Some Truths About Taxes

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One of the talking points for the Tea Party and many Republicans is that business is being taxed too much. Another talking point is that businesses are not creating jobs because they are either 1) taxed too  much or 2) afraid they will be taxed too much in the future. While these make good talking points for the talking point parrots to repeat, it is well worth considering facts about taxes and corporations.

A recent study of thirty large American corporations reveals some interesting facts.  First, all of these companies spent more lobbying the government ($476 million) than they spent on taxes. Second, 29 of the corporations paid no taxes and, in fact, received tax rebates ($11 billion combined). One company, FedEx paid taxes at a 1% rate. Third, the firms donated $22 million combined to federal election campaigns. Third, while all these corporations are profitable, many of them have laid off significant numbers of employees (perhaps explaining the profits). Finally, most of the companies have increased the compensation for their top executives (a few have decreased such compensation).

In the case of these corporations, it seems rather clear that they are not over taxed. After all, 29 of them got rebates and only one paid taxes at a 1% rate. It could, of course, be argued that these corporations are exceptions and that less connected businesses pay significant (or even unfair) taxes. If this is the case, this would suggest that the tax remedy does not lie in simply lowering taxes but addressing the aspects of the system that allow these thirty corporations to gain what would seem to be a rather unfair advantage over most Americans and perhaps other businesses as well.

It also seems clear that high taxes or fear of taxes is causing these business to not create jobs. After all, 29 of them paid no taxes and one paid at the 1% rate. However, rather than creating jobs some of these companies cut jobs. As noted above, cutting employees is a way of creating profits. In the face of this evidence, it seems rather difficult to blame Obama for the failure of these companies to create jobs: they have no (or little) tax burden and are profitable. So profitable, in fact, that they can spend generously in buying access and in providing sweet compensation to the top executives. In this system, the top executives and the folks in Washington are the clear winners while the American people (especially the people who were laid off by some of these companies) are the clear losers.

This situation indicates one harm of the current lobbying system-it enables certain corporations to be able to acquire unfair advantages. This is hardly creating the free market that ends up in so many talking points. It also indicates another harm-companies need to lobby to gain these advantages that are given by politicians. That is, these politicians seem to either be blackmailing corporations (“don’t want to pay at the 35% tax rate? Just donate. And lobby. Otherwise…”) or in cahoots with them (“you scratch our backs with millions of dollars and we will scratch you back with some major tax breaks…hey, it is just the citizens’ money!”).

Palin’s Palm

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The blogosphere is afire with the controversy over Sarah Palin‘s palm. Photos and video of her from the recent Tea Party event showed quite clearly that she had written her talking points for her interview on her hand. Naturally, some folks on the left take this as yet more evidence of her general incompetence.  Equally naturally, some folks on the right have blamed the liberal media and have rushed to her defense. I will endeavor to put the matter in perspective and draw some reasonable conclusions about the matter.

In her defense, relying on prompts and notes is all part of public speaking. As she has pointed out, Obama uses a teleprompter. So do most politicians who have access to them. When I teach, I make use of my own notes. When folks make business presentations they typically have notes or PowerPoint slides to refresh their memory and keep them on topic. While the fact that it is commonly done does not prove that it is acceptable, it does show that it would seem to be unfair to single Palin out for criticism.

That said, there are some grounds for legitimate criticism about her use of the cheat. First, there is the matter of when such notes should be used and what their use shows. It is reasonable to use notes when presenting a complex or long speech because it is rather challenging to keep that sort of information just in your mind. For example, I present lectures that are 50 minutes on up to two and a half hours about philosophy. While I do know the material, I need to make sure that I cover everything and hence using notes is reasonable. However, if I had to use notes to recall very basic and simple points, I probably should not be teaching. Likewise, if Palin cannot keep track of her most basic talking points (especially when she already knows the questions), then that seems to be grounds for concern.

Second, there is the nature of her approach. Writing notes on your skin doesn’t seem very professional. Also, she should have been aware that people would notice the writing-after all, she was waving her hand about and clearly looking at it. It seems rather odd that she would go to the trouble of writing notes in her palm to be secretive (after all, she could have just used a note card) and then just wave her hand around. Did she forget what was on her hand so quickly? Did she not know that it would show up very clearly? In any case, the event made her seem a bit silly and unprepared.

Third, there is the fact that she has criticized Obama about using a teleprompter and the fact that the Tea Party movement has a main point against scripted politicians. Presumably Palin was trying to look unscripted by hiding her script on her palm. Naturally, the fact that she does what she criticizes does not invalidate her criticism  (that would be a fallacy). But, of course, it is poor tactics do do what you criticize in others and to go against a talking point of the movement you want to appeal to.

I have considered that perhaps Palin is more clever than folks give her credit for. After all, she has risen from relative obscurity to great success. While it is tempting to dismiss her as the political equivalent of Paris Hilton (being famous for being famous) perhaps this is a mistake. Her hand notes made the news in a big way and got her national media coverage. Also, when the media folks and the liberal bloggers take shots at her, this seems to merely make her base love her even more.

Health Care Rhetoric I

As the battle over health care continues, the usual pattern of political talking points has emerged. Each side has its own set of bullet points that it fires out at its opponents and rational discussion is kept to a minimum.

One point made by the side against government health care is that the care will be awful. The usual argument is that anything the government does is big, costly, and ineffective (at best). This is supported by various anecdotes from other countries and analogies with other government programs.

A second point is that government based health care will unfairly destroy competition and this is unfair to the insurance companies.

Not surprisingly, those who are not against health care point out the apparent inconsistency: if the government health care is going to be so awful, then it cannot unfairly destroy the competition. After all, if it is bad as they claim, then only the sort of folks who buy viagra from spammers or send their bank account numbers to Nigerian princes will buy it.

It is, of course, possible to reconcile these claims. After all, if the government mandates that people buy their health care from the government or if the government applies pressure to companies and individuals to buy into this, then they can be unfair competitors even if the product is truly awful. After all, some very awful products have been able to do well because those selling them are able to use unfair advantages. The government certainly has the power to push an inferior product on a large enough scale to constitute an unfair advantage.

Of course, the Obama administration’s position seems to be that they will not force people to give up their current insurance. So, people who already find their insurance acceptable or who prefer the private health insurance over the state plan will be free to buy that coverage. If this becomes part of the plan, then those who are against the plan will seem to have little to worry about: if private health care is vastly better than the incredibly awful state health care, then only complete idiots will buy it. This will mean a fairly small number of folks on the government plan thus keeping the cost lower than expected and leaving the current sort of competition in place (that is, you can buy any health insurance you can afford that happens to be available where you live).