| To: Doren who wrote (210630) | 7/13/2021 12:57:56 PM | | From: Art Bechhoefer | | | | There are no simple answers to fixing the tax code, whether for big corporations like Apple or thousands of smaller ones. The corporate income tax, even at its present low rate, is inflationary because it amounts to a taxpayer subsidy of corporate investment. Let me explain.
The combination of low interest rates and a corporate tax of about 21% (it varies, depending on the type of corporation and numerous other factors) means that corporations can borrow at low rates and acquire other corporations at prices that would otherwise be too high if interest rates were higher. The cost of interest, nevertheless, is deductible, so the higher the corporate tax rate, the greater the public taxpayer subsidy of corporate acquisitions done with borrowed money. In this point you are correct to believe a lower corporate tax rate would tend to reduce the price of goods made by the corporation, to the benefit of the consumer.
In fact, however, it's not always true that a lower tax rate benefits the consumer. The corporate tax cut approved by the previous administration didn't lead to more corporate investing or lower prices, but it did produce higher dividends and capital gains, which benefit mainly higher income shareholders. The higher tax rate proposed by the current administration (somewhere near 25%) would theoretically increase taxpayer subsidy of corporate deductions, but a better way to fix this problem would place limits on deductions.
There could be limits on borrowing for the purpose of acquiring other corporations or assets. Even more to the point, it would preserve the higher tax rate for corporations that paid their top executives more than 40 times the median wage earned by their workers and/or workers under contract. Many corporate executives today earn typically between 200 and 2,000 times the wages of their workers, if you include not only salaries but stock based compensation. You could lower the corporate tax to 20% or less for corporations that paid their workers more, and increase the tax for those whose top management luxuriate in their stratospheric salaries and compensation. Amazon's former head Jeff Bezos is a good example. The discrepancy at Apple is less so, mainly because the professionals who comprise a large portion of the Apple work force get paid plenty. But if you included the pay given to workers, for example, in China, who assemble most of the iPhones, iPads, Apple Watches and some of the Mac computers, then the discrepancy looks worse than that for many corporations operating wholly within the U.S.
As I say, it's complicated, but the main goal should be to reduce tax inequalities that favor wealthy individuals and large corporations and shift more of the tax burden to low and middle income households. That appears to be the direction indicated in a proposed corporate tax increase as well as the recently signed executive order that would lead to more competition, especially in sectors dominated by a handful of big firms.
Art |
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| To: Art Bechhoefer who wrote (210633) | 7/13/2021 3:05:57 PM | | From: Force Majeure | | | | OT
The corporate tax cut approved by the previous administration didn't lead to more corporate investing or lower prices, but it did produce higher dividends and capital gains, which benefit mainly higher income shareholders.
it also produced greater returns for 401(k) and pension holders too. Those folks are typically in the hard working/middle class.
... the main goal should be to reduce tax inequalities that favor wealthy individuals and large corporations and shift more of the tax burden to low and middle income households. did you mean shift less of the tax burden...? |
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| To: Force Majeure who wrote (210636) | 7/13/2021 3:12:17 PM | | From: Art Bechhoefer | | | | Yeah, you caught a big mistake. The goal of any meaningful tax reform should be to shift MORE of the tax burden from low and middle income households to wealthy individuals and corporations that have previously received more benefits compared to others.
The justification for this view is based on the book by Thomas Piketty, "Capital in the 21st Century," which used some 200 years of data to show that increasing income inequality causes a lower overall rate of growth. Talk about shooting oneself in the foot!
Art |
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| To: Art Bechhoefer who wrote (210637) | 7/13/2021 4:03:16 PM | | From: Force Majeure | | | | OT
Yeah, you caught a big mistake.
Not trying to be a grammar nazi, just got confused by the statement.
.
Admittedly, I haven't heard of the book, so I'll have to check it out. By and large, most (if not all) costs, including taxes, are passed along to the consumer. So it seems to me raising corporate taxes will force a corporation to react in one or several ways:
* raise prices on goods & services and punish customers, which could result in selling less products and less revenues
* absorb the costs and pass it along to investors thru reduced eps and/or dividend payouts in some cases
* absorb the costs and punish your work force thru reduced compensation (i.e. wages, raises and profit sharing in some cases) as well as 3rd party developers; and it also threatens retention of good talent
* or a combo of some or all of the above
Any of these actions will affect investors (as stated not all are wealthy; most are hard working middle class), and most certainly the little guy (whether consumers or employees.) So I don't see how raising taxes or cutting into executive compensation benefits the low and middle class or anyone for that matter. It merely serves to punish the wrong target(s). |
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| To: Force Majeure who wrote (210638) | 7/13/2021 4:33:49 PM | | From: Art Bechhoefer | | | | Intuitively, your evaluation is correct, but in practice, not so much.
"* raise prices on goods & services and punish customers, which could result in selling less products and less revenues
* absorb the costs and pass it along to investors thru reduced eps and/or dividend payouts in some cases
* absorb the costs and punish your work force thru reduced compensation (i.e. wages, raises and profit sharing in some cases) as well as 3rd party developers; and it also threatens retention of good talent"
Historically, higher tax rates on corporations didn't result in higher prices of their goods, unless they had a near monopoly in the market. Reduced eps have occurred mostly in the short run, but in the long run, where a corporation maximizes the taxpayer subsidy of its interest deduction on funds borrowed to expand, earnings more likely increase, especially in periods of low borrowing costs. As for punishing the work force, this has occurred mostly in response to declining union membership and the associated laws and regulations that discourage union membership.
Thomas Piketty's book, when it came out about five or six years ago, was powerful because of the humongus amount of data on which its conclusions were based. The idea definitely did not fit with the thinking of more conservative economists, yet the noted Economist publication, with a generally conservative economic view, was unable to present arguments that would dispute Piketty's conclusions. The key issue that Piketty presented was that a widening income gap produces lower economic growth. This is far more important than the effects of a change in the corporate tax rate. The recently signed executive order proposing steps to increase competition, along with the recently adopted legislation authorizing larger payments to households with children will more than likely reduce the income gap, leading to greater than expected growth.
I would add, though, that the action in the stock market in response to these changes seems to reflect the more conservative view that tax cuts are always preferred.
Art |
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| From: Moonray | 7/13/2021 6:28:43 PM | | | | | | Apple just released the MagSafe Battery Pack —
a $99 accessory that snaps to the back of an iPhone 12 to extend
its battery life. It joins the leagues of MagSafe accessories that
have been available since last fall. And it’s up for order right now,
with shipments starting next week.
It’s purpose-built for the iPhone 12 Mini, 12, 12 Pro and 12 Pro Max.
The MagSafe Battery Pack is only available in white and sticks with
a silicone design that adds a hump to the back of the iPhone. From
photos of the accessory, we can see that it features a 1,460mAh
battery— it remains to be seen what that translates to with daily use
of the product. For instance, the iPhone 12’s battery capacity is
2,815mAh, so this will provide about 50% of power to it.
Like the MagSafe charger or the MagSafe Duo, this can push out
15 watts to the iPhone 12 wirelessly. There’s a catch, though; you’ll
need to have it plugged into power to get the full 15 watts — when
just attached to your iPhone, it will push out a slower 5 watts. You’ll
need to connect a 20-watt brick in order to fast charge wirelessly,
like the ones we’ve tested here.
More at: Apple's new $99 battery pack will make your iPhone 12 last longer
o~~~ O |
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