Corporate Income Tax & the Double Taxation Myth

Dean BakerThere is something that rich people and their apologists talk about a lot. It is the idea that the corporate income tax is wrong because the owners of those corporations have to pay income tax twice: once for the company and once for the individual. Dean Baker provided the standard response to this nonsense, The Myth of the Corporate Income Tax as Double Taxation. Basically, it comes down to this: no one is forcing people to set up their businesses as corporations. People do it knowing that they will have to pay corporate income taxes. And they do it anyway, because they get a great deal of benefit — most especially protection against liability.

But there are several other things that I don’t understand about this whining point of the rich. The first is, “Corporations are people, my friend.” Corporations have First Amendment rights. Why shouldn’t such an entity have to pay income taxes? Really, I don’t get it. This whole discussion seems to be the usual thing where the rich want all the advantages of whatever they have, but none of the responsibilities. And since they only talk to each other, they get the idea that somehow it makes sense their corporate status should give them all kinds of benefits that other business people don’t get, but that they shouldn’t have to pay anything for it.

The rich and their apologists know that it makes no sense to complain about the corporate income tax. In fact, as Dean Baker noted, “The corporate income tax is a 100% voluntary tax…”

Let’s consider a little thought experiment. Let’s suppose that I hire you as a maid. I don’t pay you with my pre-tax salary; I pay you with my post-tax salary. I get paid and I pay my taxes. With the money left over, I pay you, and you too have to pay income taxes. How is this any different? The reason that corporations have these special rights is that they are a special kind of person. From the profits of the corporations, shareholders are paid. The fact that they don’t do any work (unlike the maid) doesn’t change things; they are being paid because they put money into the company. So yeah, this is double income tax — just like it is when anyone hires someone else.

But what I really don’t get is the Shakespeare aspect of this, “What’s in a name? That which we call a rose by any other word would smell as sweet.” What does it matter that we call these two taxes the corporate and individual income taxes? I’m being taxed all the time. I make money and I pay income and payroll taxes on it. Then I spend the money and I pay consumption taxes. The big issue here is that the rich are laser focused on the federal income tax.

I’ve talked about this a lot, most recently in, Why We Only Talk About the Income Tax. We have a system where property taxes are very slightly regressive (the poor pay more than the rich). Consumption taxes are quite regressive. And payroll taxes are ridiculously regressive. The income tax is the only part of the tax system that is even moderately progressive. So we talk talk talk about the income tax.

The rich and their apologists know that it makes no sense to complain about the corporate income tax. In fact, as Dean Baker noted, “The corporate income tax is a 100% voluntary tax…” It’s a tax they complain about paying, but they aren’t required to pay it. But it’s the usual whining point of the rich about everything: they don’t believe they should have to pay for anything they get. They want special privileges that other people and businesses don’t get, but they think it shouldn’t cost them anything.

I’ve long been in favor of eliminating the corporation — especially when I was a libertarian. So I say we give the rich what they want: repeal the corporate income tax — right along with the corporation as a legal entity. Do I have any takers?

The Middle Ground on Healthcare Reform

Hillary ClintonI’ve come to be pretty tired of the Clinton and Sanders camps sniping at each other — especially over healthcare reform. It’s hard for me to be objective, of course, because I am a Bernie Sanders supporter. But I do think more sniping comes from the Clinton camp. It isn’t a question of total sniping. But there is a whole lot more institutional sniping by Clinton supporters. And I understand it: she’s the establishment candidate for a reason: she’s the safe choice. And as a Sanders supporter, I have to admit: I don’t see much in the way of policy differences between the two once they are in office. We live in a democracy, not a autocracy. So I wish everyone would just cut it out.

But there are substantive differences between the candidates that are worth talking about. Healthcare reform is the big one: the “fix Obamacare” approach and the “replace Obamacare with single payer” approach. What I don’t understand is why these have to be different. As you all know, I’m very happy with Obamacare, Covered California: I Died and Woke Up in Canada. I certainly would prefer a universal, single-payer system. Obamacare is a complicated mess. And I don’t really see why I had to decide between the bronze and silver plans. Like I’m in any way qualified to know what is best for me! But that’s the way our neoliberal system works.

“Getting universal Medicare would require overcoming opposition not only from insurers and drug companies, but doctors and hospital administrators, both of whom are paid at levels two to three times higher than their counterparts in other wealthy countries.” —Dean Baker

Still, it seems to me that Obamacare is single-payer just waiting to happen. For this discussion, forget people who get their insurance through their employers. For one thing, it makes this all easier to think about. But more important, I think that now that we have Obamacare, employer provided health insurance will (Quite rightly!) become a thing of the past. It will probably take twenty years, but eventually, healthcare just won’t be provided in that way. It’s existence is a fluke of history anyway.

So we have a system now in three parts: Medicaid for the poor, Medicare for the old, and the Exchanges for everyone else. Currently, Medicaid provides free healthcare to those making up to 133% of the poverty level. (Because of John Roberts, this isn’t true in most red states, but that will change over time.) What I want to know is why we can’t change the Medicaid level. Why not increase it to 150%? Or 400% (the level where government subsidies end on the exchanges)? Or why can’t we lower the age for Medicare? How about 60 years old as a cutoff? For people like me who want “Medicare for all,” this seems obvious. Whenever the Democrats get control of the government, they can increase the number of people who qualify for Medicare and Medicare. And eventually, you end up with a universal, single-payer healthcare system.

