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Protesters in Detroit in April calling for GE and other corporations to pay a fair share in taxes. (AP)

Job destroying taxes? Ask pols, which ones are those?

COMMENTARY | June 18, 2012

Aren’t reporters tired of letting flannelmouthed politicians talk about ‘job destroying taxes’ without calling them on it? And on Obamacare – couldn’t the press, once in a while, point out that other values are at stake and get past dubious assertions about what the Constitution does or does not allow?


By Martin Lobel
Lobel@LNLlaw.com
 
Words do make a difference when addressing issues. But all too often the media’s choice of words has failed to provide the public an understanding of what is really at stake. Two examples: “job destroying taxes” and “Obamacare.”
 
Job destroying taxes
 
Republicans such as House Speaker Boehner and tea party members rail against “job destroying taxes” yet support tax provisions that encourage “American” multinational corporations to shift jobs and profits overseas, the better to “compete” against “foreign” multinational corporations. But the mutinationals all operate worldwide wherever they think they can make the most money.
 
There is little dispute that corporations should be profit maximizers for their shareholders and that, if they can take advantage of tax subsidies, they should do so. Indeed, GE treats its roughly 90-lawyer tax department as a profit center. Unfortunately, while many business tax subsidies cannot be justified on economic grounds, they are so complicated that the media ignore them and the  money the corporate beneficiaries spend to get and keep them.
 
A prime example is the section of the tax code that deals with “foreign” profits. Under it, profits are not taxed until they are repatriated to the United States. At the same time, however, foreign expenses can be written off immediately against domestic profits. And, because we use the transfer pricing method – which allows multinational corporations to allocate profits essentially wherever they say they earned them – these companies shift profits and jobs to low or no tax countries. Marty Sullivan and Lee Sheppard in Tax Notes have detailed numerous examples of this shifting, but rather than try to stop it, the Republicans, at the behest of the multinationals, want to accelerate this shifting of profits by adopting a “territorial” tax system which would essentially exempt all foreign profits from U.S. taxation to help “American” multinationals compete with “foreign” multinationals. 
 
Press coverage of this issue has been, to be kind about it, abysmal. It has focused on the best way to help “American” corporations compete against “foreign” corporations because of the high U.S. corporate tax rate, ignoring the fact that the effective U.S. corporate tax rate is just about the same as in most advanced countries. Moreover, the taxation of foreign profits has a significant impact on American jobs and income, and, importantly, it puts domestic corporations, which have to pay taxes, at a real competitive disadvantage when competing with multinational corporations that don’t. 
 
Where are the cries about these “job destroying” tax provisions? Are the media being manipulated by high priced corporate PR? It would seem so. 
 
Obamacare
 
Focusing entirely on whether the mandate to buy insurance is unconstitutional ignores the economic impact of the provision. Currently American taxpayers pay for the uninsured who take advantage of emergency rooms and hospitals. Why shouldn’t the uninsured be required to buy insurance to pay for at least a part of the cost of the health care they receive? The conservative economists at the American Enterprise Institute who devised the original plan understood this, but if you read most of the media coverage of the issue you’d never know anything about the underlying economic reality. It’s much easier just to quote the talking heads in a “he said, she said” article.
 
If the media expect to regain the respect and influence they once had, they need to provide meaningful information and analysis, rather than merely repeating what the  spinmeisters provide. 
 



Posted by ACitizen
06/24/2012, 12:49 PM

There is no Fourth Estate anymore.

And until the COST of health care is brought down smoke and mirrors will do nothing.




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