Wednesday, March 30, 2011

The Chicanery of Corporate Taxes

I started this search by reading this Post last. There will be two other Opinions which I will cite concerning their evaluation of the material, which focus on other aspects of the situation I would outline. I work the content of the original Post through my mind, and come up with several decisions. The first one is that if actual Productivity basically matches the drop in Employment, then We are actually still in a Recession. I scribble up some Paper, curse a little, input a little Kentucky Windage, and determine that the actual Inflation since 2007 has been more on the order of 6% per year, if one discounts the falling values of Housing. Quantitative Easing saved no Jobs, and directly suppressed actual Productivity by artificially decreasing actual Demand for Product through higher Pricing of final Product. All Stimulus efforts advanced so far only aided final stage Production, which paid less for inputs, but received advanced Retail Pricing. This spurred the level of Business Profits, but only at the level of international Players who could import intermediate Production Goods; such items which could not be supplied by domestic Producers because of higher Costs of Production, and rising material Costs. Tyler Cowen brings his own View to the Mandel Post. He asserts that the Mandel data compares favorably with one current economic model hypothesis, while contradicting its opposition posit. I am not sufficiently fluent in either hypothesis to argue this Point. I do know of no economic evaluation which measures Productivity rate gains in terms of actual or real output increases or decreases. One factor Tyler does not touch upon remains the fact that a great share of the international competitiveness for input supply comes from Corporations desiring to transition to foreign production in order to escape necessary response to United States Business and Corporate Tax law. He does stress that there is definitely a structural unemployment problem in this Country further injured by a declining Productivity output. I could mention that the Fed Quantitative Easing did finance the Corporate efforts to shift Production overseas. Arnold Kling joins in with this effort, which underlines that this is not Trade neutral. It is also not Employment neutral. The real Cost of intermediate inputs are being under-valued. The amounts of such inputs are also under-estimated; but here is the kicker, the matrix changes massively when it is canopy production for a parent Corporation. The later has a real advantage in under-pricing the value of these inputs to achieve Tax advantage, when they can shift final Sales Profits overseas to the intermediate inputs production. They get taxed less on less reported Income. At the same time, they can claim a higher Profit ratio, but with lower amounts taxed. Corporations, if they are big enough, love this system. lgl

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