Bernie SandersAs far as I can tell, there is only one objection to this healthcare reform plan: it isn’t realistic. But it is more realistic than simply jumping to a full out single-payer healthcare system. And it has the advantages of being a gradual process — one where the insurance companies can gradually move into other areas. But even more than that, our healthcare problems are a lot bigger than our fragmented private insurance market.

Dean Baker recently wrote, Paul Krugman, Bernie Sanders, and Medicare for All. He noted, “Getting universal Medicare would require overcoming opposition not only from insurers and drug companies, but doctors and hospital administrators, both of whom are paid at levels two to three times higher than their counterparts in other wealthy countries.” And that’s important. The country needs to get used to the fact that our idiosyncrasies have distorted our system such that healthcare reform is complicated. And it is going to take time on a lot of fronts to deal with this. There is no quick fix.

So in a sense, I agree more with Hillary Clinton about healthcare reform. But I know a little bit about negotiation. And if Clinton is talking about the very reasonable idea of making Obamacare work better and having it cover more people, the most likely result will be that nothing will change. But Sanders’ unreasonable push for single-payer healthcare right now is much more likely to result in good changes to Obamacare. Let’s not forget that Obama ran in 2008 on the unreasonable idea that we didn’t need an individual mandate. We didn’t get his more liberal plan, but we did get a plan that is providing me with healthcare and dental insurance at negligible costs.

None of this means that Clinton is bad. But similarly, none of this means that Sanders is unrealistic. I’ll proudly support either of them.

Morning Music: Big Jesus Trash Can

Junkyard - The Birthday PartyWell, in our trip down Nick Cave’s career, we come to the last album of The Birthday Party, Junkyard. Like so often with great bands, this last album is when they really gel. Of course, in their case, that means they go totally crazy. It is amazing to listen to. Yesterday, I said that Prayers on Fire was post-punk. This album is… who knows?! Some of it sounds like free jazz. And then it’s straight rhythm and blues. And sometimes psychedelic — but taken by goths. Today we listen to “Big Jesus Trash Can.”

It’s a very consistent album. It has an emotional core of wry despondency. My favorite track is the most straightforward one, “Several Sins.” But it is by Rowland S Howard (maybe I’ll do a week of him sometime). “Big Jesus Trash Can” is a masterpiece of noise as music. I never much cared for noise bands, but that’s because they rarely managed to turn it into music. Here The Birthday Party does.

In “Big Jesus Trash Can,” it is hard to say what Cave is on about. There are various ways of interpreting it. It is hard for me not to see it in the context of the modern American Christian conception of Jesus as this Rambo sort of character. Certainly there seems to be some kind of statement about America being so Christian and yet so militaristic. But the main thing is the sound:

Anniversary Post: Iranian Hostages Released

Iranian Hostages ReleasedOn this day in 1981, the remaining 52 hostages were released by the Iranian government after 444 days. This was also the day that Ronald Reagan was inaugurated fortieth President of the United States. For years, this has been part of the Republican myth that Carter was weak and Reagan strong. Indeed, just last weekend, Marco Rubio was on Meet the Press, where he made the de rigueur Republican claim that the world only respects and fears America when a dry mouthed Eagle Scout brays and beats his chest. He said, “When I become president of the United States, our adversaries around the world will know that America is no longer under the command of someone weak like Barack Obama, and it will be like Ronald Reagan, where as soon as he took office the hostages were released from Iran.”

If you look at the timeline of the Iranian hostages crisis, you will see that the Carter administration was not sitting on its hands. The first attempts at negotiation were on 7 November 1979 — three days after the attack on the embassy. The Iranians would not meet with the US, so Carter froze their assets. Originally, there were 66 hostages taken. On 17 November 1979, Iran released all the female and African American hostages — reducing the number down to 53. On 11 July 1980, another hostage was released due to illness. That left the 52 who were released on 20 January 1981.

On 12 September 1980, Iran declared that they would release the hostages if the Shah’s assets were given to Iran and if Iran’s assets were released. The Iranians went to the Carter administration that month with the offer to negotiate. From then through January of 1981, Warren Christopher led the US delegation in negotiations with the Iranians. On 19 January, a deal was settled — the Iranian hostages were exchanged for roughly $10 billion in Iranian assets. And the next day, the hostages were released.

According to PolitiFact (which has debunked this claim before because Republicans so like it), there were a couple of reasons for the Iranian hostages release. First, the Iranians were tired of keeping the hostages. They had to take care of them and keep them from escaping — at the same time having to worry about an American attack, which would have been widely seen as justified. Second, they had been negotiating for months and they didn’t want to start all over with a new administration. And third, the Iranians wanted to insult Carter as the symbol of the United States.

It’s interesting how often Republicans align themselves with enemies of this country just to score cheap domestic political points. Remember Tom Cotton’s ridiculous letter to the Iranians that totally disrespected the office of the president just to make a grand statement? Remember what the letter actually communicated: you should not trust the United States of America.

As for the Iranian hostages deal, no one from Ronald Reagan’s administration took any part in the negotiations. The deal was finalized because of negotiations with the Carter administration. And it was all about money. Nothing else. Rubio is an idiot. But that’s what Republicans are. In 2012, Mitt Romney said the same thing. That’s because chest thumping is the extent to which Republicans think about foreign policy.