Free Markets, Free People

Daily Archives: June 20, 2011


Repatriating corporate profits with tax breaks

It’s under consideration, and if you read the article, the NYT isn’t particularly thrilled about it.

Why?  Because those nasty corporations didn’t create jobs the last time this was done:

But that’s not how it worked last time. Congress and the Bush administration offered companies a similar tax incentive, in 2005, in hopes of spurring domestic hiring and investment, and 800 took advantage.

Though the tax break lured them into bringing $312 billion back to the United States, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research.

This money comes from overseas operations and in some cases accounting maneuvers that shift domestic profits to low-tax countries. The study concluded that the program “did not increase domestic investment, employment or research and development.”

My question is, it didn’t increase “domestic investment, employment or research and development” where?  Because unless the stockholders took their money and buried it in a coffee can in the back yard, that’s most likely exactly where it went – via a more circuitous route that the NBER didn’t bother to follow.  That money didn’t just disappear when it went to share holders.  Where did it go?

Well, first remember that share holders are what?  Investors.   So even if all they did was let that money ride, it was “invested”. 

If, in fact, it was invested elsewhere, then one would assume that those companies in which the investment was made may have increased employment or R &D.  But you have to chase the money to find that out.

Bottom line, repatriation of overseas profits means more tax revenues, even at the reduced rate that would be found in a “holiday” as is being proposed.   And even if shareholders get the lion’s share of the money (and that’s why they’re called “shareholders” NYT, because they own a share of that money), they’re going to spend it, save it or invest it themselves.  

If one could get past the first step in the process and look at how money usually flows and is used, they’d realize that whining about “shareholders” getting most of the money is about as ignorant as complaining that if government gives taxpayers a tax break we wouldn’t spend the money properly, ala Bill Clinton.

Injecting billions of dollars of private money into the private economy in times like this isn’t going to hurt anything.  But it stands a great chance of helping.   But hey, those damn corporations wouldn’t spend it the way the NYT thinks they should, so they’re against it.

~McQ

Twitter: @McQandO


Opposing “dumb war” is now “isolationist”?

As badly as I wish Obama wasn’t president, I constantly try to look at the bright side of things and remember neither is this guy:

Former Republican presidential nominee Sen. John McCain (R-AZ) took aim at his party for what he called its growing movement towards isolationism, chastising the current GOP presidential field for not supporting U.S. military intervention in Libya and calling for speedy troop withdrawals from Afghanistan.

"This is isolationism. There’s always been an isolation strain in the Republican party, that Pat Buchanan wing of our party," McCain told "This Week" anchor Christiane Amanpour. "But now it seems to have moved more center stage."

That’s the most absurd bit of argument I’ve seen in some time.  Libya is a “war of choice” and a “dumb war” – two things Obama was supposedly against.  You can give him grief for getting involved, but it is obvious that John McCain has never met a war he didn’t like and, my guess is we’d be involved in even more if he had succeeded in capturing the White House.

Being against Libya has absolutely nothing to do with “isolationism”.  It has to do with involving ourselves in yet another military action at a time when our current military is stressed with a seeming unending deployment cycle, spending money we don’t have for something that has no connection whatsoever with our national interest and letting the UN and NATO dictate our participation instead of Congress.  Not to mention the fact that this is actually a real, live “illegal war” as opposed to the unfounded claim that Iraq was illegal.

Those four things alone are more than sufficient to oppose the war in Libya on sound principle.  

It is also apparent that John McCain is a fan of perpetual nation building, even while the nation we’re “building” is resisting it.  At some point, perhaps, it is time to reassess the situation and, like the mother bird to the baby bird, push the little blighter out of the nest.  If you can’t get a country to stand up on its own after 10 years, chances are it isn’t going to happen.   Iraq may not be the model of democracy or stability, but it at least is functional after the years we spent there.  And we went in there later than Afghanistan and we turned it all over to the Iraqis in a reasonable amount of time.

Again, pointing that out doesn’t make one an “isolationist”.   It makes one a realist.   Something with which John McCain has been acquainted.

~McQ

Twitter: @McQandO


A little followup (RightOnLine)

This story:

A group of around ten women in Muslim headscarves crashed the RightOnline conference for about ten minutes Saturday, protesting what they said was an incident targeting Muslim women Thursday night.

The event was the latest spark kicked up by the proximity of Netroots Nation and RightOnline. The two conferences are blocks apart — RightOnline is being held in a hotel many Netrootsers are staying in — and interaction between the progressives at Netroots and the conservatives at RightOnline has been inevitable.

A spokesperson for the group of women told TPM they weren’t sure of the identity of the man responsible for the Thursday incident — when two hijab-wearing women were followed by a man with a cell phone camera who reportedly asked them why they were dressed the way they were "in America" — but rumors that the incident involved an employee of conservative blogger Andrew Breitbart were rampant at Netroots.

Got it?

A few points.   It wasn’t a “flash mob” – at least not as I understand the term.   I stood on the second floor balcony, watched them arrive  together.  I then watched a person, who I assume was John Aravosis, interview one of them for at least 10 minutes and then I watched them ascend the elevator and go up into the RightOnLine crowd.  

All of this action based on a rumor that it was an “employee” of Breitbart involved in asking someone why they were dressed the way they were. Not fact – rumor.  Unfortunately for them, all they drew was curious stares from the crowd.  No confrontations, no heckling, no nothing.

I’m not sure why TPM felt compelled to make of this much more than it was, but then I always find it interesting to actually witness something as it happens and then read the report in what passes for the left’s media.

The spokesperson for the "flash mob," Allison Nevitt, told TPM that there was a larger message to their protest beyond the Thursday incident, which Nevitt said had been reported to Minneapolis police.

"The point was mostly that Muslim women are an equal part of this nation, and that we have an equal right to exist here," Nevitt said.

Is that the point?  Well other than a rumor, who at RightOnLine denied it?

~McQ

Twitter: @McQandO