The Coporate Tax Rate

In a previous article, I discussed the fact that an "expert" averred in an article published in the Austin American-Statesman that the United States had the second highest corporate tax rate in the world and that, in fact, this was not true. There were, in fact, at least six other countries with higher corporate tax rates than the United States.

At the time, I refused to discuss whether the U.S. corporate tax rate was too high. I wanted to stay on the point that this "expert" had said something which wasn't true, and which he almost surely knew wasn't true, and that the American-Statesman had published his article without the most rudimentary checking of his "facts," thereby putting and perhaps perpetuating a falsehood into the public discourse about U.S. corporate tax rates.

Now I want to talk about whether U.S. corporate tax rates are "too high."

The U.S. corporate tax rate is actually a range, depending on the income level of the corporation paying the taxes. That range is from 15% to 39%. Is that too high?

I don't know that I'm qualified to answer that question, but I have an opinion. That opinion is informed, at least in part, by this fact: According to NPR, the actual rate of tax paid by corporations in the United States on average is between 12 and 13%.

I need to say that again: the average rate of tax actually paid by corporations in the United States is between 12 and 13%.

That doesn't seem too high to me. Especially when corporations are making record profits and that's lower than the rate of taxes I pay. A lot lower.

So, in addition to making a false statement about U.S. corporate tax rates compared to other nations corporate tax rates, the "expert's" statement was really misleading. Regardless of what the stated corporate tax rate is, the actual rate of taxes paid by corporations in the United States falls below the lowest rate in the stated range of corporate taxes.

Why? I am not suggesting that U.S. corporations are cheating on their taxes, though a number of them have plead guilty to that crime over the years. Maybe they're cheating, maybe they're not. I tend to think most of them aren't.

They pay an average rate lower than the lowest rate of the stated range because of all the deductions, exemptions, and credits of which they may legally avail themselves in the U.S. tax code. So, it is actually our tax law that allows them to pay such a low rate.

My suggestion is that, when we are evaluating whether corporations pay too much in taxes in the United States, that we look at what they actually pay under our tax law, not what they might pay if their accountants were stupid and they paid more than the law requires them to pay.

Twelve to 13% doesn't seem too high to me.

CORRECTION!

In these articles, one of my recurring themes has been the need to speak the truth to each other.

Unfortunately, I violated that principle in my previous article on the Federal Debt Ceiling.

I said that the United States had had a federal debt ever since Secretary of the Treasury Alexamder Hamilton. That statement, it turns out, is not true.

In 1835, under President Andrew Jackson, the United States fully paid its national debt. The very next year, the national economy went into recession, the federal government borrowed money again, and we have had a national debt ever since.

So, the truth is that since President George Washington authorized his Secretary of the Treasury, Alexander Hamilton, to incur debt in the name of the United States, we have had a national debt ever since, except in the year 1835, when, for less than one year, we were national-debt free.

The Federal Debt Ceiling

In the middle of May, the federal government will reach its Congressionally authorized debt ceiling. Unless the Congress increases the debt ceiling, the federal government will be unable to pay its debts. The United States will default on its financial obligations.

Some members of Congress are saying that they will not vote to increase the federal debt ceiling. The problem is, there may be enough members of Congress making this threat to actually prevent the federal debt ceiling from being raised.

This is so irresponsible it approaches madness. If those who are threatening to keep the federal debt ceiling at its current level, thereby assuring that the United States will default on its financial obligations, are not insane, then they are diabolical. I don't use that word lightly, nor do I use it without understanding its literal meaning.

The issue of whether the United States government would have debt was fought out over 200 years ago, between Alexander Hamilton, our first Secretary of the Treasury, and Thomas Jefferson, our first Secretary of State and the founder of the original Republican party. The dispute was referreed by none other than George Washington, our first President.

Secretary Hamilton won, and the United States has had a federal debt ever since.

But, we've never defaulted on the payments due on that debt. Never. Hence the saying, "sound as a dollar." That saying did not become common by accident. It became common because when someone owned a financial obligation of the United States of America, whether that be a treasury bond or a dollar bill, they could be certain that financial obligation would be honored.

Our national financial system is based on this concept: the United States will never default on its financial obligations. That's why a treasury bond is considered the standard by which every other financial investment is measured. A treasury bond has been an investment in which there has never been any risk. Therefore, if an alternative investment couldn't net an investor at least as much as a treasury bond, it was clearly unsound.

