Sunday, August 24, 2014

Greg Mankiw Explains Why The Corporate Tax And The Income Tax Should Be Eliminated

Greg Mankiw blames corporate inversions on the high corporate tax rate in the US.  Corporate executives are only doing their job when they device schemes to avoid taxes.  In reality they have no national identity.  Efforts by nation states to tax their profits ignores the realities of our global economy.  Apparently, taxes which pay for the services provided by nation states, that are essential to the operation of the economy, should be shifted away from multinational corporations which are superior to nation states.  While we are at it, we should also eliminate income taxes.  They should be replaced by a consumption tax.  This is consistent with his view that we should not tax "good things" like income,  we should tax "bad things" like consumption.  That would shift the tax burden from those who are able to save most of their income to those who spend most of their income.  It also assumes a strange notion of the purpose of an economy.  Providing incomes, which are unequally distributed, is more important than providing goods and services that can be consumed.

Greg Mankiw has established himself as one of the economists best able to apply his knowledge of economics on behalf of his clients.  He also puts his naivety about how corporations operate on public display.  They have been using a variety of schemes to transfer their profits from high tax states to low tax states with impunity.  Corporate inversions are simply another way of doing what they have been doing for years.  Moreover,  the net tax rate paid by US corporations is consistent with the net tax rates paid by corporations in other industrial states.

No comments:

Post a Comment