Monday, April 4, 2011

Samuelson on GE and Taxes

As regular readers know, I'm a big fan of Robert Samuelson's views on economic matters.  He's got an editorial in today's WaPost that accomplishes two important things.  First, it explains how in God's name GE could make over $5B in US based profit and not pay any corporate tax (easy--it lost huge amounts of money in 2008, 2009 and those losses carry over), and it suggests a more business friendly tax scheme that would lower corporate tax rates while raising capital gains taxes.

First of all, we ought to be wary of any raise in taxes on its face.  Ultimately, talk like that needs to bear the burden of sense--and in this case, it does.  With capital gains rates at 15%, the overwhelming majority of the benefit of this lower rate goes to folks in the upper brackets (the top 1% derive 66% of the benefit)--which Samuelson rightly points out makes little economic sense.  Capital gains used to be taxed at the same rate as ordinary income--and I advocate doing so again (whatever tax bracket one is in for income would be the bracket he or she is in for capital gains).  I realize I leave myself open to a charge of "soaking the rich", but I see capital gains VERY DIFFERENTLY than I see taxes on income.  And oh--by the way--I think EVERYONE's income tax should be cut.


Mudge said...

GE: Government Exempt
NBC: No Barak Criticism

Anonymous said...

Well, high risk technology jobs create most of the wealth these days in america. Common sense says if you make far less on a gamble you gamble far less. You and Samuelson are looking at the issue through a pinhole which is unfortunate since I am sure you are both intelligent.

Kill start ups you kill america. They create ALL new jobs and they take investment capital, ie risk capital. We have now killed our public markets with red tape and this kind of talk frankly terrifies me that we are becoming Europe.

The Conservative Wahoo said...

Anon--you bring up a great point--I think--which is the vast portion of "wealth" granted/gained in startups is in equity--which is then taxed as a capital gain.

Do you believe raising the capital gains tax will "kill" start ups? Why?

"The Hammer" said...

How much government money went to Wozniak and Jobs when they started Apple? How about Microsoft? Hewlett Packard? Gee, I'm thinking not a damned dime. But give me about 15 minutes and I'll show you 50 companies that have pissed away billions in taxpayer subsidies.
Anon, you're an idiot so shut the -uck up!

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