Tuesday, June 30, 2009

Squash That Recovery With Taxes!


Dear Leader Obama has a few more business taxes lined up, ready to go, reported by Geoff Colvin at Fortune, relayed by the AmSpec blog.

The White House therefore proposes charging all American companies full freight -- the whole difference between their overseas taxes and the U.S. corporate rate -- on all their profits as soon as they're earned, no matter where. This measure, in their minds, would bring jobs home.

...Another would require companies to account for their inventories on a first-in-first-out (FIFO) basis rather than a last-in-first-out (LIFO) one -- an eye-glazing change that's highly significant.

1) It's not likely that 'full freight' taxation, in and of itself, will move jobs back to the USA; there are a lot of other considerations which play into that decision.

2) FIFO is great for the Gummint when inflation hits (and it will.) But it's like property taxes, which increase based on the "value" of your home, rather than your ability to pay.

But that's not the bad news. Here's the bad news:

Tax-wise, a company is just a bunch of incorporation papers; all taxes are paid by people -- customers, shareholders and employees. And guess who would bear most of the burden of these tax increases? It's the U.S. employees of the companies being taxed.

Research has shown that
when business taxes are raised by a dollar, 70 to 92 cents comes out of employees' pay.

Now that's a stimulating thought, eh?

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