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back to article Obama's budget packs HUGE tax breaks for poor widdle tech giants

President Obama's budget for 2016 includes a whopping tax break that US tech giants have been demanding – because it will let them bring trillions of dollars held in offshore accounts to America without running up huge bills. Under today's tax code, companies that earn money overseas must pay 35 per cent to Uncle Sam if they …

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  1. Anonymous Coward
    Devil

    "the late and little lamented Leona Helmsley"

    To be fair, she did say her bit about "Only little people pay taxes" on her way to being convicted of tax evasion and tossed in Club Fed.

    We need to simplify corporate taxes and bring U.S. practice closer in line with most other countries, that don't try to tax companies' global income. That being said, I'm not expecting millions of new jobs from all this returning money.

    Unless of course the rich start hiring people to be those human footstools that can be stepped on getting in and out of your carriage or limo :)

    2 1 Reply
    1. James Anderson
      Reply Icon

      us steals foreign government taxes

      These are taxes on profits made in other countries like Britain.

      For instance had the greedy f***s in the city of London not sold Cadburies to Hershey's then Camaron and not Obama would be collecting the readies.

      2 1 Reply
      1. Anonymous Coward
        Reply Icon
        Anonymous Coward

        Re: us steals foreign government taxes

        and the Cream Egg would still be made with chocolate ... rather than the vomit US equivalent.

        7 0 Reply
    2. James Micallef Silver badge
      Reply Icon

      Re: "the late and little lamented Leona Helmsley"

      "bring U.S. practice closer in line with most other countries, that don't try to tax companies' global income"

      That right there is a start, but a mentioned in the article there are currently too many loopholes and big multinationals end up paying no tax at all. Rich countries need to take a stand* and tighten up their rules, and they can start by acknowledging that relaxing the rules in the first place did not give them any benefit so they might as well close the loopholes.

      *Why rich countries? Because they are the countries with rich consumers and are markets that big multinationals cannot afford to abandon.

      2 0 Reply
  2. Mark 85

    Pie in Sky tactic..

    I think it's wishful thinking on the President's part. If they wouldn't bring their money to the States at 5.25%, what makes him think that they will at 14 or 19%? It sounds to me like the dear lad has already "spent" the money he thinks it will bring in. I think he's forgotten the saying about "counting chickens before they hatch"....

    As for stealing the tax money from other countries, those corporations aren't paying the taxes to anyone at this point. I believe the taxes should be paid in the country where the money is earned. Then if they pay those taxes, they can bring their money tax-free. Won't happen in our lifetime as there is creative accounting.

    4 0 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      They did bring it back at the 5.25% rate

      The problem was, all the money they've earned since then they've kept overseas because they figured if they waited long enough they'd get another tax holiday.

      Changing the repatriation rate and having the holiday be not all that much smaller is probably the best you can do to cure this situation. While it is possible some companies will keep some of their money overseas hoping to do better than 14.5%, the smaller the spread between the normal rate and the "hoped for tax holiday" the less it is worth waiting.

      At least we're avoiding the sham that this is a job creator like the first time. The money goes to the shareholders in one form or another. Some shareholders might use that money to create jobs, but the people who are making millions off the repatriation dividends are mostly flush with cash anyway so if they had a business idea that was going to create jobs they would have already done it.

      Whether one thinks the normal top corporation tax rate is too high, or that overseas earnings should be taxed at the same rate is one thing, but it was obvious to everyone with a brain that the repatriation holiday would have this effect - bring a bunch of money back then, and much less in the future as they waited for another. Basically all it did was help make the deficit look better in an election year. Hardly the first time incumbent politicians resorted to something so crass and calculated.

      12 0 Reply
      1. James Micallef Silver badge
        Reply Icon

        Re: They did bring it back at the 5.25% rate

        "they figured if they waited long enough they'd get another tax holiday."

        Exactly so. I've seen countless repatriation schemes come and go in many many different countries. In all cases it is presented as a 'last chance', 'one-off' etc. In all cases, it happens regularly every 20-30 years

        0 0 Reply
      2. BoldMan
        Reply Icon

        Re: They did bring it back at the 5.25% rate

        But those shareholders are things like your pension fund as well as rich bastards, so don't be too negative about shareholders!

        1 0 Reply
        1. Preston Munchensonton
          Reply Icon
          Boffin

          Re: They did bring it back at the 5.25% rate

          This line really seeks to distract the reader who isn't paying attention:

          "Instead, a 2008 study [PDF] by the National Bureau of Economic Research found that of the $362bn that was repatriated to the US, more than 90 per cent of those funds went straight back to shareholders in either dividend payments or share repurchasing schemes that increased the value of their stock."

          Now that money is in the hands of investors, what happened next? Study never mentions that, nor is it ever likely to track every dollar that far. Even in a quasi-free-market economy, every action by an investor receiving that money is a good thing (save one):

          1. GOOD: Investors save the payouts, allowing banks to lend to more consumers and businesses.

          2. GOOD: Investors consume the payouts, boosting the revenues and required labor with the sellers of the objects of consumption.

          3. GOOD: Investors reinvest the payouts, boosting the capital in the selected businesses.

          4. BAD: Investors pay taxes, leading to a 20% loss of capital (see Barro, Robert for discussion of governmental multiplier).

          Those are really the only options once that money comes back into investors hands. In truth, all four occur to varying degrees. I don't see the downside yet from an economic perspective. Certainly, Adam Smith would be thrilled.

          2 1 Reply
  3. Dramoth

    hmm

    Get together with all the other countries that these big corporations are using tax rules to profit shift their money around before slotting it into a bank in a tax haven somewhere and charge those corporations with tax evasion, present the banks with various warrants and seize the money from the tax haven and spread it around the countries who are owed billions in taxes.

    Should pay for a couple of tridents for the UK... or another aircraft carrier for the US.

    2 2 Reply
    1. Charles 9
      Reply Icon

      Re: hmm

      How do you get the money out of the tax haven when said haven has sovereign power of its own and would defend itself if anyone tried to intrude?

      2 1 Reply
      1. Medixstiff
        Reply Icon

        Re: hmm

        "How do you get the money out of the tax haven when said haven has sovereign power of its own and would defend itself if anyone tried to intrude?"

