19 August 2008

Propaganda ~ U.S. Corporate Taxes

The ideologues at The Wall Street Journal editorial page were whining last week about the high (combined Federal & State) corporate tax rates in the U.S.; this was in response to a Government Accounting Office report showing that large numbers of U.S. corporations paid zero taxes in the period 1998-2005. You can read about that in The New York Times here and here. Never mind the discrepancy between nominal rates and actual payments!

Of course, the WSJ crowd point out that lots of companies simply didn't make any money during that period. Well,, I would ask ~ If that is so, how many of the corporate execs who are paid astronomical compensation packages actually lost a job in that period? If they did lose their job for poor performance, did they get the big severance deal? Why the need for the astronomical packages in the first place if the execs are so incompetent at what they do? And what about the teams of expensive accountants and lawyers that the corporations deploy to try to avoid taxes or the union-busters they hire, or the PR firms to spin their (whether actual or perceived) questionable practices of various sorts?

The WSJ folks are not fools, they are ideologues. They recognize that our nominal tax rates generate "huge compliance costs as businesses scramble to exploit the loopholes, with the result of less revenue for the government." But they don't want to talk much about the costs of exploiting loopholes by such means as the transfer pricing that The Times points to and they surely have nothing really to say about the exorbitant compensation levels for corporate execs relative to the workers in their own firms or their peers abroad.* Like all good propagandists, the WSJ folk do not actually lie, they simply don't bother with the truth.
* E.g., "American CEOs earned 411 times as much as average workers in 2005, up from 107 times in 1990. ... Top executives in the U.S. now make about twice the pay of their counterparts in France, Germany and the U.K., and about four times that of Japanese and Korean corporate chieftains." (Source)



Anonymous Anonymous said...

You say the writers of WSJ of "don't bother with the truth," while you are BLATANTLY doing so. The Times articles clearly state that MOST of the businesses in that investigation were small. One article even points out that companies with "$50 million in sales or $250 million in assets, are less likely to avoid Uncle Sam." Guess what? These CEOs you keep whining about work for multi-BILLION dollar companies. Don't worry, Jimbo. They pay their taxes, and on time, too.

19 August, 2008 11:07  
Blogger Jim Johnson said...

Anon, Are you really so stupid that you cannot read a newspaper story?

"In 2005, one in four large United States corporations paid no taxes on revenue of $1.1 trillion, compared with 66 percent in the overall pool. Large corporations are those with at least $250 million in assets or annual sales of at least $50 million."

Lets set aside the assumption that this threshold for "large" makes any sense. Then, only 25% of the big boys paid not a dime. let's assume they did so for legitimate reasons - like they really lost money (instead of relying on accounting tricks to show a loss). Did any of the CEOs of those companies lose a fucking job? Seems like a reasonable question to me.

You seem to be getting stupider over time. I didn't think that was possible!

19 August, 2008 11:20  
Anonymous Anonymous said...

Why does it even matter if they lose their jobs?! If the shareholders want to keep them there, that's their choice!

FYI, just because a company doesn't do well, doesn't mean the CEO failed. There are also down cycles in business, or exogenous factors that could contribute to rising infrastructure costs. Yoohoo! OIL!!

GM is a perfect example. Here is a company that is going down the tubes, more or less. Have they dumped their CEO? No. Why? Because it won't make a difference! Believe me, if the major shareholders thought all it took was changing one guy and they'd be getting paid, they'd do it in a heartbeat. It's not that simple, Jimbo.

19 August, 2008 11:28  
Blogger Jim Johnson said...

Yooo Hooo! Anon! This report is for the time period 98-05 before OIL shot up. Are you a total idiot?

The miracle of the market, which the WSJ ideologues trumpet is about how it corrects for stupidity and bad decisions. Oooops! I guess that is a myth too.
Or, rather what we need is a market to hold the incompetent accountable. Right now we have the worst of both worlds ~ bullshit ideology and inadequate institutions.

By the way, my chicken shit anonymous 'friend,' the only "simple" thing around here is you. Don't bother to leave more comments, they are going into the hopper where they belong. Bye!

19 August, 2008 11:38  
Blogger Dawei_in_Beijing said...

LOL @ the usage of "Yoo Hoo!" hahaha

With these comments, Anon has hit a new low.

20 August, 2008 16:28  

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