But, more than that, the world's financial system is based on the concept that the United States will never default on its financial obligations. Everyone in the world trusts the United States to pay its debts, and investment decisions in every corner of the globe have been made on that assumption. A previously safe assumption.

However, now it is no longer safe.

And just the fact that it is not a safe assumption - entirely aside from whether we actually default on our debt - is already causing damage in the financial world, which will eventually spill over and affect every man, woman, and child in the world negatively. Some will be hurt much worse than others.

Just making people think we might not pay our debts, just letting people think we might not pay our debts, has terrible consequences. Already, major banks are developing contingency plans for how they stay in business - not how they continue to make a profit, how they stay in business - if the debt ceiling is not raised. That costs money. Real money. Out of the real pockets of real people.

If a member of Congress wants to control or reduce the federal debt, the way to do that is by controlling the federal budget. Not by threatening to default on our financial obligations. Unless, of course, your real objective is to destroy the federal government or, even more diabolical, the United States of America.

I have already heard it said in defense of the threats to vote against raising the federal debt ceiling that "Senator Obama did it."

I have two responses to that defense.

First, it was wrong for Senator Obama to do it. That doesn't make it right now. There was a difference when Senator Obama voted against raising the federal debt ceiling. There was no way there were going to be enough votes against raising the debt ceiling to actually defeat the bill. So, no one anywhere actually considered that there was any chance the United States would default on its financial obligations. But, that didn't make it right for Senator Obama to vote against it. It was wrong. And the fact that it provides an excuse - no matter how flimsy - for madmen to justify their similar votes now is just one reason why it was wrong. (See my previous articles where I refer to the Law of Unintended Consequences.)

My second response is: Do the people who are threatening a default of the United States' financial obligation really want to gauge the appropriateness of their behavior by Senator Obama's actions? Really? "It's okay for me to do it because Obama did it"? Really?

Peaceful Protest

And so I hear that this morning the state security forces moved to clear peaceful protesters from the public square in the capital of Wisconsin.

Oh! I'm sorry. I'm getting my stories slightly confused.

And so I hear that this morning the state security forces moved to clear peaceful protesters from the public areas of the capitol building in the capital of Wisconsin.

The Revolution

A member of the United States Congress is shot through the head by an armed citizen of the United States.

A federal judge, shot dead. A U.S. Congressional aid. Dead. Mothers, grandmothers, daughters, wives, husbands, fathers. Dead. A nine-year-old girl lying dead in a pool of her own blood. Our fellow human beings' bodies strewn about like so many bloody, ripped-up rag dolls. Many others wounded, bleeding, bodies torn apart by bullets. Our neighbors.

Second Amendment remedies indeed.

Perhaps this was the work of a mad man. Whether it was or not, if you are one of those who have been toying with, talking about, or even thinking about revolting against or seceding from the United States, this mad man has painted a picture for you, a picture which you should burn into your brain and keep there.

This is what your revolution looks like.

Before you decide to start your revolution, think about this picture and decide very carefully if your revolution is really worth it. Because, once you start, you can't turn back.

And, when you revolt, if you do, against my country, against my government, against my flag, against the nation I love, I will participate. I will fight. But, it won't be on your side. I will fight you in defense of my country. So, don't imagine that those dead and wounded men, women, and children will only be the bodies of your imagined enemies. Among them will be your women and children. Your friends. Your loved ones.

Second Amendment remedies? Really? Are you serious? Have you really thought about what you're saying?

I hope so.

Compassion?

Republicans in the United States Congress claim that they want to reduce the federal deficit.

They applaud President Barrack Obama's proposal to freeze the wages of federal employees for two years. This would save about six billion dollars over the two years. "Long overdue," is the way some of them describe the proposal.

This proposal, if it were to be adopted by the Congress, would freeze the wages of every federal employee, even those making the lowest wages - clerks and secretaries and maintenance people.

At the same time, the Republicans in Congress are determined to give a tax cut to everyone making $250,000 a year or more. I can't be sure, but I'm willing to bet few, if any, federal employees make $250,000 a year from their federal salaries. Frankly, few employees of anyone make that much.

This proposal, if it were to be adopted by the Congress, would increase the federal deficit by about 700 billion dollars over ten years.

So, Republicans, who claim to be concerned about the federal deficit, are willing to hurt the lowest paid federal employees to save six billion, but they're willing to add 700 billion to the deficit to help the richest Americans.