        Do a Russia on them with economic sanctions?

        1 1 Reply
      2. John Robson Silver badge
        Reply Icon

        Re: hmm

        According to the US there is no sovereign, there are just (t)errorists and those who might be (t)errorists

        1 1 Reply
      3. Syntax Error
        Reply Icon

        Re: hmm

        Invade and conquer.

        0 1 Reply
    2. LucreLout
      Reply Icon

      Re: hmm

      Get together with all the other countries that these big corporations are using tax rules to profit shift their money around before slotting it into a bank in a tax haven somewhere and charge those corporations with tax evasion, present the banks with various warrants and seize the money from the tax haven and spread it around the countries who are owed billions in taxes.

      Your first problem is that no tax is owed. The money is where it is entirely legally, and it has all required taxes paid upon it.

      Your second problem, is that soverign nations won't like other nations seizing their wealth, which is legally resident there, in compliance with all international laws.

      Your third problem is that you don't seem to comprehend the difference between tax avoidance and tax evasion. One is legal, sensible, and desirable, the other is not. You'll note that there is no moral component to avoidance.

      4 0 Reply
    3. codejunky Silver badge
      Reply Icon

      Re: hmm

      @ Dramoth

      Are these legal tax havens or not that are targeted? The legal ones you know about but are of course legal and the illegal ones are presumed to hold illegal holdings because you have no idea if it is or isnt legal due to secrecy. I find it interesting you want to go after companies who follow the rules to move their money where they wont be robbed blind, and you want to steal their money to redistribute to governments who are struggling financially because they did a terrible job with tax payer money?

      A better way to pay for tridents and aircraft carriers might be to take people like you up on their desire to pay more tax, because you surely want to lead by example? The gov could even make up some warrants and claim to be owed large amounts in tax from you as they seize your lifes work.

      Socialism. Its great until you run out of other peoples money.

      2 3 Reply
  4. Anonymous Coward
    Anonymous Coward

    This is the face of First-World White-Collar CORRUPTION.....

    I live in South America. People here want to live in America because of all the corruption here. Little do they know that corruption thrives everywhere. Its just that in America its a little more subtle! Apple et al should keep hoarding cash and just buy America one day. With all the shortermism from lobbying to CEO paychecks, the US is clearly for sale...

    ..................."The Budget would devote the one-time revenue from this toll charge to the Highway Trust Fund, financing the President's six-year Surface Transportation Reauthorization proposal," the document states. "Devoting one-time transition revenue to infrastructure investments is both pro-growth and fiscally responsible, since - unlike using this temporary revenue for permanent tax cuts or spending increases - devoting it to one-time investments will not increase long-term deficits."

    ..................."Here we go again You may remember hearing this "one-off" argument before. In 2004 the then-President Bush authorized the Homeland Investment Act, allowing firms to bring their overseas funds to America with a 5.25 per cent tax rate. It was argued this would give US enterprises the opportunity to invest in factories in the Land of the Free and spur millions of new jobs. "

    ..................."That didn't happen. - Obama's budget packs HUGE tax breaks for poor widdle tech giants"

    2 3 Reply
  5. Anonymous Coward
    Anonymous Coward

    highway fund, hell no

    Pay it straight to the debt, oldest first, until it runs out. Maybe we can finish paying for WW II or is it WW I...

    0 0 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      Re: highway fund, hell no

      "Pay it straight to the debt"

      A pointless sticking-plaster exercise until governments start living within their means and are regularly running a balanced budget. Whilst conceptually simple, there is the unresolved problem that governments and their civil administrations everywhere are formed of the dishonest and the retarded, meaning that running a balanced budget has a probability similar to that of hell freezing over.

      7 0 Reply
      1. LucreLout
        Reply Icon

        Re: highway fund, hell no

        Whilst conceptually simple, there is the unresolved problem that governments and their civil administrations everywhere are formed of the dishonest and the retarded, meaning that running a balanced budget has a probability similar to that of hell freezing over.

        Harsh, but completely fair.

        4 0 Reply
      2. Preston Munchensonton
        Reply Icon

        Re: highway fund, hell no

        "Whilst conceptually simple, there is the unresolved problem that governments and their civil administrations everywhere are formed of the dishonest and the retarded, meaning that running a balanced budget has a probability similar to that of hell freezing over."

        Anyone truly honest and smart chooses to not go into politics, further perpetuating the downward cycle. Balanced budgets are hard to do anyway, since any organization has the same issue with control on costs but no control on revenues. It's much easier to control costs than control revenues, which is why so many bureaucrats are nothing more than private-sector middle managers, with the chief difference being incentives.

        1 0 Reply
  6. auburnman

    Implement a 'Stagnation' tax

    If the various governments weren't gagging for cash and could afford to wait longer, they could implement a tax that ticks upward by (say) 1% for each year profits sit in an offshore location doing nothing. It wouldn't be too hard to argue hoarding money weakens the dollar and the general economy and should therefore be levied.

    Unfortunately the government(s) are clearly and publicly too poor to play brinksmanship. If they had the funds to stand their ground, I'd be interested to see what the big corporates did. Particularly Apple, I seem to recall they took out a loan to pay a dividend* so they didn't have to repatriate any money?

    *Which in my opinion should have been stamped on before it was allowed to set a precedent.

    1 2 Reply
    1. codejunky Silver badge
      Reply Icon

      Re: Implement a 'Stagnation' tax

      @ auburnman

      "Particularly Apple, I seem to recall they took out a loan to pay a dividend* so they didn't have to repatriate any money?"

      Are you blaming apple because it is cheaper to take a loan to pay a dividend than to actually return the money earned and worked for back to their home country? Surely that says more about the excessive cost of returning the money home.

      "It wouldn't be too hard to argue hoarding money weakens the dollar and the general economy and should therefore be levied."

      Where is money hoarded? Is it locked away in a vault somewhere? Thats expensive, that costs money (inflation + place to hold it + security + etc). Or is the money invested? Put into assets, securities and various investments which causes money to be circulated through the economy? Or of course the gov can rob it all and piss it away on unaffordable bribes and of course expanding their departments.

