JB’s DC 4/7/16

April 7th, 2016 at 10:13 am

–Heading to CT tonight for a debate on political economy with my old friend Larry Kudlow, 7:30 at the Ridgefield Public Library. We’ve long been friends and have even longer eternally disagreed with each other on almost everything. So come see people disagree without being disagreeable.

–Am on the Amtrak Acela which leads one to contemplate infrastructure. Based on chapter 6 of the 2016 ERP, our infrastructure isn’t in as bad shape as some maintain, though it’s clearly aging and needs repair: exhibit 1, the DC Metro, ex. 2, the *%&!$#! internet connection on this train. I’m working on a longer piece on this point, but, like so many critical policies these days, gridlock is preventing necessary action. What needs to happen is some serious bottom-up pressure from the many whose lives are negatively affected by this underinvestment.

–Lots of good reads out today on tax avoidance, riffing off of this week’s announcement by Treasury of new rules to slow inversions. Here’s my rap: bottom line, tax avoidance in general and inversions in particular are a cost shift from those with staffs of tax lawyers exploiting deep loopholes, to the rest of us. Relatedly, Richard Rubin of the WSJ asks the Talmudic question: if everyone wants “tax reform,” why is there no tax reform?

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2 comments in reply to "JB’s DC 4/7/16"

  1. Tom says:

    Regarding infrastructure – I’m not sure where “bottom – up pressure” comes from, given the atomized and increasingly overworked and underemployed members of society. For example, most subway riders would be hard-pressed to take even one day from their jobs to protest or refuse to use public transportation, and it’s not like the tens of thousands of people in Flint MI were able to effectively fight back against the decision to poison them.

    Their also needs to be pressure from corporate heads, policy makers, and government officials able to act on the larger scale. The new Treasury rules you mention in the third paragraph are a perfect example of that – the employees at Carrier can’t do a damned thing if their jobs are moved, but the government can make it less rewarding to move profitable businesses out of the country.

  2. spencer says:

    Obviously, ever one does not want tax reform. Of more likely, everyone does not have the same concept of tax reform. Business and republicans see tax reform as a way to lower taxes while the more liberal politicians see it as a way to raise revenues. Obviously, we are talking about different things. With the effective tax –all three, federal, state and local — barely over 20% as compared to the much higher statutory tax rate it is very difficult to see how these differing views of what tax reform means can be resolved.

    Personally, I favor the idea of corporations paying taxes on their earnings reported according to GAAP and doing away with our current system of corporations have two or more sets of books. One reason I favor taxing gap earnings is that it would reduce corporations incentives
    to lobby congress and/or state & local politicians for special treatment. As it now stands corporations usually try to maximize their GAAP earnings because that is what their stocks trade on while they try to minimize their taxable earnings. If corporations paid taxes on their GAAP earnings they probably would temper their desire to maximize GAAP earnings. As long as we have the tax system favoring some form of corporate behavior — oil depletion rules for example, we can not get away from the charge that some firms are not being treated fairly