Guest Post by Willis Eschenbach
I don’t usually wander too far off of the climate reservation, but this excellent cartoon by Michael Ramirez deserves wider publication, as it addresses a critical problem. It shows the US Budget for 2011, along with the cuts proposed by the Democrats (liberal) and the Republicans (GOP, conservative).
The US Government is about to shut down because the two sides can’t agree on a budget.
Can the rest of us agree that despite all the posturing, neither side is actually serious about the problem?
w.
PS – Anyone who thinks that CO2 is more important to the US than the above pie chart is fooling themselves badly …
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Willis,
Did not see this until today, but you are exactly right. We need to cut $1.7 trillion from the budget this year. We need a $300 billion surplus for the next 50 years to the national debt to a reasonable state.
R Gates
Some of us have read the article. Are you suggesting that GE should pay US taxes on the whole 14.2b from all operations or just 5.2b from US ops? Tom in Texas is just pointing out the realties, GE’s US credit operation GE Capital took a big hit in 2009.
If you read the article you also know that GE employs over 975 people in their tax department whose “mission statement” consisted of 19 rules and urged employees to divide their time evenly between ensuring compliance with the law and “looking to exploit opportunities to reduce tax.”
The Times article talks about GE’s lobbying efforts for these opportunities but fails to identify which ones were the largest dollar amounts for GE. I don’t know for sure but there has been a lot of TAX opportunities created over the last 10 years that I am sure GE has taken a great interest in. Yeah I am talking about alternative energy, some of these projects let you front load 30 % of all your expected capital expenditures for a project that has just broke ground.
AS they say in the HOOD “Don’t blame the player blame the game.”
Hu McCulloch says:
April 9, 2011 at 10:05 am
Thanks, Hu. Ramirez has done some killer cartoons about energy policy. My problem with say his 4/8 cartoon you mention is … after he’s said what he’s said in the cartoon, there’s not a whole lot to say.
All the best,
w.
Ed_B says:
April 9, 2011 at 7:54 pm
Ikes #’s are basically correct. For a look at Revenue as a % of GDP (since 1792) see:
http://www.usgovernmentrevenue.com/downloadsrs_gr.php?codes=FTR&units=p&group=&fy=fy11
Here is a split between Personal, Corporate, and Social Insurance taxes for 2011
http://www.usgovernmentrevenue.com/united_states_total_revenue_pie_chart#usgs30210
The site linked provides a lot of fact based info (within measurement uncertainties) to work with.
Jeff Norris says:
April 9, 2011 at 8:47 pm
R Gates
Some of us have read the article. Are you suggesting that GE should pay US taxes on the whole 14.2b from all operations or just 5.2b from US ops? Tom in Texas is just pointing out the realties, GE’s US credit operation GE Capital took a big hit in 2009.
If you read the article you also know that GE employs over 975 people in their tax department whose “mission statement” consisted of 19 rules and urged employees to divide their time evenly between ensuring compliance with the law and “looking to exploit opportunities to reduce tax.”
The Times article talks about GE’s lobbying efforts for these opportunities but fails to identify which ones were the largest dollar amounts for GE. I don’t know for sure but there has been a lot of TAX opportunities created over the last 10 years that I am sure GE has taken a great interest in. Yeah I am talking about alternative energy, some of these projects let you front load 30 % of all your expected capital expenditures for a project that has just broke ground.
AS they say in the HOOD “Don’t blame the player blame the game.”
____
Of course a multinational corporation like GE should not pay U.S. taxes on all operations, but only that derived from U.S. operations. My point really is about the “poor” corporations that Rep. Ryan wants to give increased tax cuts too. They are hardly poor and they should pay their share and feel the pain in balancing the U.S. budget. Of course, they could just pull a Halliburton and move their whole operations overseas, even though they get a large percentage of their revenue from U.S. taxpayers.
It is simply flat out false and wrong to suggest that corporations need to have their taxes reduced. They are seeing some of their largest profits ever, and have hardly been damaged by excessive taxation. Read this article for the True Story:
http://www.cnbc.com/id/42511085
And here is a little taste:
“The disparity is especially stark as companies are swimming in cash. In the fourth quarter, profits at American businesses were up an astounding 29.2 percent, the fastest growth in more than 60 years. Collectively, American corporations logged profits at an annual rate of $1.678 trillion.”
