“Price is what you pay. Value is what you get.”
Please Sign-Up for Updates
Please Follow Me On:
There are some activities in which the motive for private profit leads, on the whole, to the promotion of the general interest and others in which this is not so. Finance is now definitely in the latter class.
Modern Midas – 1933
An interesting paper by Eric Toder of the Urban-Brookings Tax Policy Center and Alan D. Viard of the American Enterprise Institute on replacement of the corporate tax with a shareholder oriented accrual tax program. (Via Martin A. Sullivan at The Tax Analysts Blog.)
The second option, which could be adopted unilaterally by the United States, would replace the corporate income tax with increased taxation of shareholders. American shareholders of publicly traded companies would be taxed on both dividends and capital gains at ordinary income tax rates and capital gains would be taxed upon accrual. The option would ensure that American shareholders in both U.S. and foreign based multinational corporations pay tax on their worldwide income, while improving incentives for both domestic and foreign corporations to invest in the United States and increasing the competitiveness of U.S.- resident MNCs. It would also curtail a host of closed-economy distortions, including the current system’s biases against corporate equity‐financed investment, dividend payments, the sale of appreciated assets, and specific industries and types of capital. But it would face a number of design challenges and would reduce federal revenue. It would also confront severe political obstacles because it would be perceived as a giveaway to corporations, it would tax accrued gains that many shareholders do not consider to be income, and it would require other tax increases or spending cuts.
Increasing supply while decreasing demand:
A survey by Harvard Business School reports that its alumni would rather buy robots, out-source, or use part-time workers than hire (and train) full-time, long-term employees. Part of the reason the economy will grow but with wealth concentrated among the haves, a declining middle class, and a growing class of have-nots.
Corporate boards lavish them with massive pay packages and politicians venerate them as “job creators.” But it turns out that America’s business chieftains would rather not create full-time jobs to do what needs doing if they can possibly avoid it, according to the latest annual survey from the Harvard Business School (HBS).
Worker productivity is up but worker share of profits is at an all time low.
Workers aren’t earning less because they’re slacking off — just the opposite. Their productivity increased 8 percent between 2007 and 2012 while their wages actually fell, a trend that has been going on since at least 1979. And they’ve been speeding up since the recession, increasing their productivity last summer at the fastest pace since 2009.
The productivity has helped out corporations. They saw record high profits last year, rising to $1.68 trillion, and they have been rising steadily for some time, more than fully recovering what they lost to the financial crisis. Yet workers are getting little of that money. Profits have risen nearly 20 times faster than workers’ incomes since 2008, and on the whole workers have seen a lost decade of stagnant wage growth.
Who cares if you’re innocent. It’s the process that counts, not Justice.
This Court has never held that the Constitution forbids the execution of a convicted defendant who has had a full and fair trial but is later able to convince a habeas court that he is “actually” innocent. Quite to the contrary, we have repeatedly left that question unresolved, while expressing considerable doubt that any claim based on alleged “actual innocence” is constitutionally cognizable.
Since Adam Smith, capitalist economists (for the most part) have agreed that government (or other social institutions) should fill the gaps that the private sector can not address or would not do so as efficiently and/or effectively as the public sector. The Ex-Im Bank is a government agency that provides credit support to U.S. exporters. A major beneficiary is Boeing – airplanes being one of the U.S.’s largest export industry. Supporters argue that the Ex-Im Bank supports jobs, economic growth, helps the U.S. trade balance, and actually generates a profit to the Treasury while doing so.
While critics are correct that the program may create trade distortions, other countries have similar programs so a unilateral disarmament by the U.S. wouldn’t level the playing field but simply tilt in more in favor of non-U.S. producers such as Airbus.
In addition part of the Ex-Im Bank’s role is to help small companies enter the international market and I would argue that there is a gradient between trade promotion and trade distortion.