      2 1 Reply
      1. auburnman
        Reply Icon

        Re: Implement a 'Stagnation' tax

        (@ codejunky)

        Where did I say I blamed Apple? All I'm saying is I would have been interested in seeing what would happen with taking a loan to pay a dividend over time in a world where the government was in a position to stick to it's guns? Would the other corporates have followed suit? (Probably) How long would this be sustainable if there were no tax holidays?(Dunno)

        I'm making no judgement about the cost of returning money home because frankly I don't know if it's too high.

        Where is money hoarded?

        0 1 Reply
        1. codejunky Silver badge
          Reply Icon

          Re: Implement a 'Stagnation' tax

          @ auburnman

          "Where did I say I blamed Apple? All I'm saying is I would have been interested in seeing what would happen with taking a loan to pay a dividend over time in a world where the government was in a position to stick to it's guns?"

          I asked if you were blaming Apple. What do you mean by a gov that stuck to its guns? Companies will always look for the most efficient way of managing their money otherwise they go bust. It does suggest the tax is too high when the money earned cannot be brought into the country. Especially since the country would benefit from having that money in their country.

          0 0 Reply
    2. LucreLout
      Reply Icon

      Re: Implement a 'Stagnation' tax

      If the various governments weren't gagging for cash and could afford to wait longer, they could implement a tax that ticks upward by (say) 1% for each year profits sit in an offshore location doing nothing.

      The first issue here is, as you say, governments are gagging for cash. The second issue is that they have no claim, legal, moral, or otherwise, on that money unless & until it is repatriated to their jurisdiction.

      If they had the funds to stand their ground, I'd be interested to see what the big corporates did.

      Simple, they'd relocate their HQ off shore too and pay zero tax to the country trying to tax them too hard.

      Governments of all colours are going to have to get used to the idea that they need to produce a lot more output with a lot less input. Civil servants need to take the idea to heart, as do councils, and start waking up to the new relaity. There's no money tree, and people have hit the limit of what they are willing to pay, as have corporations.

      Whether you want to be or not, your country is in a global competition for corporate tax revenues. You can't just take ever more from them because you want a new train set, or to buy more votes with larger welfare handouts. They'll just move and leave you with 100% of nothing.

      3 0 Reply
      1. Dan Paul
        Reply Icon

        Re: Implement a 'Stagnation' tax @LucreLout

        Exactly, what part of this do the readers not understand? Is communism really that well entrenched over there?

        Seems all these fools actually WANT to give their money to the government.

        Government is the most inefficient way to distribute money. The best way is not to to take it from the taxpayer in the first place.

        A flat tax is really the only way to deal with the inefficient bureaucracy of the tax departments. Kill them all off and save the money then all this "repatriation" nonsense goes away.

        10% on everyday people (including government and state employees) and 15% on corporations, NO LOOPHOLES EVER! And EVERY country needs to be at the same rate to avoid tax havens. No VAT, no Sales tax, period end of discussion.

        You would be surprised how that concept would affect the efficiency of government. If you combined it with decriminalization of drugs, there would be the largest government surplus in history. More than enough to pay for social welfare for those who need it and run neccesary government services..

        1 0 Reply
        1. arrbee
          Reply Icon

          Re: Implement a 'Stagnation' tax @LucreLout

          "Government is the most inefficient way to distribute money"

          I disagree. The financial sector is by far and away the most highly subsidized industry in modern history. In the UK we distribute tax payer's money to banks who are then less dependent on money from savers and hence can increase the gap between their loan & deposit interest rates leading to much improved margins which in turn justify higher bonuses etc. Looks pretty efficient to me.

          1 1 Reply
  7. auburnman

    Ireland

    It also seems to me that Ireland is a recurring word whenever the discussion turns to dubious tax arrangements. Can anyone think of an incentive that could get the Emerald Isle to toughen up on tax?

    1 1 Reply
  8. codejunky Silver badge

    why

    "one-off" tax holiday

    Why not make 14% the permanent tax figure instead of 19%? There seems to be an amount of crying in the article that last time companies were allowed (yes allowed!) to bring home their money without being robbed in broad daylight by the mafia that they used it to pay bonuses. Of course they did because the robbing rulers gave a limited time reduced penalty for making a living!

    What is most disturbing about this article is the comment at the end makes the spot on point- "Only the little people pay taxes". Every time the gov is doing something 'nice' for the little people by taxing 'the rich' more they are actually creating a tax which YOU will end up paying. The money isnt magic, it doesnt just appear in the rich mans hands, instead it is taken from the people. And the reason the money stays outside of the US is because it is blindingly stupid to bring it back to the US, where it will be stolen by the gov.

    If you want the little people to pay less tax then tax needs to be reduced not increased. Less money needs to be taken from people for the mere crime of earning it. And yes it will reduce the bloated interfering governments and their lovely lifestyle.... oh yeah and some of the bones they throw to win votes. But the thieving society seems to be the one that gains the votes. Leaders who will rob peter to bribe paul.

    2 2 Reply
  9. Tom 38

    Instead, a 2008 study [PDF] by the National Bureau of Economic Research found that of the $362bn that was repatriated to the US, more than 90 per cent of those funds went straight back to shareholders

    Fucking shareholders, reaping benefit from their investments. Where do they get the cheek?

    As we all know, any money returned to shareholders just goes in to their McScrooge like money pit, never to be seen again.

    6 1 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      A more likely explanation

      The 90 % of the 362 bn $ probably went into bigger and better Ponzi schemes like sub-prime mortage investments, if what happened in 2008 is any indication.

      I mean if you are already wallowing in cash and suddenly see big dividends, your first instinct should be to re-invest it, right? Otherwise pay capital gains on this juicy windfall. And if your broker then shows you some "can't lose" re-packaged mortgage backed debt..... well you get the idea.....

      Tax will always be paid by the little people and what is left of a dwindling middle class. Eventually the peasantary will either revolt or we will burn the tax code and start over. I would prefer the latter outcome but the two are not mutually exclusive.

      Wealth cannot continue to trickle upwards into fewer and fewer hands without an increasingly negative impact, regardless of the shell games that keep us all in constant hope. QE and market crashes are manifesting themselves in dwindling or fleeing economic activity, a bigger welfare state for both banks and poor people, more unemployment and a jobless future for many in the West.

      Something's gotta give.

