J. Andrew Rogers
andrew at ceruleansystems.com
Tue Jul 14 18:52:37 PDT 2009
On Jul 14, 2009, at 6:01 PM, Stephen Williams wrote:
> Are you implying that the US "skims" 20% of gross revenue on all
> business revenue? Really? "Skimming" means taking a chunk of gross
> receipts. The mob guy stops by Friday night and dips into the till
> for a handful.
All the parsing aside, the US business taxes are not favorable by the
standards of the industrialized world, and there are plans afoot to
make them materially worse than they already are.
I think it is very reasonable to be concerned about the business tax
structure in the US; we are starting out from a position of mediocrity
and proposing the pathological. It is fine that they want to raise
revenue, but it seems to be more about political expediency and
control than efficient revenue generation.
> Is that why some ad I saw for Mother Jones at the post office
> yesterday (misleadingly) points out that "61% of corporations pay no
That is because most corporations are tiny and the money is passed
through to the individuals that own it, which as you point out is
misleading. Ideally, even large corporations could operate in this
fashion if only to eliminate the perverse incentives corporate
taxation creates. The 1990s dotcom boom-bust cycle was at least in
part an artifact of perverse incentives created by the US tax structure.
> Some counties do have a gross receipts tax. The most I've seen is
As an additional data point, I know the State of Washington has a 1.5%
gross receipts tax for many businesses.
The major criticism of gross receipts taxes is that they compound
rapidly to a significant percentage and create perverse incentives
toward inefficient business structures. Perhaps not 20% in the US,
but far larger in reality than the trivial-looking 1-2%. It does not
require taking an obvious "20% off the top" to create a de facto
approximation of that. In most cases, a large VAT is a better idea
than a small GRT.
> So, how is Obama being an idiot or hypocrite here? I would raise
> the same point.
The only point worth raising is that it is plainly an attempt to
obscure a steep tax hike that will be paid by average individuals. I
have no problem with that as a mechanism per se except to the extent
that it is very damaging to the US business environment to try and
bury that large of an individual tax hike in the US business tax
structure. That has consequences to average people far beyond paying
more in (obfuscated) taxes.
If the US needs to raise revenue, the least the government could do is
be intelligent about it. The Europeans are in many ways smarter about
tax structures than the US government. It baffles me that the plan is
to ignore the better features of European governments and to
diligently emulate the parts where European governments reliably under-
J. Andrew Rogers
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