Wednesday, July 6, 2011

Patriotic Tax Cheats

This is so fucked up/stupid you can basically guarantee it will happen. Paul Krugman:
The idea of granting a tax holiday for corporations that repatriate income they’ve kept overseas, and on which they have avoided taxes, is one of the worst ideas I’ve heard in a long time. (And that’s saying something in these days and times).

It figures, then, that my politically clued-in friends tell me that it’s an idea gaining lots of support on the Hill, even among progressives.

So, what’s wrong with this, aside from the fact that any short-term gain in revenue will be much more than offset by future losses? (Think about the encouragement you’re giving to tax avoiders, who can figure that they too will get a free pass one of these days).

The answer is, it would do absolutely nothing — zip, zero — for job creation.
But, say the advocates, it would put cash in the hands of businesses, which would then invest that cash, right?

Um, aren’t people reading the financial news?

Major corporations — and this is what we’re talking about — are awash in cash, which they aren’t investing in new plant and equipment because they don’t see enough consumer demand to justify expanding capacity. Instead, they’re paying down debt, buying back their own stock, and in general using cash for just about everything except job creation.

So why would you suppose that letting these major corporations slip hundreds of billions of cash past the tax collectors would change anything? The pile of cash they aren’t using would just get bigger.
With the economy this terrible, it still blows my mind that the range of debate in DC goes all the way from "giving rich people more money" to "giving huge corporations more money".


  1. The idea that I had seen floated was that the tax holiday would be tied to stimulus spending - that is, money could be brought back at a much lower than usual rate, and in exchange the revenue we gained from that would be used for things like infrastructure projects.
    The first half is still probably a terrible idea, but I think it's mostly showing how desperate some dem's are getting to do something, anything that could actually help the economy now... even if it does screw us pretty hard in the future (but well after the next election cycle)

  2. I had seen that floated too, and it's one of those things that I just have 0% faith that it will occur.

    It reminds me of the tax cut extention negotiations, just because there were all kinds of amazing things floated in the weeks before hand, to make even people like me think... "well, if they got that in exchange" which ended up no where close to the final deal.

    With that said, if one of those plans DID happen, it wouldn't be the first choice, but any infrastructure/job creator would have to be considered. The economy is just too fucking horrific right now not to.

  3. yeah... I really don't get this whole thing. The entire premise of, "Yes, we understand that not doing this would absolutely tank the economy, and we promise we'll eventually do it, but only if you first agree to the following demands" is completely and utterly beyond me. How the hell can they say "we won't do X unless..." when they have openly admitted that they eventually, absolutely have to do X?

    Somehow this seems appropriate:

    Unfortunately, economics is unlike biology as a science in that these people are trying to use it. This is like having a chipmunk design the safety mechanisms for a nuclear reactor.