      1 2 Reply
      1. Preston Munchensonton
        Reply Icon

        Re: A more likely explanation

        "The 90 % of the 362 bn $ probably went into bigger and better Ponzi schemes like sub-prime mortage investments, if what happened in 2008 is any indication."

        This is the most uninformed, idiotic statement. If you want to understand the causes of the 2008 financial crisis, you should enlighten yourself with the informative "The Financial Crisis and the Free Market Cure" by John A. Allison. It's the one book that every person should read before discussing the crisis.

        0 0 Reply
  10. The Dude

    Smoke and mirrors

    It's all smoke and mirrors. Until we deal with the problem of oligopolies working hand-in-glove with government for favored treatment and barriers to competition, nothing substantive will change. WE will continue to fund all of this through the tax-slavery system, the charmed circle of business elite will continue to run the show, and our labour will be the engine that drives their luxury.

    Perhaps we should try an idea that's been around for a while but never really put into practice: Laissez-faire capitalism. Watch the fat cats run if that happens!

    2 0 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      Re: Smoke and mirrors

      Does the term "Gilded Age" ring a bell? Even with Laissez-faire, the government still exists and becomes a target (if for no other reasons then they necessarily control an army and taxes), meaning it eventually devolves into Crony capitalism. Any capitalism of any sort eventually spirals down until there is a winner. Much like a poker tournament.

      0 0 Reply
  11. Graham Marsden
    WTF?

    "The argument will be that...

    "...returning this money to shareholders will stimulate investment and thus benefit us all"

    Oh, sure, because the Trickle Down principle worked so well in the past.

    After all, the rich shareholders will go out and spend more money, won't they? It's not as if they'll just find other ways to invest it and benefit themselves whilst the minimum wagers get screwed again...

    1 2 Reply
    1. Preston Munchensonton
      Reply Icon
      Boffin

      Re: "The argument will be that...

      You really don't understand capitalism at all, do you? There's only four outcomes once the investor receives the dividends:

      1. Investors save the payouts, allowing banks to lend to more consumers and businesses.

      2. Investors consume the payouts, boosting the revenues and required labor with the sellers of the objects of consumption.

      3. Investors reinvest the payouts, boosting the capital in the selected businesses.

      4. Investors pay taxes, leading to a 20% loss of capital (see Barro, Robert for discussion of governmental multiplier).

      The fourth is a necessary evil, but all four happen in some measure throughout all the dividends returned to shareholders. They absolutely will consume some of it, to buy for themselves some luxury that they think can afford, but I suspect that's the smallest amount of the four.

      The interesting part is that you want to classify capitalism as "Trickle Down", when all economic systems have some form of trickle down effect in place, with every single transaction that takes place between buyer and seller (whether public sector, private sector, barter, etc).

      1 3 Reply
      1. Graham Marsden
        Reply Icon

        @ Preston Munchensonton - Re: "The argument will be that...

        > You really don't understand capitalism at all, do you?

        On the contrary, I understand it all too well and I can also understand the flaws in your proposed outcomes:

        1) Investments are not just national, but international, especially on the scale we're talking about. What benefit will someone on a low income in the West get if the money us used for currency speculation in the Far East? Or investment in Emerging Markets?

        2) You don't seem to be familiar with Marginal Propensity to Consume. If someone on minimum wage gets an extra £100, they'll probably spend most of it. If someone at the top of the corporate ladder gets an extra £100 (or more) they're unlikely to spend it or, if they do, they will most likely spend it on goods that won't benefit those at the bottom of the ladder. And even if they did, how many flat screen TVs or Rolexes or Luxury cars do they need to buy?

        3) See point 1)

        4) Right, just like Amazon and Google and all the others are paying *sooo* much in taxes right now...

        The fact is that the current system is more "trickle up" than "trickle down" and will stay that way until the big employers start paying their workers sufficient money that said workers can start spreading the money around at their level instead of it all going to boost Directors bonuses and shareholder dividends.

        0 1 Reply
        1. codejunky Silver badge
          Reply Icon

          Re: @ Preston Munchensonton - "The argument will be that...

          @ Graham Marsden

          I have to agree with Preston, you dont get it.

          1) Yes investment is global. So investments in the far east, africa and all the other places which are used to provide a low cost service which benefits the poor. However you seem to be arguing that investment at home is so unattractive that instead of making it more attractive (and yes trickle down worked) something else needs to be done, which often comes in the form of tax. Thereby making it even less attractive to invest at home (invast= more jobs, more workers, more wealth, better advancement).

          2) Are you seriously asking who benefits from the rich buying luxury goods? The things with huge markup prices which provides work/wage for everyone down the chain including the minimum wage workers making the vast array of components? And where do they put it when they dont spend it? Do they sit on the money which then loses value due to inflation? Do they put it in a bank which then gets lent out to everyone else? Do they invest it which then stimulates growth and higher employment?

          4) Amazon and google pay what they must in tax. Very few people (nearly none) pay more than they have to (by choice). And as a result they employ a lot of people and have further tax extracted for the pleasure of paying someone to work for them. That you seem to be implying they should be forced to pay more, probably with the idea so you dont have to, seems to imply you want others to pay for you.

          The trickle up problem is because of government and tax. Who gave the bailouts? Its the gov. The capitalists who took the risk and so should be allowed to fail were rewarded when things collapsed. It was the gov that did that. They gave the money they take from all of us to reward those who misbehaved or lost a bet. The same govs who struggle to control their own spending of our money.

          1 1 Reply
          1. Anonymous Coward
            Reply Icon
            Anonymous Coward

            Re: @ Preston Munchensonton - "The argument will be that...

            I think the real fallacy at work here is that taxation will ever solve anything. Adam Smith and others have demonstrated unequivocally that taxation is always a negative for the overall economy and its growth.

            Economies grow when people add value by producing goods and services. They stagnate or fail when people stop doing this. Not exactly rocket science. It is something even non-economists (and the rest of the hoi polloi) can fully understand.

            Personally, I would like to see a taxation system that isn't "too big to fail". Proposals like the APTT (Automated Payment Transaction Tax) of Dr, Edgar Feige are most interesting, Check it out at www.apttax.com

            In Feige's proposal, ALL (yes ALL) taxes would be abolished except for a very low, instantaneous tranasaction tax on each and every money transaction between individuals, corps, governments, stock markets etc. He proposes a taxation system fit for the 21st century, not a thinly disguised perpetuation of the feudal practices of yore.

