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Response to NYTimes: Should We Stop Taxing Capital Gains? Plan’s Costs Far Outweigh Its Benefits by Chye-Ching Huang


I would raise the corporate marginal rate to 91% (can you say, “I like Ike?”) and the personal marginal rate to 50%. (Actually, personal rates were at 91% and corporate rates were low under Ike) However the new tax rate would be optional. Any company that hired someone who was out of work at least 3 months would be able to deduct 110% of the salary, benefits, educational and recruiting costs (seriously, in today’s market, how high could recruiting costs possibly be?). If the new hire was out of work more than 6months, 120% deduction, 1 year 130% deduction and so on to 2 years and 150% deduction. To qualify the hiring must result in an increase in staff and subsequent attrition would disqualify the enhanced deduction for each head[count] lost. If the company hired enough people they could reduce their effective tax rate to zero. With this plan, the “job creators” would have to actually create jobs in order to get a tax deduction for job creation rather than just claim to be “job creators” based on having created jobs once upon a time. Certain capital improvements and software/systems/tools acquisition might also qualify for additional deductions temporarily but not acquisitions of other companies which would still be deductible at the normal, but not bonus, rates.

To the employers who say that they don’t have enough work to justify hiring anyone, I say start hiring in your marketing department. That’s the department that will bring in more work for the other departments to do. All the money you spend there is deductible at 100% and the money you spend there on salaries and training is deductible at the new higher rates. Start creating new products and services and improving old ones and get out there, beat the bushes and sell, sell, sell!

In addition if the corporation moved offshore (or already was offshore), in order to do business in the US they would have to pay the difference between their local taxes and US taxes (but wouldn’t be qualified for enhanced deduction of the salaries of their non-US workers on their US tax bill.

Setting up a shell corporation in the US and overcharging the US shell for the product as not to show any taxable US profits wouldn’t work either. The foreign company would still have to pay US taxes on their under taxed foreign profits if they wanted access to US markets. They could save themselves US taxation by giving up access to US markets but why would any international company want to give up access to one quarter of the world’s GDP? Answer: they wouldn’t. And couldn’t survive long by ignoring the world’s largest market.


That’s the real reason the US is so successful in attracting capital and producing GDP. Here in the US we’re selling Cadillacs. The 1% have CON-vinced us that in order to be competitive, we have to sell those Caddies at a Chevy price. Not true. Cadillac doesn’t compete with Chevy. Cadillacs are worth more and sell higher because they’re Cadillacs. The US doesn’t need lower taxes to attract capital. We already provide the “Cadillac environment” for business and investment. Witness the ridiculously low rate on US Government debt. Investors are “paying the government to hold their money” by investing at a rate below inflation.

The only other thing necessary are fresh ideas and the 1% are as fresh out of fresh ideas as a 1 trick pony.


The Myth Of “Smaller Government”

What they mean is small government for business but large government for individuals (except gun owners) but what they can’t say is how small.

The next time someone with whom you are in conversation insists that small government is the right way to govern or that government is too big, ask them how big should the government be? Of course the’ll answer “smaller;” these people are, for the most part non-thinkers and are just parroting the [Right’s] party line (or talking point, if you will).

Don’t accept this answer. Insist that they tell you HOW big (or small). If they don’t know how big the government should be (or is) how can they say it’s the wrong size now. In order to know if the government is too big or too small one would a) have to know precisely how big the government ought to be (with logical justification for that number, no shooting from the hip here) and b) how big the government is now. If the current size of government is larger than that “correct size” then it’s too big and ought to be smaller. That is to say, ought to be shrunk until it reaches that size and no further. If the current size of government is smaller than that “correct size,” then it’s too small and ought to be grown until it reaches that size and no larger. Don’t worry. They won’t know how big. They will become confused or angry or both but won’t know as that wasn’t covered in the talking points memo.

One can further confuse these idiots by asking them how this “smaller government” is to be measured. In dollars or number of employees or office space square footage or acreage of land, etc. If in dollars should it be revenue, expenditures, debt, value of assets, etc. And if so why?

Unless you’re talking to someone who’s an economist or works for the CBO or the Fed, they will be thoroughly confused at this point and it will be obvious, even to them, that they have no idea what they’re talking about. This is the whole point; to get these morons to realize that they’re clueless and are just suffering from powder burns on their lips from shooting their mouths off.

Next time I’ll write about the myth of lower taxes spurring the economy.

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