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?
English: (Green) Greece. (Light-green) The European Union (EU). (Grey) Europe. (Light-grey) The surrounding region. See also: Category:SVG locator maps of countries of Europe (Photo credit: Wikipedia)
Greece will be voting again on Sunday June 17, 2012. Depending upon the outcome, it is possible that Greece will abandon the Euro and enforced austerity. It may be bad for the rest of Europe and the US, but it may be good for the people of Greece. Iceland let its banks go bust and now Iceland is recovering nicely. Greece got into trouble by borrowing more than it could repay from big, Wall Street banks. Greeks also have a history of tax avoidance which is not unique to Greece, but probably more endemic there. I will await Sunday’s results with bated breath. I wish the Greek people well.
Corporations don’t pay enough in Federal taxes. They paid 1/3 of Federal revenues in the 1950s and individuals paid 2/3. Over the years the corporate share has dropped to 1/10 and individuals now contribute 9/10 of Federal revenue. John McCain and Wolf Blitzer, just moments ago, claim that the US corporate tax rates are the highest in the world. Those are NOMINALrates. In fact, the effective rates, the rates they actually pay in dollars and cents, is the second lowest in the industrialized world, only second behind Iceland according to the Center for Tax Justice. The revised corporate tax law proposed by Barack today is revenue neutral; it will neither raise nor lower total revenue.
Boomerang, Travels in the New Third World by Michael Lewis, the author of Liar’s Poker and Moneyball, recently made into a film starring Brad Pitt. This slender volume is an eminently readable tale of how the Great Recession is affecting five different countries: Iceland, Greece, Ireland, Germany and the US. His thesis is that different cultures react differently to the shock of economic disaster.
If people are given the opportunity to live beyond their means, most people will do so. Almost everyone in Greece is corrupt; no one pays their lawful taxes. All 300 members of the Greek Parliament cheat on their taxes. To expect Greece to change its customs now when facing national default is too optimistic. And a Greek default could bring down the Euro affecting the US adversely.
Germans live by the rules, and it will be up to Germany, the financially strongest country in the European Union to bail out the rest of the members of the European Union who may need help. Iceland went bankrupt because it thought that its banks could outsmart the big banks of London and New York who had both more assets and more experience. Ireland went mad with construction of commercial and residential structures for which there was no foreseeable demand.
Here in the US, our ties to one another have become frayed. Instead of looking out for one another, it has become a game of grab all you can while you can before someone else does. We need to watch out for each other and cooperate in this time of need if we are going to survive the Great Recession, which shows no sign of ending and is likely to worsen.
On the steps of a fire-bombed bank in Athens, Lewis saw a sign quoting an ancient Greek orator named Isocrates who lived from 436 BCE to 338 BCE: “Democracy destroys itself because it abuses its right to freedom and equality. Because it teaches its citizens to consider audacity as a right, lawlessness as a freedom, abrasive speech as equality, and anarchy as progress.” True then–true today.