            According to his research, only 20 % of economic activity is actually taxed anyway. Properly implemented, the APTT would change that and remove a lot of headache for businesses, governments and individuals.

            Before dismissing him as yet another crazy fool economist pretending to be a scientist, give it a read. It provides some serious food for thought.

            0 0 Reply
        2. Preston Munchensonton
          Reply Icon

          Re: @ Preston Munchensonton - "The argument will be that...

          Graham, you definitely don't understand capitalism.

          1. National boundries matter if you are a mercantilist, but not a capitalist. Adam Smith demolished your point of view on this many years ago. You may not admit it, but low income workers are benefited far more by the low cost of goods produced by emerging markets than by higher cost goods produced locally. Is it really that hard to admit that capitalism benefits everyone involved? Geez.

          2. Marginal Propensity to Consume isn't really a concern when we're talking about an investor receiving dividends. And I clearly mentioned my acceptance of the concept when I mentioned my expectation of consumption being the least likely of outcomes. Read much?

          3. Nothing about international vs. national markets forces the reinvestment of dividends to only benefit the market in which it's invested. This is the vary nature of markets in general, that one transaction leads to another, and so on. You obviously aren't a dummy, so why do you allow your ideology to cloud what is otherwise a very, very simply picture?

          4. Forums on the Internetz.com are hardly conducive to a discuss about tax systems, but if you have such interest, you should read more about the worldwide taxation scheme employed by the US, as opposed to the regional scheme used by virtually every other nation on earth. It's just insipid to expect that a foreign corporation or individual owes any US taxes on earnings outside the US because the US says they do. The same is true for people like Boris Johnson and others with dual citizenship. That said, taxes do result in a capital loss, as the so-called government multiplier is a myth that progressives and socialists love to perpetuate.

          Personally, I don't care where the trickle starts, because I'm only concerned that each buyer and seller in a transaction has the freedom to associate and transact without central government mandates or other market aberrations (whether governmental, corporate, or otherwise). I strongly share your sympathy that workers have earnings enough to live their lives, but I don't have such a narrow view that there's a fixed pie of income floating around for the government to regulate its distribution. Again, I think the sentiment is admirable, but making one group poorer doesn't make another group richer.

          1 1 Reply
          1. Graham Marsden
            Reply Icon

            @codejunky @ Preston Munchensonton - "The argument will be that...

            > low income workers are benefited far more by the low cost of goods produced by emerging markets than by higher cost goods produced locally. Is it really that hard to admit that capitalism benefits everyone involved?

            You rather miss the point that the local low-income workers are probably now local non-workers because the money that they would have earned from the jobs they've lost is now going to other countries and to those with a lower cost of living, because capital is really only interested in ROI and doesn't give a damn about those who get screwed in the process.

            So those local workers can buy cheap stuff made by others, but they're going to find it harder to earn more to be able to afford anything better. Is it that hard to understand this? "Geez"

            > Marginal Propensity to Consume isn't really a concern when we're talking about an investor receiving dividends.

            Yes it is, when we're talking about the benefits of labour not going to the workers who would actually *spend* the money!

            > You obviously aren't a dummy, so why do you allow your ideology to cloud what is otherwise a very, very simply picture?

            Because the picture is bigger than the one that you want to look at. Take off your ideological blinkers.

            > Amazon and google pay what they must in tax.

            Lol! The rich can afford to pay expensive lawyers and accountants to help them dodge paying tax. Do their workers benefit from this? Do they hell.

            > The capitalists who took the risk and so should be allowed to fail were rewarded when things collapsed. It was the gov that did that

            (Facepalm) And *WHO* do you think persuaded the governments to do that??? Us? Or their rich mates?

            > Again, I think the sentiment is admirable, but making one group poorer doesn't make another group richer.

            Riiiight... That's why Carnegie and Rockefeller and JP Morgan and so on were sooooo poor...

            Never mind, you go on enjoying your Right Wing ideology, I'm sure you're alright and that's all that matters, isn't it?

            0 0 Reply
            1. codejunky Silver badge
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              Re: @codejunky @ Preston Munchensonton - "The argument will be that...

              @ Graham Marsden

              "You rather miss the point that the local low-income workers are probably now local non-workers because the money that they would have earned from the jobs they've lost is now going to other countries and to those with a lower cost of living, because capital is really only interested in ROI and doesn't give a damn about those who get screwed in the process."

              If they had the job and earned the money the cost of the item would be greatly more expensive and they would be poorer. The assumption that they would then be non-workers assumes the gov have screwed up the country so bad that no other job exists but low skilled sweatshops. How many successful countries are in that position?

              "Lol! The rich can afford to pay expensive lawyers and accountants to help them dodge paying tax. Do their workers benefit from this? Do they hell."

              Yes they do. The option you offer is expensive lawyers and accountants, vs even more expensive tax (otherwise they wouldnt do it). By not having the earned money confiscated they can afford more workers and more R&D which employs more people who then have more money to spend. Also the lawyers and accountants are also consumers who spend and so cause other people in the wider economy to be employed. And the lower the tax, the less damage to the economy and the more people can be employed. Hell is being taxed out of work.

              "(Facepalm) And *WHO* do you think persuaded the governments to do that??? Us? Or their rich mates?"

              You may need another facepalm. You are arguing the gov should take more in tax but have just said the gov is so financially insecure that they can be persuaded to take money from you to give to the rich who lose it in bad investments. If the gov is so easily swayed to spend your money in such bad ways then it surely makes more sense not to suggest they take more.

              "Never mind, you go on enjoying your Right Wing ideology, I'm sure you're alright and that's all that matters, isn't it?"

              Whenever I read this excuse not to think I wonder if the nazi haters have any thought of the communist nutters? If you go too extreme either way is bad but success comes from a blend of left and right wing (simplifications of) ideology. To try and frame us as uncaring is amusing but if you think about it frames you as the uncaring one. Think about it before you reply.

              0 0 Reply
              1. Anonymous Coward
                Reply Icon
                Anonymous Coward

                Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                "If they had the job and earned the money the cost of the item would be greatly more expensive and they would be poorer. The assumption that they would then be non-workers assumes the gov have screwed up the country so bad that no other job exists but low skilled sweatshops. How many successful countries are in that position?"

