Be it comments sections, links, articles, news, or posts I am acutely aware that nothing has changed and have likely gotten worse. College students and their professors are hard to discern as they throw equally childish and victim-whoring temper tantrums over adult-world realities. Democrats don't even try anymore to come up with convincing lies about national debts and e-mail servers. And every soccer mom is seemingly rushing to have her precious (and otherwise completely normal) child diagnosed with the latest mental disorder to excuse her and her husband's lack of parenting. It's an insane world, and I take solace in that I no longer care and am just going to watch the show as I imbibe in as much Rumpleminze as possible before it's over.
However, every once in a while a leftist choir will sing a chorus that is so parroted, so knee jerk and so Goebbels that it compels me to dust off my ole Economist hat, fire up by economist spidey senses, and do a little research that will debunk the lie indisputably. Not because I want to have the research to point to at a later date should I be debating a leftist and need it. Not because I wanted to know for a fact what the truth of the matter was. But merely to piss them off and force their brains to the uncomfortable brink of cognitive dissonance as quickly as possible. And chorus the choir was singing this time was "evil corporate tax breaks."
Now this chorus has many variations:
If corporations paid what they did in 1950 all our problems would be solved
Corporations get all this "corporate welfare"
and the always bland, non-discript and completely void of any intelligence whatsoever
Corporations don't pay their fair share!
So I did a little bit of digging, pulled the national data on corporate profits and corporate taxes going back to 1947, and have more than enough data to put an end to this debate and the above claims once and for all.
First, corporate welfare.
Unfortunately, this isn't a matter of facts or statistics, as much as it is the left's complete ignorance of basic accounting. Because there is no such thing as "corporate welfare" UNLESS you want to consider the bank bailouts and grant money to solar companies welfare. In that case, yes, that IS corporate welfare and it is wrong. But sadly most leftists confuse merely giving corporations a TAX BREAK with a HANDOUT like welfare.
The truth is that all taxes (corporate or individual) are based on there being a profit to tax in the first place. This is the concept of "before tax profit," the amount of money left over after a company deducts all of its operating expenses from its total revenues. This "before tax profit" is the amount taxed because taxing a company on its revenue would be like taxing a father of five on his gross salary. Certain expenses need to be deducted so that the individual/corporation can pay for vital expenses to merely exist and run a business.
Now the stated corporate tax rate is 40% in the US (and most states). However, sometimes local and national governments will give a corporation a tax break if they invest in a certain town, build a plant in an impoverished area, etc. etc. However, this is NOT welfare. It is merely LOWERING the tax the company has to pay to the government. So instead of paying 40% the company pays 35% or 30%. The company did not "collect a welfare check" that required the taxpayers to bail it out. It was already self-supporting itself and NOT parasiting off of society. It is merely just a lowering of its tax bill.
Understanding this fact allows us to move onto chorus #2, "Corporations use tax loopholes to lower their taxes!"
You damn right they do. And it's all legal.
Historically, the left was right. In one year (1951) the effective tax rate was 50% for US corporations and yes the economy was booming back then. However, this had more to do with the fact the US was the only industrialized economy remaining in the world and our corporations were the sole suppliers of goods to the world. That argument aside, the effective corporate tax rate has since gone down to today's rate of 25%.
This effective rate of 25% (whilst the statutory rate is 40%) proves corporations are indeed using whatever loopholes they can to park money overseas and lower their tax bills.
However, while the left will jump to say, "SEE!!! SEE!!!!!!" they need to realize it's a Pyrrhic victory. The reason why is that corporate taxes are out of their control. Many other countries have found that instead of hating and villainizing corporations, they'd rather woo them (and their jobs) to their home countries. And they do this by LOWERING, if not ELIMINATING corporate taxes. This has given rise to rich nation states such as Hong Kong, Singapore, Bermuda, the Caymans, Lichtenstein and Luxembourg, as well as corporations (who are global in nature) simply moving their HQ's and operations to tax-friendlier countries. And no matter how desperate you are to get them to pay those 50% tax rates they did back in 1951, the more you squeeze them, the more they flee.
Alas, just like I have to accept the fact it is outside of my control to get leftist faux-intellectual Minneapolitans to adhere to logic, leftists have to accept the fact forcing private companies to pay more in taxes is increasingly outside of theirs.
But let us say corporations are not like wet soap, and the harder you squeeze them, the faster they slip out of your hand. Let's just assume we "magically" could wave Paul Krugman's "magic wand of Keynesianism" and force ALL corporations to ALL pay 50% of their profits to the state. And let's ALSO assume corporations would not move their investments or even be slightly disincentived by you stealing 1 out of every 2 dollars they earned.
Well that's the leftists' dream come true, isn't it?
If corporations "just paid their fair share" then all of the country's financial problems would go away?
So sorry. It's that damn
In a make-believe Keynesian Dreamworld where Robert Reich and Paul Krugman run through daffodils, holding hands, while wearing speedos, the additional money raised if we retroactively applied a 50% tax rate to all corporate taxes going back to 1971 (when our national debt started its upward climb) would amount to:
A full $10.2 trillion short of our national debt.
I'd even be more than willing to throw in a couple extra trillion to account for inflation and savings in interest, but I'm terribly sorry leftist speedo worshipers, it's MATHEMATICALLY IMPOSSIBLE TO SOLVE THE COUNTRY'S PROBLEMS THROUGH TAXING CORPORATIONS! In order to do that, we'd need a tax rate closer to 80% and that would just send companies screaming offshore.
The reality is that the US has a spending problem and not a revenue problem. But complicating this problem is that the left in this country is too lazy to do some basic math to even determine whether their ideas are feasible, and complicating it even more is that the left is mentally impaired to the point they would rather believe in their religion of socialism than the reality of math.
The real issue is how do YOU react to these people?
Like I said, I gave up 5 years ago trying to convince them. When I pointed out simple things like the above math I was called a racist, a fascist, etc. etc., and it finally dawned on me there's no reasoning with insane people. The only thing to do is make your case, mock and ridicule those who believe in these lies, and then enjoy watching reality destroy these delusional peoples' lives as the reality socialism promised them never materializes. It's my new favorite past time and sadly, about the only one left to truly enjoy.
Enjoy the decline!
Aaron Clarey is a mean guy who uses math and other tools of patriarchy and privilege to bring (only!) minorities and women down. When he's not busy oppressing people or kicking kittens he hosts The Clarey Podcast as well as runs his consulting division, Asshole Consulting.