The EU reaffirmed its commitment to fighting corporate tax avoidance through a statement by European Commissioner Pierre Moscovici. This should come as no surprise following recent financial scandals exposed through the Panama Papers and Luxleaks, and the ensuing international outrage towards corporations “not paying their fair share”. Yet, the push for higher corporate taxes disproportionately also affects ordinary citizens by increasing their tax burden.
Corporate tax avoidance is regularly said to be unfair to other taxpayers. Indeed, proponents of higher corporate taxes accuse multinational companies of de facto increasing ordinary citizens’ tax burden because these ones would be forced to compensate states’ budget shortfalls.
However, this artificial opposition between corporate and public interests is dishonest. When one argues corporations don’t pay taxes, the implication is that shareholders, workers and consumers are not taxed at all, which is completely untrue. All these people are taxed in various ways, including income tax and valued-added tax, among other costs imposed by national governments. The only purpose of this distinction is to push ordinary citizens to support higher corporate taxes without allowing them to realise they are the ones who are going to pay the bill.
In fact, a corporation is a legal fiction which aims to reduce transaction costs between physical stakeholders, which are shareholders, workers and consumers. Consequently, every fiscal cost imposed on corporations will necessarily be paid by these people. Therefore, as corporate taxes increase, shareholders’ dividends and workers’ salaries will decrease, while consumers will be forced to pay more for their purchases.
Read more at the The Daily Caller
Since January 1937, Americans have dutifully paid into Social Security trusting that its benefits will be there for them when they retire. Yet, that faith now seems unfounded with Social Security hemorrhaging cash. According to the latest report by Social Security’s Trustees, the program’s combined trust funds will be unable to deliver full benefits in 2034, forcing future beneficiaries to suffer a 21 percent benefit cut. In order for the program to survive, comprehensive reform is necessary.
Earlier this month, Rep. Sam Johnson (R-TX) introduced the Social Security Reform Act of 2016, a bill that aims to prevent the forecasted cuts by implementing a wide series of structural reforms to the program. According to the Social Security Administration’s Chief Actuary Stephen Goss, if the reforms outlined in the bill are implemented, “the combined OASI and DI Trust Funds would be fully solvent…throughout the 75-year projection period.”
There are no new ideas in this bill, nor does it aim to radically change the structure of Social Security. Rather, it’s a plan which would not involve raising taxes. In general terms, the plan outlined in the bill would affect Social Security in two ways: the mechanics of Social Security would be updated to account for modern economic conditions, and the program would further redirect funds towards poorer beneficiaries.
Continue reading at Townhall.
Lawmakers in Chicago are forcing citizens to fear their tax burden more than the inevitable winter cold.
In addition to boasting one of the highest sales tax rates in the country, the infamous “Netflix tax,” and a pending tax increase on water, Chicagoans will now see an increase in both property and fuel taxes for the purposes of funding the “Red Ahead” program. The program seeks to “rebuild vital infrastructure for Chicago’s future,” but rests upon a premise shakier than a rusting portion of “El” tracks.
City officials claim that monies levied from these specific tax increases will go exclusively to fund the Red Ahead project. However, constituents should raise their eyebrows reading this statement, given the pension debacle occurring within the state. Both the State of Illinois and the City of Chicago have misappropriated funds to the tune of hundreds of millions of dollars. Why should Chicagoans trust city lawmakers to handle these funds appropriately amidst an ongoing financial crisis? City officials in Washington, D.C., certainly did not handle funds for their streetcar program well — $200 million over the last 10 years on a streetcar system that barely functions.
Continue reading at Watchdog.
Why is it when politicians try to “fix” a problem, they always seem to reach for your wallet? Governments from all across the world, from Mexico to the United Kingdom to Berkeley, California have made a strong effort to warn its citizens about the dangers of sugary drinks. But some have gone even further by imposing excise taxes on citizens who consume these sweet nectars.
The city of Philadelphia, where the Declaration of Independence and the Constitution were written, is on the verge of passing a tax on sugary drinks. Taxes are typically toxic to
economic growth but a sugar tax is especially harmful to those in a lower socioeconomic
class. The common argument for a sugar tax is that it combats obesity while having no negative effect on the public.
Yet, increasing the price of sugary drinks does not necessarily translate into a healthier citizenry, as shown by a Tax Foundation study:
Detailed economic analysis shows that when the consumption of soda is discouraged with higher prices, children and adolescents tend to substitute other food or drink to make up for lost calories. Taxes on soda could even cause an increase in caloric consumption, as other substitutes can have higher calorie contents than soda.
The only certain effect of the sugar tax is that it will increase prices for all consumers. Politicians and presidential candidates claim to care about the poor and middle-class families, but increasing the prices of goods they consume is not caring—it’s callous and
unproductive. When politicians claim the middle-class is disappearing, they should be reminded that many families have been taxed out of the middle class.
Sugar may be addictive, but clearly not as addictive as taxation. When politicians blatantly try to increase taxes on the poor and middle class, it shows that addiction.
Tax cuts are a major feature of Republican presidential candidates’ economic policies, and it showed in last week’s debate.
But not all tax cuts are created equal. In particular, the drive to cut individual rates is misguided. In the tax code, the real culprit for sluggish economic growth is the corporate tax.
The United States has the highest corporate tax rate in the developed world—39 percent, when including an average of state levies. In the 1950s, high corporate taxes provided a sizeable chunk of federal government revenue—up to 32 percent in some years. But today, the tax makes up only about one tenth of federal government revenue.
Read the rest on Watchdog here.