All this under the Obama watch…so those who would call him a socialist, as he’s been President while profits at American businesses saw their fastest growth in 60 years…are just playing loose with the truth. And Rep. Ryan is wrong to want to cut taxes for corporations…as they are obviously doing quite well, thank you.
Doug Badgero says:
April 9, 2011 at 11:38 am
Our tax code is a joke..
In one of my other incarnations I was a tax accountant. The US Tax Code used to be a string of books that took up about six feet on a shelf. Then the US passed a Tax Simplification Act, and after that, the total length of the Tax Code shrunk to only ten feet …
w.
Noelene says:
April 9, 2011 at 8:29 pm
“A simple pie chart is a bit misleading is it not?I did note that you are a democratic voter Willis.Maybe cannot admit that your party is mainly responsible for where America is at?”
____
The deficit is hardly the fault of either party, but is part of the Washington Culture. The Republicans prefer corporate welfare and the Dems give it to actual people. Either one is an addiction and needs to be stopped.
Gates,
Wrong as usual. You’re consumed with jealousy and class envy. Why don’t you just go out and buy shares of GE? Then you could share in the tax-free profits.
American corporate taxes are already among the highest in the world. And corporations don’t really pay taxes, they collect taxes for the feds. Since you’re so fixated on taxes, why not just pay double your own tax liability? There’s an IRS form for that – and you can even get a deduction…
…or, be a hypocrite, I don’t care which. I just resent greedy governments always with their hands out. They are never satisfied, and they always want more, more, more. Government greed makes Bernie Madoff look like a piker.
To hell with them and their apologists. It’s time to start cutting $Trillions out of the bloated federal budget. If the Obama spending spree was simply rescinded, our economy would be in fairly good shape today. Rolling back the Obama/Pelosi reckless spending should be the first order of business for the new Congress.
Smokey says:
April 9, 2011 at 9:31 pm
“To hell with them and their apologists. It’s time to start cutting $Trillions out of the bloated federal budget. If the Obama spending spree was simply rescinded, our economy would be in fairly good shape today. Rolling back the Obama/Pelosi reckless spending should be the first order of business for the new Congress.”
=============================
Bravo!
Chris
Norfolk, VA, USA
R Gates
Rep Ryan is lowering corporate tax rates and closing tax loopholes . A fair early analysis can be found here
Baltimore Sun
I am not sure which loopholes are being closed and for what the details are not out yet. All I am suggesting is that we all give it a honest look. You are being disingenuous with regards to the CNBC article. The articles focus was how CEO’s are still making the big bucks nothing about TAXs. Also from the article is this quote.
“Many if not most of the corporations run by these executives are doing better than they were in the downturn. Many businesses were hit so hard by the recession that even small improvements in sales and profits look good by comparison.”
I agree CEO pay is outrageous ( see HOOD Quote )are you suggesting that the government set wages for CEO’s. Can they do that for Professional, Athletes as well? How about hear surgeons?
Regarding tax credits or subsidies should we give companies a tax credit if they invest in green energy or any other cause of the month or not. Maybe just give it to the “little guy companies”. You know pick winners and losers.
R Gates
I just saw this
The deficit is hardly the fault of either party, but is part of the Washington Culture. The Republicans prefer corporate welfare and the Dems give it to actual people. Either one is an addiction and needs to be stopped.
We agree but you have to keep an open mind. The devil is always in the details.
R. Gates says:
April 9, 2011 at 9:18 pm
The deficit is hardly the fault of either party, but is part of the Washington Culture. The Republicans prefer corporate welfare and the Dems give it to actual people. Either one is an addiction and needs to be stopped.
=========================
As usual, your spin on actual reason and logic…now attempts to treat both with some sort of equal weight.
They are not equal.
Corporate welfare AND individual welfare are both RIFE in the Democratic Party alone!
So WHO IS the better candidate at this point??
I know that you will not be able to see this observation with clarity like some of the rest of us will…due to the Ron Paul pacifist-isolationists…[to which you are drawn like a wispy moth to a candle]…but this all needs to be said anyway.
And your faulty logic needs to be exposed for what it is….seen over hundreds of posts.
You need to read and digest the novel Atlas Shrugged….and check back later.
Chris
Norfolk, VA, USA
The Total Idiot: Great post. I agree completely and would give you post of the day if I had the importance to do so. Sadly for both of us, I am just a minion with no importance at all.