                Hmm...just about ALL of them? Name one country that can honestly say they have the vast majority of their population fully contented, working, and productive members of society. Everywhere you look there is SOME significant body of discontent (Scandinavia and Japan both have suicide issues, Germany is having trouble with its export markets, and the concerns most everywhere else is known).

                Your argument basically boils down to to old-age stance of, "If you can't do it, you're expendable. Tough luck, goodbye, better luck next life." How Spartan; why do I always think of the Gilded Age at times like this...?

                "Yes they do. The option you offer is expensive lawyers and accountants, vs even more expensive tax (otherwise they wouldnt do it)."

                For a business, especially a big one, these lawyers and accountants aren't that expensive in terms of the greater picture and can actually be construed as investments in legal compliance and so on. IOW, not that big a burden for them and usually The Cost of Doing Business.

                0 0 Reply
                1. codejunky Silver badge
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                  Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                  @AC

                  Not sure if you are just trolling but you did make me laugh. Do you honestly think many successful countries have nothing but low skilled sweatshop jobs? And yes there is always a group that is not content. Over here it is people wanting higher tax's, just not on them please. The assumption seems to be that taxing more will bring a utopia, unlike all the other times it has been tried and depressed the economy terribly (lost jobs, lost money, lost productivity).

                  "Your argument basically boils down to to old-age stance of, "If you can't do it, you're expendable. Tough luck, goodbye, better luck next life." How Spartan; why do I always think of the Gilded Age at times like this...?"

                  If that is what you think of then it shows how cold you are. If it is your gut reaction because you think not stealing all the money off people who earn it is the ridiculous view you just stated then that is between you and your therapist. Either way it has nothing to do with discussion and shows an irrational fear which prevent you from thinking about the subject. Simply if a gov tries to steal money from people who earn it, those people will do all they can to keep the money away from the gov. That includes not bringing money home for investment.

                  "For a business, especially a big one, these lawyers and accountants aren't that expensive in terms of the greater picture and can actually be construed as investments in legal compliance and so on. IOW, not that big a burden for them and usually The Cost of Doing Business."

                  Exactly. The gov is ripping them off so badly that the expensive lawyers and accountants are cheaper than having earnings confiscated for the pleasure of working for them. No wonder the companies do all they can to protect their earnings. And of course invest them where they wont be financially ripped off. The outcome of this is lower tax receipts for the welfare projects and less money for jobs, investment and growth. All because a gov got greedy.

                  0 0 Reply
                  1. Charles 9
                    Reply Icon

                    Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                    "If that is what you think of then it shows how cold you are. If it is your gut reaction because you think not stealing all the money off people who earn it is the ridiculous view you just stated then that is between you and your therapist. Either way it has nothing to do with discussion and shows an irrational fear which prevent you from thinking about the subject. Simply if a gov tries to steal money from people who earn it, those people will do all they can to keep the money away from the gov. That includes not bringing money home for investment."

                    Which means the government must do EVEN MORE than they can to keep the money from disappearing since the natural gravity of their wealth means it will draw more wealth away, and since wealth is material (and thus finite), it has to come from somewhere: if not them, then everyone else. Eventually, it will LITERALLY be a case of haves vs. have-nots (or rather, have-everythings vs. have-nothings). Get to that point and things are going to get ugly. So unless the government intervenes to even the playing field and reduce the discontent, they run the risk of overthrow.

                    0 0 Reply
              2. Graham Marsden
                Reply Icon

                Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                > If they had the job and earned the money the cost of the item would be greatly more expensive and they would be poorer.

                "Greatly more expensive"? Or just that the businesses profit margins would be smaller? Oh, but of course, the aim for the business owner is simply to get as much money as possible for the least possible expense and they don't care who gets screwed thereby. (Business owners are not allowed to have a consciene, are they?)

                > The assumption that they would then be non-workers assumes the gov have screwed up the country so bad that no other job exists but low skilled sweatshops. How many successful countries are in that position?

                Hmm: Number of workers on minimum wage has DOUBLED to 1 in 20 and that doesn't include all those on benefits, nor all those who are self-employed who are on low incomes, but aren't included in these figures.

                > By not having the earned money confiscated they can afford more workers and more R&D which employs more people who then have more money to spend

                "Confiscated"? Oh dear! Yes, they can afford more workers but they will probably only be paid the minimum wage. And what's the betting the R&D will be devoted to "how can I make more money with fewer people and less expenditure so I can make more profit".

                > the lawyers and accountants are also consumers who spend and so cause other people in the wider economy to be employed

                But there's a *limit* to the amount that people will spend as I've already pointed out, so more of that money will not be passing into general circulation, but squirreled away into investments which will then be used by banks and other institutions to make *themselves* more money in the financial markets...

                > If the gov is so easily swayed to spend your money in such bad ways then it surely makes more sense not to suggest they take more.

                Oh ye gods, codejunky, you don't get it do you? The argument is for a more *compentent* government, not one with idiots like Osborne at the helm who has borrowed *more* money than anyone else before and *still* failed to clear the deficit *despite* taking lots of money off the little people who can least afford to lose it!

                > To try and frame us as uncaring is amusing but if you think about it frames you as the uncaring one

                Oh I've thought about it and I've looked at history and I remember the words of George Satayana: "Those who do not learn from history are doomed to repeat it", yet that's exactly what is happening now and what you seem happy to continue.

                0 0 Reply
                1. Charles 9
                  Reply Icon

                  Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                  NOTE: I'm not criticizing here but corroborating.

                  "Hmm: Number of workers on minimum wage has DOUBLED to 1 in 20 and that doesn't include all those on benefits, nor all those who are self-employed who are on low incomes, but aren't included in these figures."

                  How about one more metric just to be sure. What's the distribution of job wages vs. the total population? This way factors such as absolute population shifts can be accounted for and show that the proportion of low- to high-wage jobs is shifting more towards the former even on a per capita scale.

                  ""Confiscated"? Oh dear! Yes, they can afford more workers but they will probably only be paid the minimum wage. And what's the betting the R&D will be devoted to "how can I make more money with fewer people and less expenditure so I can make more profit"."