Legitimate criticisms include one by Delta that the U.S. government is providing a subsidy via Boeing/Ex-Im Bank to foreign airlines who then have a competitive advantage over U.S. airlines causing economic harm (including job losses) in that industry. Thus the impact of the Ex-Im Bank needs to be measured not just on the primary effects but also on the secondary effects. An also interesting issues is raised in the Comments section of the Bernstein column by Roger Anderson who points out that in recent years Boeing has had a negative federal income tax rate while competitor General Dynamics has paid at a 29% tax rate. So just how large is the real subsidy of Boeing and is it fair to its U.S. competitors?
So will Congress address this complicated issue with the intelligent nuanced analysis that it deserves? Probably not. Joe Nocera of the NY Times reports on Rep. Hensarling’s view of the Ex-Im Bank:
Representative Jeb Hensarling, a Republican from Texas who is chairman of the House Financial Services Committee, gave a speech to the Heritage Foundation. Hensarling is a Tea Party favorite. His core view is that better government is less government, and that there is nothing government can do that the private sector can’t do better.
Hensarling’s speech was about economics, which, of course, meant it was about wasteful government subsidies and “crony capitalism.” He tossed off what he felt were examples of each — the failure of Solyndra; the continued existence of Fannie Mae; the bailouts of Wall Street and the auto industry — before landing on a government organization that he described as being the “poster child of the Washington insider economy and corporate welfare.”
“Its demise,” he went on, “would clearly be one of the few achievable victories for the Main Street competitive economy left in this Congress. I believe it is a defining issue for our party and our movement.
As if there are Mom & Pop stores selling jetliners and jet fighters in the local strip mall.
Downing scarcely had taken a seat aboard the Harlem Railroad when an agent told him to leave. Downing refused, and “the agent and driver immediately seized hold of him, dragged him out, and assisted by two other men, gave him a severe beating, and inflicted a wound in his neck.”
When NYC residents fought racially segregated public transit and the landmark lawsuit was won by a future Republican president.
A new Demos study finds that federally-supported firms, defined as companies that receive 10 percent or more of the yearly revenue from contracting,employ 6.6 million people. Of these workers, 3.5 million of these workers earn wages at or below 150 percent of the poverty line for a family four (disproportionally minorities and women). And they frequently get lousy treatment from their employers.
A 2010 GAO investigation found that the government frequently awards contracts to companies with wage, safety, environmental, immigration and Medicare violations. Meanwhile, according to a Senate Health Education Labor and Pensions Committee report, firms that do federal contracting made up 30 percent of the companies with the largest penalties for health, safety and wage violations between 2007 and 2012.
“When your work speaks for itself, don’t interrupt.”
Henry J. Kaiser
Americans’ median wealth is a mere $44,900 per adult… only good enough for 19th place, below Japan, Canada, Australia and much of Western Europe. ‘Americans tend to think of their middle class as being the richest in the world, but it turns out, in terms of wealth, they rank fairly low among major industrialized countries,” said Edward Wolff…. Super-rich Americans skew average wealth upwards. The U.S. has… 49% of those with more than $50 million in assets…. This schism secures us the top rank in one net worth measure–wealth inequality…. Americans… are having trouble building wealth because wages have stagnated for more than a decade.
Remember, the median household income rose 20% over those ten years (the Perpetual’s net income rose from $100,000 to $120,000), so the official CPI puts the Perpetual’s household at a $6,500 annual deficit! By using the reality-based CPI, the deficit is truly staggering by a factor of 5x.
Finally…A Reality Based Cost Of Living Index – Seeking Alpha
Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.
James McCarthy has 30+ years in finance and private equity, corporate structuring and work-outs, and raising debt and equity as an investor, lender, investment manager, portfolio manager, financial advisor, corporate consultant, work-out consultant, and city planner. Clients have included domestic and offshore institutional investors, investment funds, hedge funds, high net worth investors, and private companies. I hold an MBA from Columbia University and a Master of City & Regional Planning from Rutgers University.
Special interests include green and sustainable design, resilience, passive energy design, waterfront, walkability, transit-oriented design, affordable housing, high-quality and innovative architecture and construction technology, mixed-use development, and the inclusion of public spaces and landscape architecture.