Lost in the noise: a tax holiday is a bad idea

[Double Trouble]

The same way as last time. Repatriation tax holiday = opportunity for public companies to pay one-time special dividends to shareholders and/or increase bonuses for top execs of the company that would do absolutely nothing for ordinary U.S. workers.

That's the myth that keeps getting repeated over and over. "one time special dividends to shareholders" and bonuses for top execs still provide a benefit to the economy because that money goes somewhere. It gets spent, taxed, invested, whatever. And that benefit is more than what we currently get (nothing), no matter how small.

 

[UberNeuman]

If a business makes a profit, where do you suppose that profit goes? Ultimately, it has to go somewhere. Either to shareholders, or owners, or in compensation to workers (including fat bonuses for execs), or as investments. It has to go somewhere, and when it does, we get some benefit from it, whereas right now we get no benefit at all. Zero.

 

[Double Trouble]

What exactly do you think current tax law does, numbnuts?

Get rid of the whole damn thing, institute a flat tax, and include short term capital gains as income. Done.

You morons and demand for social experimentation via the tax code are what let the rich avoid taxes but you're too stupid to realize it.

Good post. If the tax code was used for what it's supposed to be used for (collecting revenue to fund the government), there would be no slew of loopholes and ways for the wealthy to escape paying taxes or defer tax payments. Unfortunately, the tax code is used as a social engineering tool to incentivise certain things (like homeownership, child rearing), while dis-incentivizing others. The ultimate result of that is to make the wealthy more wealthy because they have the resources to make the most use of those loopholes or opportunities.

 

[UberNeuman]

Good post. If the tax code was used for what it's supposed to be used for (collecting revenue to fund the government), there would be no slew of loopholes and ways for the wealthy to escape paying taxes or defer tax payments. Unfortunately, the tax code is used as a social engineering tool to incentivise certain things (like homeownership, child rearing), while dis-incentivizing others. The ultimate result of that is to make the wealthy more wealthy because they have the resources to make the most use of those loopholes or opportunities.

What parts of Government would be funded under your idea?

\Ayn Rand took SS benefits....

 

[ayabe]

I have to agree with Fern and <sigh> Craig the Fail 234 that a tax holiday with no investment conditions is a bad idea. It would still be a shot in the arm for the economy, making our banks and our domestic corporations more solvent, and driving up tax revenue as those profits are disbursed, but it would do little for jobs.

There is just no way that is going to play out in the manner you describe. Yes technically we could put very stringent conditions on what those taxes would be used for as well as how the companies should spend their gains. If it were up to me, that money would be funneled to an infrastructure fund, where it could only be used for that purpose. We desperately need it and nearly every business will benefit from better roads, airports, fiber connections, etc.

But.

It's very unlikely to happen, rules will be weakened or purposefully vague, that is the only thing our government produces. Even current "laws" can't be implemented in a timely manner, how many times have provisions of Dodd-Frank been postponed?

 

[werepossum]

There is just no way that is going to play out in the manner you describe. Yes technically we could put very stringent conditions on what those taxes would be used for as well as how the companies should spend their gains. If it were up to me, that money would be funneled to an infrastructure fund, where it could only be used for that purpose. We desperately need it and nearly every business will benefit from better roads, airports, fiber connections, etc.

But.

It's very unlikely to happen, rules will be weakened or purposefully vague, that is the only thing our government produces. Even current "laws" can't be implemented in a timely manner, how many times have provisions of Dodd-Frank been postponed?

That's probably true. Congress certainly doesn't have a good track record. However, "funneling" that money (meaning other people's money) is merely flat out theft, particularly so considering that this money is not even in our country. Do you propose to use military force to make other nations raid corporate bank accounts and give our government the money? If so, why not just make them give us the assets of corporations not even involved with America?

 

[werepossum]

That's the myth that keeps getting repeated over and over. "one time special dividends to shareholders" and bonuses for top execs still provide a benefit to the economy because that money goes somewhere. It gets spent, taxed, invested, whatever. And that benefit is more than what we currently get (nothing), no matter how small.

That's certainly true, but considering that most of the disbursements will be taxed at 15%, I think we could make it attractive to repatriate that money and still provide an honest and effective boost to employment and capital investments with a targeted repatriation. Also, much of that will probably be held indefinitely as reserves because companies are afraid of Obama and of the economy too. It's still a benefit as that money makes our banks more solvent, but not nearly as much of a boost to the economy. And we lose the future tax receipts of whatever portion those corporations would repatriate later - although considering the domestic situation, those future tax receipts may be small indeed. And it encourages corporations to hold out future profits for future repatriation tax holidays.

I think if we're going to do a repatriation tax holiday, we need to do a restricted one in return for matching, concrete employment and capital investment spending. Otherwise the ROI is just too small.