                  I've noticed an increasing amount of R&D going into two things: robotics and expert systems. Technologies that can render human workers expendable. And worse yet, this creep of automation is starting to hit areas where we thought humans were safe like the arts. And to top that off, there doesn't seem to be much of an outlet for the displaced masses unlike in previous technology shifts. Most of what's left will be highly-technical and/or specialized positions that pretty much call for a life decision just to pursue, let alone secure a position. They'll also be of a nature that not many of them will be needed to handle the population. I'm reminded of that Robots Are... poster you see in Portal 2...

                  "But there's a *limit* to the amount that people will spend as I've already pointed out, so more of that money will not be passing into general circulation, but squirreled away into investments which will then be used by banks and other institutions to make *themselves* more money in the financial markets..."

                  And not all of these investments need to result in greater economic activity. Investing in real estate without developing it or stockpiling in precious commodities (which have value by merely existing) results in stagnant value: no real money flow. Also, the flow can be restricted: money circulated mostly within the elite doesn't become accessible to the hoi poloi.

                  "Oh ye gods, codejunky, you don't get it do you? The argument is for a more *compentent* government, not one with idiots like Osborne at the helm who has borrowed *more* money than anyone else before and *still* failed to clear the deficit *despite* taking lots of money off the little people who can least afford to lose it!"

                  Only problem is that we're running into the "power corrupts" problem. Even if just for one term, the natural tendency for people in power (like politicians) is to leverage that power as much as possible so as to have a comfortable endgame. Selflessness and ambition appear to be conflicting traits in your average human, and the end result is that politics appears to naturally attract the kinds of people we least want in power. And I bet none of the safeguards we could conceive would be enough to reduce this tendency to any significant degree.

                  0 0 Reply
                2. codejunky Silver badge
                  Reply Icon

                  Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                  @ Graham Marsden

                  ""Greatly more expensive"? Or just that the businesses profit margins would be smaller? Oh, but of course, the aim for the business owner is simply to get as much money as possible for the least possible expense and they don't care who gets screwed thereby. (Business owners are not allowed to have a consciene, are they?)"

                  Greatly more expensive. I didnt say it wrong. And the dream that profit margins would be smaller is actually the dream that less people are employed and there is less money in the economy as there is less to spend. The 'trash the business owner' approach is an argument to reduce the people employed. Not a good idea.

                  "Hmm: Number of workers on minimum wage has DOUBLED to 1 in 20 and that doesn't include all those on benefits, nor all those who are self-employed who are on low incomes, but aren't included in these figures."

                  Yes. We have a huge problem that we import people from much lower paid countries to do a lot of that work too (the manual stuff at least)! And of course we have growth in minimum wage jobs when we have people too precious to work because benefits is easier. I know a number of these people who found work too hard so quit then came boasting how easy they had it. I do hope that option has been removed. Also self employed is not a swear word. Just so you know.

                  ""Confiscated"? Oh dear! Yes, they can afford more workers but they will probably only be paid the minimum wage. And what's the betting the R&D will be devoted to "how can I make more money with fewer people and less expenditure so I can make more profit"."

                  When you take something from someone without permission is it stealing or confiscating? I notice you argue against employment when you say "they will probably only be paid the minimum wage". Sorry your highness but when not on the lofty heights of demanding a small fortune for a job that is taxed and red tape burdened already there are people who would prefer to have a job/income than no jobs. Your argument seems to be "how can I make more money without having to work for it".

                  "But there's a *limit* to the amount that people will spend as I've already pointed out, so more of that money will not be passing into general circulation, but squirreled away into investments which will then be used by banks and other institutions to make *themselves* more money in the financial markets..."

                  Look up the word investments. Look at what the financial markets do with the money. You see all that stuff around you (property, employment, wages, infrastructure, technology, etc) that didnt come from you huffing and puffing. It came from investments to employ the people to do it. Some pay off, some fail. But the money is back in circulation wherever it is worth investing.

                  "Oh ye gods, codejunky, you don't get it do you? The argument is for a more *compentent* government, not one with idiots like Osborne at the helm who has borrowed *more* money than anyone else before and *still* failed to clear the deficit *despite* taking lots of money off the little people who can least afford to lose it!"

                  Please tell me we have someone competent to judge the competence. Osborne isnt great but the simple problem of borrowing so much more is due to the clusterf**k left by the last lot. You remember a recession occurring around the world and then the various govs who binged on credit looking worried. Brown was one of em! And how do we pay the interest? We either cut off all them public sector jobs/services we cant afford or we borrow. The fact that he has taken so much money and still cant clear the deficit shows how bad the last lot were at signing contracts we cant pay and hiring public workers to make unemployment look good..... all on credit!

                  "Oh I've thought about it and I've looked at history and I remember the words of George Satayana: "Those who do not learn from history are doomed to repeat it", yet that's exactly what is happening now and what you seem happy to continue."

                  You have no idea how true this is. People demanding more tax even though it reduces jobs and damages growth. People rallying against 'the rich' because it makes them feel better when the gov and population when on a credit binge. Even without looking far back we can look just to europe in the current situation. Countries tanking due to over regulation, tax burden and gov incompetence. Govs all over clambering to steal money from the successful (the private companies who were careful). And I am not happy for history to keep repeating. But until reality smacks you in the face and even then probably not, you will demand we do it all again. While people demand jobs and money and growth.

                  0 0 Reply
                  1. Graham Marsden
                    Reply Icon

                    Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                    > The 'trash the business owner' approach is an argument to reduce the people employed. Not a good idea.

                    Balderdash. How many million pounds of bonuses does the owner need? How about they give some of that money back to the little people who are actually doing the work instead of just paying them thte minimum required by law? Who knows, that may even help improve staff morale and reduce turnover! (But, hell, there's enough unemployed people out there that if someone quits, there are plenty more desperate for a job...)

                    > I know a number of these people who found work too hard so quit then came boasting how easy they had it. I do hope that option has been removed.

                    Oh gods, someone else who has swallowed the "Scrounger Narrative" hook, line and sinker. Try looking up how much money is lost through that, then how much is lost through big corporations dodging tax. Again, take the log out of your eye first.

                    > Also self employed is not a swear word. Just so you know.

