Yes, 0bama (yes, that’s a zero) was in fine form in the final debate, showing the nation and the world that he is stone-stupid. Sadly, McCain was too much of a gentleman to pick up the stone and smash 0bama between the eyes with it. I am not.
0bama has been spouting this nonsense for a while, not just at the debate:
Now, Senator McCain, the centerpiece of his economic proposal is to provide $200 billion in additional tax breaks to some of the wealthiest corporations in America. Exxon Mobil, and other oil companies, for example, would get an additional $4 billion in tax breaks.
I asked this question of our resident leftists, but none had the nerve to answer me — even the stupidest of mammals learns to be wary of someone who hits it with a sledge-hammer when it sticks its head out of its hole. McCain should have asked it of 0bama:
Senator 0bama, what do the oil companies do when the price of crude oil goes up?
We all know the answer — they raise the gas prices. So now comes the follow-up in the one-two punch:
Well, then, Senator, what do you expect them to do when you raise their taxes?
We all know the answer to that, too — they will raise the gas prices. Thank you very much, Senator 0bama. Let’s keep following this line of reasoning:
OK, then, what has happened to gasoline prices in the last few weeks?
Well, they’ve come down.
Why?
Crude oil prices have come down. So, having beaten him about the head and shoulders, it is time for the coup de grace:
So, what should we expect to happen when their taxes come down?
It doesn’t take a rocket-scientist to figure this stuff out, folks. (Disclaimer: I am a rocket scientist.) This is nothing new or revelatory. Adam Smith wrote about the pass-through effect of taxes on profits in 1776 in The Wealth of Nations, Book V, Chapter II, Part II, Article II. The whole book is worth the read, though it goes over 1000 pages.
Another stupidity is the idea of a graduated corporate income tax rates — if a company makes $50,000 a year, it should be taxed at a 15% rate, but if it makes $100,000 a year, it should be taxed at a 34% rate. So, let us say that I have a company with two government contracts, each earning $50,000. Assume each contract will require an outlay of $500,000, so I will get a 10% return on my investments. If I break up the company into two entities, one for each contract, my taxes will be $15,000. But if I have a single company, the taxes will be $22,250. I’ve invested the same amount of money, done the same work, and made the same profit. But in one case I pay $7,250 more in taxes.
Is that stupidity, or just insanity? After all, liberalism is a mental disorder.
Sounds simple, right Jack? The question you should ask is “What would companies do with no income tax?” Well, here’s a few things:
* Reduce investing money back in the company since it will be cheaper to pay dividends – Shareholders will put even more pressure on;
* Reduce or eliminate charitable spending as they will get no direct benefit from it;
* Reduce payroll as this will not be deductible any more.
* Others that don’t come to mind immediately but I could easily research if I cared more.
I agree that “jack”ing companies is not the way to go, but a reasonable income tax is fine.
And “reasonable” isn’t 0!
It appears to me that our country expanded at unprecedented rates during the 19th century and the first part of the 20th century. This was well before taxes became such a burden.
You may argue all that you like about the ‘evil’ of what they did, but you cannot deny the benefits. Capitalism works as a general rule. In your opinion this may not outweight the cost, but in mine, it is a
no-brainer.
(No, I do not believe that getting rid of taxes altogether is practical.)
Sure capitalism is great over the long term, but pure capitalism naturally creates bubbles. (Remember Beanie Babies?) Expansions are wonderful! Contractions hurt. Better to have modest regulation (like they used to have with banks) to prevent these kind of dislocations.
Sure the country expanded at unprecedented rates during the 19th and early 20th centuries. Primarily because the expansion was literal AND economic.
[...] has proposed some good thoughts on the question of “What would companies do if there were no corporate income taxes?” [...]
There is a difference between regulation and taxation.
This is an excellent post, Jack. An issue many people do not understand at all, very well explained.
Sanity?
Live up to your name, boy. And you are also stupid. When you don’t re-invest in your company, the profits dwindle sooner than later and maintaining the company costs more than if you just let it go bust. That is where competition takes hold. You either come around or go under. Only a fool would start a business with the intent to just rape it short term and let it go bust. Oil is no different. And when that genious, astute individual comes along to offer an equally affordable alternative to oil, watch what the oil companies do then.
BTW Before there were Beanie Babies there were Pet Rocks, Cabbage Patch Kids, etc. What’s your point?
six-pack,
Sanity does make a good point about regulation. The unions were essential to workers’ securing basic rights. There were men who NEVER saw their children in daylight. Those working in remote regions were paid in company script that could only be used at the company store.
That said, the unions, for the most part, got their demands, and have since negotiated themselves right out of the labor market.