Those who have an interest in taxation, etc, might enjoy the nowandfutures website:
http://www.nowandfutures.com/taxes.html
The site has extensive data on a variety of economic and investment topics. The taxation page considers the total government take at all levels.
Noelene says:
April 9, 2011 at 8:29 pm
Well … no. It depicts the situation this year quite exactly. It gives an exact idea of the proportions involved, and the relative size of the cuts.
Is it a deep, far-reaching analysis of the possible future effects of the cuts? No. It’s a cartoon … but that doesn’t make it misleading.
You seem to be impressed by the following, from the article you cited:
You still don’t get it. Yes, the cuts will save “hundreds of billions of dollars” over the next decade. If you save $40 billion a year for ten years you get hundreds of billions in savings.
But if the existing budget deficit continues over the next decade, it will add, not hundreds of billions, but tens of thousands of billions to the debt.
It’s just crumbs on the pie, Noelene, whether you look at one year or ten years. The problem is the huge overspending.
Since WWII, no matter what the tax rates have done, corporate taxes going up and down, individual taxes going up and down, capital gains rates going up and down, the Federal Government has collected about the same amount of money – about 15%-20% of the GDP.
This would tend to indicate that in the long run, we damn well better learn to live within our means, which is to say learn spend less than 20% of GDP. And we need to remember and provision for the fact that in bad times, like the bursting of the dot-com and housing bubbles, there’s less revenue collected because there’s less business activity. Here’s a graph of the data since 1900:
I leave you to decide what that means, it’s worth a good look. There’s no way we can sustain what we’re doing.
I never said I was a Democrat, Noelene. What I said was that I’d voted against the Republican in every Presidential election. But that’s mostly because the other guy seemed like the lesser of two weevils, not because I’m a Democrat. In the event, I’ve regretted some of those votes but not others. I thought Nixon was a crook ever since he hung out with Joe McCarthy, and I was right. In any case, I’m registered as an Independent, as befits my nature, and I vote the man or woman, not the party …
So I don’t have a party. Which points to the ultimate idiocy of trying to attack my motives or my politics. As I’ve mentioned before, it’s not about me. Can you please focus on the issues, and not burden us with your fantasies of what I “cannot admit” about my non-existant party …
Thanks,
w.
savethesharks says:
April 9, 2011 at 9:52 pm
Realistically, the concept of corporate welfare is as mythical as corporate taxes.
Mark
I’m surprised you even bother to register as an Independent, Willis. You seem like the type that wouldn’t mark anything down… or does that count as registering as an independent? I don’t remember anymore… I still liked to belong when I was 18 and first registered. Somewhere along the line my cynicism grew to the point that belonging was a bad thing.
Mark
Willis …
That graph of % GDP since 1900 ? source ? since the GDP hasn’t been officially calculated with the same standard and I’ve never seen data from the early 1900’s I’m curious how calculated the % of GDP ?
I’m convinced you didn’t read my post.
Noelene says:
April 9, 2011 at 8:29 pm
According to Fox news the Republicans got a great deal.
Since Fox News is the media arm of the Republican Party, this sentence is totally unconvincing.
Over the next decade the cuts are expected to save hundreds of billions of dollars.
The next battle with consequences begins in a matter of two short weeks when the accumulated U.S. debt will be nearing it’s $14 trillion legal limit. So Congress will have to vote to raise the ceiling so Uncle Sam can borrow still more money.
The cuts that are expected to pass only cover the second half of 2011. The next decade is not covered in what was passed.
It probably is unconstitutional for the US government not to pay its creditors. If the debt ceiling is not passed, under the constitution, the government is still required to pay its debt. This has never been tested.
The administration has said it will need to be raised between April 15 and May 31 or the U.S. could default and create a new fiscal crisis of unknowable magnitude. Fiscal hawks plan to demand strict, enforceable spending caps, triggers for across the board cuts, and austerity measures in exchange for raising the debt limit.
This is not a smart way to cut spending. We need to raise taxes on the rich back to levels that were achieved under the Clinton administration, when the government was put on a sound fiscal basis. We also need to cut the bloated military budget. The US spends as much as the next 10 biggest military spenders. In addition, we need to restructure the incentives in the health care system. Instead of rewarding a high volume of procedures, of which about 30% are unnecessary, we need to reward achievements of good health.
This short-term agreement was just a beginning.