                    I know, given I started my own business on a self-employed basis over 20 years ago, however there is a difference between that and people who have been forced to sign contracts where they "work" for businesses on a self-employed basis, meaning that they can be sacked without notice, don't get sick pay or paid holidays or any of those other tedious and expensive annoyances...

                    > When you take something from someone without permission is it stealing or confiscating?

                    And I bet you believe Copyright Violation is theft too.

                    > there are people who would prefer to have a job/income than no jobs.

                    Great, but how about we actually pay people a *living wage* insted of a pittance? Or is that too left-wing for you?

                    > Your argument seems to be "how can I make more money without having to work for it"

                    Erm, excuse me? Isn't that what you're saying that the business owners should be able to do? Because that's sure as hell what they're doing! The little people do the work, the owners trouser the profits...!

                    > Look at what the financial markets do with the money.

                    I have, they run it around in a massive hamster wheel that generates lots of money for them, but precious little of it (if any) gets back to the people at the bottom of the pile.

                    > the simple problem of borrowing so much more is due to the clusterf**k left by the last lot.

                    Are you naiive or just ignorant? Yes, Labour made a mess, but Osborne has made the problem worse and dumped the costs on us, the tax payers, not on the banks and businesses who caused the issue!

                    Anyway, as fascinating as this is, I see little point in continuing this discussion because it's clear that your ideology is blinding you to what is *really* happening out there. Money is going *up* the tree, it is *NOT* coming back down. The rich are gettting richer, the poor are getting poorer and until *that* reality slaps you and them in the face and the government keeps colluding with them to maintain the status quo, it will only get worse.

                    Feel free to have the last word, I have a business to run selling sensibly priced products instead of trying to gouge every last penny of profit because I can see the flaw in that model even if you can't.

                    0 0 Reply
                    1. codejunky Silver badge
                      Reply Icon

                      Re: @codejunky @ Preston Munchensonton - "The argument will be that...

                      @ Graham Marsden

                      "Balderdash. How many million pounds of bonuses does the owner need? How about they give some of that money back to the little people who are actually doing the work instead of just paying them thte minimum required by law? Who knows, that may even help improve staff morale and reduce turnover! (But, hell, there's enough unemployed people out there that if someone quits, there are plenty more desperate for a job...)"

                      This is the trap of aiming for the wrong direction. How much money do you need? Arbitrarily lets decide that you have too much money, you cant need all that! So lets take it from you and redistribute it as we please. Maybe moats and duck houses (maybe porn for ministers husbands). You dont need it and we can drag everyones pay down. Vs letting the person who earns the money to keep the majority of it (regardless of their wage). That way it is worth making money and employing people, and with the increased wealth associated with that we can "improve staff morale".

                      "Oh gods, someone else who has swallowed the "Scrounger Narrative" hook, line and sinker. Try looking up how much money is lost through that, then how much is lost through big corporations dodging tax. Again, take the log out of your eye first."

                      So you have a boner for businesses money (they earned it, you didnt) but have no problem with people dropping out of work to take a slice of that money because you think it isnt much being taken? You may need to clear your eye before we go on.

                      "I know, given I started my own business on a self-employed basis over 20 years ago, however there is a difference between that and people who have been forced to sign contracts where they "work" for businesses on a self-employed basis, meaning that they can be sacked without notice, don't get sick pay or paid holidays or any of those other tedious and expensive annoyances..."

                      I can see the problem. So many regulations making it harder to employ someone properly that it makes more sense to hire them as self employed. Makes sense. Although I guess you think these people are better served being out of work and using the 'safety net' welfare is supposed to be?

                      "And I bet you believe Copyright Violation is theft too."

                      Not seeing what you are getting at here. I said nothing about copyright (I would argue that stealing a copy is not the same as stealing something irreplaceable such as someone's earnings).

                      "Great, but how about we actually pay people a *living wage* insted of a pittance? Or is that too left-wing for you?"

                      What living wage is that? Food? Shelter? TV? Internet? Wifi? Unlimited funding for unlimited children? Also how many jobs are you happy to see disappear to afford your living wage? Obviously as costs go up the money must be found and the business owner will allocate as they please (for the business they own, run, theirs, not yours. Hope thats not too right wing for you).

                      "Erm, excuse me? Isn't that what you're saying that the business owners should be able to do? Because that's sure as hell what they're doing! The little people do the work, the owners trouser the profits...!"

                      Aww poor you (*tiniest violin*). You mean the owner who is liable for the running of the business? To make long term decisions including appointment of staff? To keep the thing running so the 'little people' can do their job and come back to it again tomorrow? The profits which are earned against a business not set up by the 'little people' but instead employs them and makes money through viable business to pay them? Poor you. Maybe you should go set up your own then you can make that risk free, easy money.

                      "I have, they run it around in a massive hamster wheel that generates lots of money for them, but precious little of it (if any) gets back to the people at the bottom of the pile."

                      You might want to look again. You missed most of it.

                      "Are you naiive or just ignorant? Yes, Labour made a mess, but Osborne has made the problem worse and dumped the costs on us, the tax payers, not on the banks and businesses who caused the issue!"

                      Eh? You do know that labour spent the money in a boom? And you know it was labour who bailed out the banks letting them carry on? And while various scandals have hit, the banks 'rescued' by tax payer bailout have performed worse than most of the private ones? The issue was caused by lack of regulatory oversight (3 bodies, no eyes, no teeth) and govs loving the boost to their finances (of funny money). Osborne hasnt been brilliant but the sinking you attribute to him was pre-him.

                      "Anyway, as fascinating as this is, I see little point in continuing this discussion because it's clear that your ideology is blinding you to what is *really* happening out there. Money is going *up* the tree, it is *NOT* coming back down."

                      While I have the same opinion of you and your ideology I do agree with your assessment of the direction money is going. So many subsidies and market fudges are pushing money to the rich, but thats not the market doing it. The market didnt bail out the risks the banks took. The gov sloshed money to underwrite the risks (here and US). Plausibly storing further problems (and yes Osborne is doing this too).

                      "because I can see the flaw in that model even if you can't."

                      The funny problem with this debate is we both have the same opinion of each other. So I will watch France and Greece apply your ideas and see how they get on.

                      0 0 Reply

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