Tag: Corporate tax

Obamanomics in a nutshell…

And this Obamanomics phenomenon applies to collectivism’s economic precepts in general. The idea is to stifle small businesses by subjecting them to ridiculous tax rates, to control them and limit their ability to compete. After all, small businesses are anathema to the big government types, because in general, big government is the enemy of these entities and their biggest economic pain point. In the mean time the big corporations that the government elite favor, both as business entities and as the type of business said government feels should be economic winners, are given tax breaks. That’s always in return for said businesses supporting the efforts of the big government types. From the article:

The New York Times reports that President Obama is reviving an old proposal to lower the corporate tax rate from 35 percent to 28 percent (and 25 percent for manufacturers). Obama’s push to lower the corporate tax rate to 28 percent comes less than a year after he raised the top individual income tax rate, paid by many small businesses, to 39.6 percent.

In a speech delivered Tuesday afternoon, Obama did not explain why he thinks it’s a sound economic idea to raise the top marginal tax rate on small businesses but lower it for corporations.

It is not accidental that the nanny stater’s philosophy is to favor the big over the productive. That’s what the USSR was all about. Practically every entity in the collectivist’s way of doing things needs to be centrally managed by them, leading to a model where anything from manufacturing to healthcare end up as behemoths that are gigantic, inefficient, ineffective, and tied to the state’s whims. While we no longer have the collectivists in charge wanting the state to outright own everything like the good old days of communism, we should not be fooled into believing they have abandoned they belief in central planning and bigger is better. “Too big to fail” is something, and something really bad, the nanny staters gave us.

These days the collectivists masters prefer to create the veneer of free enterprise while setting up a legal system that makes them the de facto power brokers. The ability to pick the winners and losers and to create an incestuous dependency between big business and big government, has all but replaced that. And they still keep the ability to rile up the stupid masses through the usual marxist envy and jealousy based class warfare bullshit that has served them so well, while they and their crony corporatists buddies laugh all the way to the bank. The LSM might ignore the truth, but the facts speak for themselves. This is not happening by accident: it is by design.

Collectivists have no use for a middle class. Their system is predicated on an elite class that rules, and the serfs that serve them. That’s why their policies, while always sold as well intended, have as a side effect the erosion of the middle class at the same time as it expands the number of lower class members dependent on government handouts for their daily subsistence. Punishing small businesses and using them as a cash cows, while favoring the giant corporations that they favor, plays very well into this collectivist model. Collectivist are good at pretending to care, but what they do destroys prosperity. Ask the people that lived under the old Soviet system, the people left behind in communist China, the North Koreans and Cubans, and anyone else subjected to the whims of these fools.

Appropriate Corporate Tax Obligations

It’s no secret that the cause de jour lately in Obamatown has been deficit deduction, or at least paying lip service to deficit reduction. Whether it is discussions on raising the debt ceiling or lowering unemployment, reining in runaway spending seems the cure for many federal maladies. The link between the lack of jobs and the deficit is clear, who wants to expand their business and hire more people if your tax liabilities are onerous, the bureaucratic regulations keep you hobbled and the uncertainties of both getting worse increase with each passing day as government keeps kicking that can down the road.

It is interesting to see how each state has attempted to tackle both their deficit spending and their unemployment problem. The great(?) state of California has it worse then most. If the national unemployment rate is roughly 9%, ours is 11.9%, and why is it higher then the national average, here is one answer:

California currently ranks #49 among U.S. states for “business tax climate” (Tax Foundation) and #48 for for “economic freedom” (Mercatus). It shouldn’t be any surprise then that companies are leaving the “Golden State” in record numbers this year (see chart above) for “golder pastures” and more business-friendly climates in other states.

You would think that businesses would be flocking here, perfect climate, abundant food and resources, cutting edge technology, proximity to the Far East, and myriad leisure activities to satisfy even the most finicky of clients. It would take something pretty cataclysmic to chase away all these businesses (and in the process skyrocket the unemployment rate) stifling taxation and regulation will do that, see, the bottom line is profits and if you can make more money in another state (increasing that state’s coffers with your tax dollars and increasing that states job markets), moving is elementary.

The capital directed to out-of-state or out-of-country, while difficult to calculate, is nonetheless in the billions of dollars. The top five destinations are (1) Texas, (2) Arizona, (3) Colorado, (4) Nevada and Utah tied; and (5) Virginia and North Carolina tied.

If we look at the tax date chart, we can see why. Further below in the chart you can see how the individual states stack up against foreign countries again, we hobble ourselves needlessly.

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If we look at the above chart we can see that although our personal tax rate is moderate compared with the rest of the world, our corporate tax rate dwarfs all others except for Japan.

I am willing to concede that lowering the personal tax brackets does nothing for job creation, Bush and Obama proved that (although, to be fair, when in the throws of a recession as both were, income tax rates no matter where they are is insufficient for this) but what about corporate taxation? How many decades have we seen Japan’s inability to get out of it’s own way in growing it’s economy, think that high corporate tax rate has anything to do with that?

Obama has flirted with this idea and Ryan’s plan has this as part of it’s tax strategy, if the individual states can show a correlation between the corporate tax rate and productivity, maybe Washington should pay attention.