Eh?

So Barack Obama can promise tax cuts by “the closure of corporate tax loopholes and tax havens.”

He’s right: he can.

No he can\’t.

He can close loopholes and tax havens (well, at least in theory he can) and thus raise the effective tax rates that corporations pay, thus leaving room to lower other taxes on other people. That he might be able to do.

But raising more money from one group and then less from another is not "tax cuts". That\’s a redistribution of the tax burden.

8 comments on “Eh?

  1. Indeed. The oft-cited “tax cuts for the rich” by Bush was in fact a removal of the double taxation of dividends (prior to which distributed corporate profits were taxed at something close to 50%). If this is a loophole, then Mr. Murphy is a wise and knowledgeable tax specialist.

  2. You’re right, it is a redistribution of the tax burden, albeit more toward those in a position to carry that burden than those less able to.

    Tim adds: Well, yes, although around here we buy into the tax incidence argument pretty heavily. That only people not legal fictions bear the burden of taxes…and in the case of corporation tax the majority of the burden is carried by workers in the form of lower wages. There are papers out there (respectable ones even) which argue that the workers lose more than $1 in wages for every $1 of the tax raised.

  3. What is confusing is the non-economic arguments for this type of redistribution.

    The Left is always (note, always) banging on about “social justice” and the need for more governmental-led “solutions” to “problems”.

    In this instance we are speaking of the US. Already 40-50% of US wage earners pay no income tax. Now further chit-chat of redistribution to this set of individuals.

    Should these individuals be asked to shoulder part of the burden of government in the form of taxes -or- are these individuals free-riders shirking their duty to ensure “social justice”?

  4. Murphy’s belief that tax is there to enable redistribution of resources – rather than to fund government spending – is quite horrifying.

  5. I’m so glad we’ve solved that problem! Just close the loopholes! Thank goodness someone had the brains to come up with that!

    Now if only someone could work out how to make money on the stock market…

    Wait a second, I’ve got it! Buy at the bottom and sell at the top!

  6. Strict accounting reveals that the customer always pays. It is almost self evident that the consumer will suffer the entire burden of any taxation imposed on the means of production. Everyone, including those who don’t think they pay any tax, actually pay tax when they spend. Higher earners spend more, thus pay more tax. That is the full extent of progressive taxation.

    http://ecforster.netfirms.com/Tax/Doc1.html

    One must conclude that our complex tax system is a charade to hide the true cost of government from consumers and voters. No wonder the implication is unwelcome to the tax industry; there need only be one tax and that is a sales tax. The Inland Revenue could be wound up and its employees put to more productive use to our benefit; ditto for tax accountants, advisers and economists.

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