Fareed Zakaria, Editor, Newsweek International was a featured speaker at Charles Schwab Institutional Impact 2007 at the Mandalay Bay Convention Center, Las Vegas, Nevada, United States. (Photo credit: Wikipedia)
I usually agree for the most part with Fareed Zakaria whose show GPS is broadcast each Sunday morning at 8am and 11am, Mountain daylight savings time on CNN. However, this morning July 15, 2012, I disagree most strongly with his assertion that the US has the second highest corporate tax rate in the industrialized world. That is a nominal rate. The effective rate is one of the very lowest, exceeding only that of Iceland as the lowest rate.
He indicated that corporate taxes now provides only 8% of total Federal revenue. That is down from the 10% I had seen in past articles. If the Federal government gets only 8% of its revenue from corporations, that means that people like you and me provide the other 92%. Please think about that. In the 1950s and 1960s, corporate taxes supplied 35% of federal revenue and individuals 65%. I think that the share of Federal revenue supplied by corporate taxes are moving in the wrong direction.
If corporations are people, why aren’t they paying taxes like real people?
Host Jon Stewart in the studio of The Daily Show in 2004 (Photo credit: Wikipedia)
On TV political talk shows these days, there is much heat and not enough light. I suggest that these four hosts appear regularly on each other’s programs, individually on a round-robin basis: Jon Stewart of the Daily Show, Rachel Maddow, Fareed Zakaria and Bill O’Reilly. The goal would not be to score points or to defeat the opponent, but to select a subject for discussion and enlighten each other and the audience. This could be of great national service and interest in a year where negative commercials will overwhelm the airways.
English: Fareed Zakaria, American journalist and author (Photo credit: Wikipedia)
When things wear out or break, good maintenance practice is to fix or replace them. When an individual or nation is short of cash or credit (broke), then maintenance is deferred. The US is in that position now. Devoting too much of our resources to defense and a sizable portion of the rest to social programs, we are cash-strapped to invest in education, research and infrastructure that will grow our economy in the future.
We defeated the USSR in the Cold War, because we increased our defense spending to the point that they could not compete. Their economy cracked under the strain. We are headed in the same direction with China, but now we are the ones whose economy is showing the strains. If our economy grows at 2-3% per year and the Chinese economy grows at 9-10% per year, the simple laws of interest compounding ensure that they will have the capacity to grow all their expenditures, civilian and defense, at a faster rate than we can.
It is my belief that we must grow our economy faster if we wish to remain a superpower. We will never grow our economy as fast as China does, but according to Fareed Zakaria, China is about to experience slower growth, around 6%, due to the sheer size of their economy. Therefore, the parties in Washington must stop their bickering and put our economy on a sustainable path to recovery. We have a more educated work force than the Chinese do. We should encourage everyone’s participation in the economy to reap maximum benefits for them and for the US.
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On Sunday January 22, 2012, Fareed Zakaria interviewed David Rubenstein, a founder of the Carlyle Group, a private equity firm, on his program GPS on CNN. The Carlyle Group is a larger version of Bain Capital and Fareed’s interview was designed to explain what private equity firms do. Essentially, they restructure companies for a profit for themselves and their wealthy investors. David Rubenstein has done well for himself having an estimated net worth of approximately $2.6 billion. Private equity firms were formerly known as leveraged buy-out companies, a term that fell into disfavor.
Rubenstein talked about his charitable giving. He has purchased several copies of founding documents and put them on public display. One copy even hangs in the Oval Office of the White House. He also donated money to repair the Washington Monument. Personally, I believe that these gifts, while praiseworthy, should be paid for by our government out of tax revenues. If tax revenues are insufficient, then tax rates on the wealthy and the very wealthy like Rubenstein should be increased.
In closing Fareed asked him about his concerns. As almost all wealthy persons, he is concerned about the deficit and the national debt. That is because the wealthy want to preserve the value of their financial assets against the effects of possible inflation. The US Federal Reserve has two opposing responsibilities, preserve the value of the dollar and keep unemployment low. The Federal reserve usually listens to the 1% and leans toward preserving the value of dollar instead of keeping unemployment low. Rubenstein and other members of the 1% are not concerned about unemployment for themselves.
Please see Mitt and Bain | Creative destruction | Globalization 101
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I watch a lot of political shows on the tube and I have noticed recently that Rachel Maddow on MSNBC has been much more informative than any other show on the air, except perhaps for GPS on Sunday mornings with Fareed Zakaria. That contrasts greatly with FOX News which a recent survey has found the viewers are more poorly informed than if they watched no news at all.