Giving companies more money (loans, tax-breaks) only increases investor payouts, not expansion


#21

Simplistic explanations of complex social phenomena is pretty much one half of Michael’s bailiwick, with the other half being gleeful cheerleading and/or anticipation of abuses of power over and revocation of rights of people that he doesn’t like. He’s a fairly typical authoritarian follower in that manner, albeit one with high levels of innate aggression towards outsiders.


#22

What they want are bailouts and public subsidization and private profits. Who needs customers?


#23

No, there aren’t. There are bad, illogical arguments saying that – the Trickle Down theory, for example – but economic theory and actual history prove otherwise.

The only thing that creates jobs is demand for more product/service than can adequately be offered by the existing employees. That means more of the money currently available needs to flow through consumers.

Within that situation, the only thing that creates incentive for investing in expansion – more machinery, another company location, adding a new product or service – is making profit expensive enough that reinvesting in the company is a smarter way to build equity and value. That means higher taxes on company profits.


#24

People don’t invest in stocks to have a place to live; they invest for gains that they expect to get out.

This actually makes no damned sense whatsoever. Non-living robots?


#25

If you own stock, even just one share, every year (at least) you get to vote on a handful of things that the company does.

Every year there are shareholder requests that are put to vote regarding limiting executive pay, being more responsible regarding what countries and conflicts the companies involve themselves in, acknowledging climate change, using more renewable resources, all sort of progressive things…

Always…without fail, the board’s recommendation is “Against”. If you choose not to vote your shares, they board’s recommendation is your vote.

Not all shareholders are in it for the pillaging, and many are pushing for the good causes. Still, it’s pretty hard to have more voting shares than the CEO, and other board members of a corporation.


#26

Relies on it, because investors have been convinced that the way to make money on the stock market is to buy low and sell high as quickly as possible instead of long-term investing in companies that pay quarterly dividends. Everyone thinks they’re a better gambler than they are (and usually don’t realize how much brokerage fees cut into their winnings profits).


#27

you mean this stiuation.


#28

I was pointing out the “reductio ad absurdum” fallacy of the simplistic argument of the article. Of course, it works both ways; if it is true that a slightly higher tax on profits is net good, then an ever higher tax must be even better … on the flip side, you end up with 0% tax. But I didn’t write such a stupid article, so I allow myself to sketch an argument in a reply. The onus of good reasoning falls harder on the author, I feel.
The point is to understand the compromises, something we need more than ever in Western politics. I react to the patently extreme comment that lower corporate tax has no overall benefits. If that was actually true, corporate tax would be 100% ( communism). A reasoned debate needs to acknowledge the compromises involved in setting taxes. Higher corporate taxes make investment in companies less attractive relative to other investments. This is clear, and I don’t even care if you acknowledge that or not, because it is the actions of those who command capital which matter in this case:this point is not up for debate. Witness the billions of offshore US corporate profits hiding from the high tax on repatriation.
In the short term, policies which reduce investment won’t do any damage: if capital has a useful life of five to 20 years, then a loss of investment in new assets won’t have a short term effect, and perhaps the state can find good investments with its higher revenue. But history shows to me that the state will run out of good investments, and an economy starved of investment by owners of capital will see declining productivity. The owners of capital will find other investments, probably overseas, so they won’t be harmed. But those who can’t move as easily as capital will be harmed, eventually. This is why I dislike the simplistic argument. It is wrong, as many simplistic arguments are, but the the system does not provide immediate pain to let you know a mistake has been made. Instead you wander into a fog of good intentions and get lost in a morass, like France, Spain and Italy.


#29

Your response to @Michael.Lederman is correct, but someone who demonstrated a lack of rudimentary economic skills in the same post where he mocks others for not having them is not going to grasp what you’re saying. Putting economic knowledge aside, John Galt there clearly doesn’t understand the role that tax breaks (local? federal? makes no difference to him) do or don’t play in the (very different) business cases he cites.

The only shareholders who usually have that kind of clout with a large corporation are the institutional investors. The corporations usually neuter them by offering the institution or a close affiliate a board seat of its own.

It’s clearly understood that the article is discussing corporate tax breaks in the current atmosphere of late-stage capitalism resulting from 30+ years of deregulation, supply-side economics and the neoliberal consensus. In that context, the current tax break situation is indeed absurd. It now favours corporate executives and shareholders (in that order) to a highly unbalanced degree compared to the benefits accruing to the local or domestic economy that’s offering the break.

Tax breaks, like debt, are best used as a situational tool and not as a way of life. The article describes an economy in which the latter assumption has been in effect for at least two decades, to a point where even the U.S.'s relatively low corporate taxes still aren’t good enough for some corporations.


#30

Except that the article isn’t saying that. It is saying that lowering taxes doesn’t help a very specific thing. That does not imply that raising taxes does the opposite, it implies that we need to do something different to help the thing we’re trying to help (which may or may not include some raising of taxes).


closed #31

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