Read more: http://politics.blogs.foxnews.com/2011/04/09/who-won-shutdown-showdown-it-wasnt-even-close#ixzz1J5Tf6OAy
A simple pie chart is a bit misleading is it not?I did note that you are a democratic voter Willis.Maybe cannot admit that your party is mainly responsible for where America is at?
It is the Republican tax cuts, the Iraq War and Afghanistan Wars, the increase in weapons programs, and the recession triggered by a crash partly due to lack of banking regulation, which reduced tax receipts, and increased safety net spending that cumulatively that are responsible for the recession we have today. All of this was done under a Republican president, and Congress.
If you keep watching FOX, you will never get your facts straight.
dkkraft says:
April 9, 2011 at 9:11 pm
Ed_B says:
April 9, 2011 at 7:54 pm
Ikes #’s are basically correct. For a look at Revenue as a % of GDP (since 1792) see:
My chart that I produced shows 15% down to 11% or so currently, since the end of WWII. Thanks for the source, but I can’t reconcile Ikes numbers. Willis posted a chart, which looks the same shape, except his shows 25% down to 15% (wtf??) This is for the personal income taxes. If Willis’ chart were to include corporate taxes,we would get a full picture.
The only observation I can make is that corporation taxes fluctuate far far more than personal income taxes. When the economy is strong, such as the 1990s, corporate revenues are strong. That means that the Obama administrations failure to have an home grown energy policy which grows the GNP is devastating. The green agenda is 100% wrong!
savethesharks says:
April 9, 2011 at 9:52 pm
R. Gates says:
April 9, 2011 at 9:18 pm
The deficit is hardly the fault of either party, but is part of the Washington Culture. The Republicans prefer corporate welfare and the Dems give it to actual people. Either one is an addiction and needs to be stopped.
=========================
You need to read and digest the novel Atlas Shrugged….and check back later.
_____
Thanks, I’ve read it and it is one of my favorite. The myth that I’ve come to realize is a myth is that either party represents the Conservative ideal. Both feed at the corporate trough, selling their souls for power and money, and corrupting the Constitutional Ideal of a minimal government. We need:
1) Term limits
2) Campaign finance reform
3) A balanced budget amendment to the Constitution
These will never happen until the 2-party system is overturned by the people.
Jeff says:
April 10, 2011 at 5:31 am
Willis …
That graph of % GDP since 1900 ? source ? since the GDP hasn’t been officially calculated with the same standard and I’ve never seen data from the early 1900′s I’m curious how calculated the % of GDP ?
Jeff – I think you already know this, but for anyone else who might still be reading and interested. The pre-1930s stuff is more like Paleo data :-). Of course the post 1930 to present data is ticklish too. Fortunately there is a lot documentation on this topic. See:
http://www.measuringworth.com/uscompare/sourcegdp.php
From there use the Bureau of Economic Analysis links.
For a look at the history of the process try this:
http://www.bea.gov/national/pdf/nipaguid.pdf
There are limits to the precision of which we can calculate GDP. So % of GDP ought to be used with some caution. However when the deficit as a % of GDP (with all measurement caveats noted) goes from a 60 yr range of -4% > x < 5% to 3 straight yrs in the 8.5% < x < 11% range, well…… it's time to address it.
BTW – the Measuring Worth website has a neat little answer to the significant figures question i.e. "How can the answers be so precise?" To quote:
"They cannot. The calculators report answers to the last cent or pence, but in truth, it would make more sense if we reported that results with only two-digit accuracy. So if the answer is $427.32, it would be better to say $430.
Most historical data must be measured by making certain assumptions about the relationship between the variable that is being reported and an observation that is available. For example, a price index is based on representative items. The price of potatoes might be assumed to be 3% of the cost of food and yet it could be 2.6 or 3.4% instead. So when the price of potatoes goes up, the true cost of the increase in food may be under or over estimated.
So why do we report the results the way we do? Partly it is easier and partly it is because we think (you) the users prefer it this way."
http://www.measuringworth.com/glossary/index.php
Hi Ed_B
Yes, lots and lots and lots….. (and lots) of key figures to choose from. I think the chart Willis provided includes Total Revenues which would be a function of all taxes incl corp and personal and, importantly, social insurance + other revenues.
We could reconcile it – but there are plenty of other folks who have already looked at this. Here is one example that will help answer your question:
http://www.deptofnumbers.com/blog/2010/08/tax-revenue-as-a-fraction-of-gdp/
Europe has social welfare programs to support their poor, America has the military…