Medieval monarchs quarreled with territorial grandees and local customs to raise armies and taxes in a struggle for state power that it took the French Revolution (and an end of monarchy) to win. Who knows what corresponding trauma will end the conflict between the United States’ laws and the special interests that work hard to neutralize them. Joe Nocera in the Times: 

Arguably, the United States now has a corporate tax code that’s the worst of all worlds. The official rate is higher than in almost any other country, which forces companies to devote enormous time and effort to finding loopholes. Yet the government raises less money in corporate taxes than it once did, because of all the loopholes that have been added in recent decades.

{snip}

The problem with the current system is that it distorts incentives. Decisions that would otherwise be inefficient for a company — and that are indeed inefficient for the larger economy — can make sense when they bring a big tax break. “Companies should be making investments based on their commercial potential,” as Aswath Damodaran, a finance professor at New York University, says, “not for tax reasons.”

A corporation that isn’t paying roughly a third of its profits in taxes is cheating the body politic that nourishes it.

Drop me a line at rjk@dailyblague.com
This entry was posted on Wednesday, February 2nd, 2011 at 10:30 am.