Swing Taxes

Greg Mankiw provides Us with an excellent Rundown of the cinematic outline of the effects of the Corporate Income Tax, though I must admit not without the old Saw that such Corporate Tax Cuts will pay for themselves; as dubious and stupid as Mao swimming the Yangtze River in his 70s (I have always wondered how good Swimmers had to be to hold up an underwater platform while it was being pulled). Corporate leadership, though, may have found some truly fine Swimmers. Does it matter either way?

Greg, like all such advocates of Corporate Tax reduction, lacks the courage of their convictions. They claim that Corporate Income Taxation destroys Business initiative, and should be reduced; but will not take the final Step and call for a complete elimination of the Corporate Income Tax. It is bad, if it is bad, and should be reduced to Zero if it destroys. The fact of the matter, though, is that they are unwilling to face the Spectre of a 14% loss of Federal Income. I, on the other hand, would like to see this elimination, solely to force a restructure of the Federal Tax system.

Readers should recognize the real elements of this Debate. Bush gave Corporations a 15% Corporate Tax rate once, if they would bring their Profits home. Some did, Others refused to do so; unwilling to endure even the reduced Tax rate. The Corporations which did bring their Profits back paid the reduced Tax, then shipped the cleared Profits back Overseas in foreign investment. The Corporations which didn’t bring back their Profits, simply derived a 15% leg-up on the Corporations that did return their Profits. In no way, or at any time, did Community-based Corporations gain anything from the Exchange; it being a Benefit attainable only by the international Conglomerates. It has been awhile since that Exchange, and the international Corporations again want a Reshuffle paid for by the Government. States and Localities favor the Tax remission, as Community-based corporations currently have to pay the high Corporate Tax rate, plus their increased Property and State Tax rates, which the subordinate Governments want to increase. No one truly expects any but the Internationals to benefit from any Tax Cut.

I mentioned that I would like to see a complete Remission of the Corporate Income Tax. It might be the necessary Propellant to gain support for the necessary proper Taxation: Tariffs; long derided by Economists of all stripes. Tariffs have been ostracized since the Great Depression, they being the claimed Evil generating the disturbance. Study of the Clearing Costs of such a Taxation, even under the usurious rates passed during the Depression, would not have impeded any vibrant Economy. The Cause of the Great Depression was a Warehoused Overproduction of Industrial Goods which had a limited Consumer Demand (the Question of whether that Consumer Demand was properly financed is an alternate Question highly debatable). Business cut their Labor Force, not their Prices, and the Overproduction refused to clear with intense additional loss of what Consumer Demand did exist. The actual revision of Tariff charges did not make any difference, or would the elimination of those Tariffs have made a difference. Tariffs still remain the primary vehicle for proper regulation of International Trade, and it is Time that Economists get serious about regulation of that Trade. lgl