Go figure.

It's My Property!

"It's my property and I have a right to do what I want with it!"

How often I have heard this sentiment, or one very like it, expressed.

The speaker is usually ranting about wanting less government interference in something. Often he or she is venting about how they want less taxes.

It is, superficially at least, an attractive position. I do, after all, own my property. I did, after all, work hard to gain the ownership of that property, assuming I didn't inherit it or receive it as a gift. Why shouldn't I be able to do what I want with the stuff I worked so hard to own?

Well, two reasons: first, it's illegal. Second, it's immoral.

Now, the illegality of doing whatever you want with your own property can always be changed. It is usually this illegality (the fact that using your own property anyway you want, without any obligation to use it in any particular way, is not permitted by law) that the speaker wishes to have changed. And, if enough of us agree that it should be changed, we can all agree to change it. But, we shouldn't.

Because it is immoral to "do whatever I want with my own property."

In logic, there is a concept called reductio ad absurdum. The idea is that the logic of an idea can be tested by taking the idea to its "logical" conclusion. If, when one does, the idea becomes absurd, then it is, in fact, illogical. For an idea to be logical, it must be logical in all its applications, not just some applications.

The notion that we have the moral right to do whatever we want with our property fails the logical test of reductio ad absurdum.

Imagine that one person has managed to acquire ownership of all the property in the world. All the real estate, all the businesses, all the food, all the water, all the houses, all the streets, all the schools. Everything. And imagine that he has done this perfectly legally. He is just such a skilled businessman that he has managed to acquire all the property in the world by completely legal, legitimate means. He - one person - owns everything.

And further suppose that it was, in fact, the law that a person could do anything they wanted with their own property, including doing nothing at all with it, if that's what they chose.

Would it be morally right for that one person to withhold all property from everyone else in the world, just because he had the legal right to do so? Would it be morally right for him to let everyone else in the world starve to death and die of thirst, just because it was all his and he had the right to do with "his" property what he wanted, and he didn't want to share with anyone?

If the answer is "yes," it is a perfect example of reductio ad absurdum. It cannot possibly be true that it is morally right to let everyone else starve when you own all the property in the world, just because you have the legal right to do it. That conclusion is absurd.

What if just two people owned all the property in the world? Would it be morally right for those two to let everyone else starve - all 6 billion human souls - because it was theirs and they had the right to do what they wanted with it? Clearly not. No reasonable person could think it would be moral for them to let everyone else starve when they had more than they could ever use, just because they had a protectable property right.

How about if three people owned all the property in the world? Or 100? Or 1000? Or what if 1 billion people owned all the property and the remaining 5 billion had nothing? Would it be moral for the 1 billion to let the 5 billion die so that they could exercise their "right" to do whatever they wanted with "their" property? Clearly not.

Well, if it isn't morally right for one person to deprive all the rest of the necessities of life, or 2, or 3, or 100, or 1 billion, then the notion of "its mine and I have the (moral) right to do what I want with it" has been demonstrated to be logically faulty.

In fact, we have demonstrated that, rather than having a moral right to do what you want with your own property, you really have a moral obligation to use your property in a way that benefits others. If you have very little property, than your moral obligation is very small, but if you have a great deal of property, then your moral obligation is very great. In fact, there is a direct proportionality between the amount of property one owns and one's moral obligation to use that property for the benefit of others.

The rich have a moral obligation to use their property for the benefit of the poor.

It is, in fact, the teaching of Jesus.

Now, we can quibble about how that moral obligation is affected by the choices the poor have made, or, more precisely, the choices that the rich think the poor have made. But, no matter how the obligation is affected or modified by individual circumstances, it never goes away. It always exists in some form or another. Remember, our hypothetical man who acquired all the property in the world did it legally, and as a result of his skill as a business man. That means that everyone else must have made really poor choices when they agreed to the business deals that resulted in them losing everything. Even so, we cannot imagine that it is then morally acceptable for him to let everyone else in the world starve, because they made "poor choices." It is still clear that he has some obligation to use his property for the benefit of the rest of the world, who are all starving.

So, once it becomes clear that anyone who owns property has at least some moral obligation to use his property in a way that benefits others, we can have legitimate debate over the extent and nature of that moral obligation. We cannot, however, ever logically claim that "its my property and I have a right to do whatever I want with it."

That's absurd.