Dealing with Multi-National Corporations’ Tax Avoidance — Robert Samuelson Has an Idea that Might Help

© 2011 Peter Free

 

04 April 2011

 

 

Perhaps we should distinguish between corporations and those who profit from their flight from the United States

 

As a general rule, American law works against encouraging social responsibility from corporations as abstract entities.  That is an unfortunate part of our traditionally uninsightful social heritage.

 

Given that General Electric paid no U.S. taxes at all for last year on $14.2 billion in profits worldwide — and got, instead, an Internal Revenue Service rebate — one wonders how to fix a backwards system.  Current policy and practice transfers our economy wholesale to other nations, leaves American workers jobless, and digs a deeper hole for the nation’s budget deficit.

 

Robert Samuelson has idea for at least part of a fix:

 

We should lower the tax on corporations. That would make the United States more attractive to American and foreign multinationals.

 

We should then raise taxes on the people who receive the benefits of profits.

 

The economists suggest cutting the corporate rate to 26 percent [from 35 percent] and increasing the capital gains rate to 28 percent [from 15 percent]; dividends would be taxed as ordinary income.

 

Eliminating unwarranted business tax breaks would generate extra revenue.

 

© 2010 Robert J. Samuelson, The real tax avoidance scandal centers on dividends and capital gains, Washington Post (03 April 2011) (paragraph split)

 

I agree.  Though I think Samuelson (probably intentionally) overlooks the financial problems posed by American environmental laws and health care costs.

 

(Which is not to say that we should ditch both.  I am opposed to engaging in a race to the bottom of the pit toilet.  Especially so, given our lamentable unwillingess to think about what a just society actually is.)

 

 

Justifying Samuelson’s idea is easy

 

I see no sense in oppressing American workers by:

 

(a) taking their jobs away

 

and,

 

(b) simultaneously taxing wage-earners still at work at higher rates than substantially wealthier people — who profit from corporate investments that are more and more frequently deliberately directed toward transferring American jobs abroad.

 

The equivalence between (pretend) free markets and God is not a valid one.  Except, of course, to those whose greed has overwhelmed both their intelligence and their arguable moral duty to their neighbors.