the world to be a tax haven?

The US is essentially the only major economy that taxes worldwide profits. Why should a company pay their tax bill in full in a country where they earned the income and then have to pay US taxes simply because their headquarters is in the US? This is why you are seeing deals like Burger King. In a global economy, a company can compete with their headquarters in Canada or Mexico (or anywhere else) just as easily as if they are headquartered in the US. A better focus of their energy would be on companies that shift their income to overseas intangibles companies (i.e. Apple).

"Notice the second bullet, incentives to business for "investment property" and "Section 179" (depreciation) allowances-- $346.1 billion over a 10-year-span, or more than one third of the entire package."

-I don't think the author knows what Section 179 of the IRC is. By its very definition, it is not available to the very rich. It is a benefit for small businesses. Now, if he wants to discuss bonus depreciation, then he makes valid points.

Finally, a question I would like to see asked is why are these credits for companies being extended retroactively? If the point of the benefits is to encourage specific activity (R&D, charitable contribution of certain items, etc.), how do you encourage behavior that took place 12 months ago?

[librechik]

3. They should pay for the PRIVILEGE of having that US address. or stop using it.

that isn;t bad reporting--that's propaganda designed to convince small time business owners to support tax breaks for huge entities because (not true) they have the same interests.

[joeglow3]

4. Sadly, there is no privilege there

Once again, that is why companies are moving out of the US. It is not worth hundreds of millions, if not billions, of dollars a year. Sadly, almost 10 years ago (on DU), I said exactly this would happen. People mocked because it was such a privilege own a building called your headquarters in the US. Now that what I said would happen is happening, people are STILL claiming it is worth it.

[librechik]

5. No. You have swallowed the anti-US propaganda.

Sure, we're an occupied nation and citizenship gets you Butkus. But in the global market, the US brand is still golden. It's in the interest of the gazillionaires to pretend the US is shit; they're always looking for a bargain.

And we have swallowed that BS whole. We're just a brainwashed mess, otherwise, we could fight back. But we would have to organize to do that, and the propaganda divisiveness has made us incapable of that.

[joeglow3]

6. So, all the companies moving their headquarters don't know jack?

Burger King's income will drop by tens (if not hundreds) of millions annually (to offset the tax gains they will get)?

[librechik]

7. sorry to call them stupid

but I've not seen anything smart about the way these companies are choking and starving and drowning their future customers and forcing them into wage slavery. They seem completely deranged to me, including the weird futuristic Burger King deal. They act like derivatives are real and global warming is a hoax. Stupid, yes.

[joeglow3]

9. Honestly, this is as easy to understand as global warming

Pay 10% tax in foreign country, repatriate earnings to US and pay another 25% in taxes, or pay 10% tax in foreign country, repatriate earnings to Canada and pay nothing more in taxes.

[aspirant]

12. How much do we charge

for the use of our infrastructure to deliver their buns and burgers, our courts, our fire and police depts etc? Should we the people pay for that so they can extract our money to store in Canada?

[joeglow3]

13. Zero.

That is how income is apportioned to where it is earned. To the extent they are delivering buns and burgers to stores in the US, they are paying 35%. If the buns and burgers are coming from the US and sold into a foreign jurisdiction, there is a transfer pricing study (that is audited by the transfer pricing division of the IRS) to ensure a proper amount of income lands in the US.

You don't realize it, but you just proved my point. The US is providing NOTHING in regards to investments and sales in Japan (for instance). And yet, our government wants to tax that Japanese income (again, we are one of only a handful of nations in the entire world with this antiquated structure).

[aspirant]

8. Do the multinationals go to the US fed

for trillions in loans at virtually no interest rates? If so, why don't we force them to France or China, etc. for these loans and give our money to solely American companies?

[joeglow3]

10. Outside of banks, who is going to the Fed?

[aspirant]

11. Outside of banks

Where do the multinationals go for loans. Are the mega-billions in subsidies from US taxpayers or Chinese taxpayers? Do we have a transparent Fed where we audit them every year to see where every penny is going? Do we insure that the majority of our Fed money stays in America?

[joeglow3]

14. For long term financing, we issue bonds to individuals who chose to buy them

For short term financing, we issue commercial paper (which is usually bought by money market funds). Thus, we (a Fortune 500 company) don't go to the Fed.

[aspirant]

15. WSJ article

Oct 8, 2008, by Jon Hilsenrath; Feds will lend directly to corporations.