Capitalism, The Best Solution to Poverty

[pErvinalia]

For multi-national corporations, the old saw "nothing is true except for death and taxes" has disappeared - corporations (until the revolution) are immortal, and, in many jurisdictions, they don't pay any tax either...

This is largely a myth. Corporations generally pay large amounts of tax.

Your reply is largely bullshit. They pay tax somewhere, just often not in the country where the profit was primarily earned.

[L'Emmerdeur]

For multi-national corporations, the old saw "nothing is true except for death and taxes" has disappeared - corporations (until the revolution) are immortal, and, in many jurisdictions, they don't pay any tax either...

This is largely a myth. Corporations generally pay large amounts of tax.

Your reply is largely bullshit. They pay tax somewhere, just often not in the country where the profit was primarily earned.

Ah, well if a corporation has profits of $3 billion, and it pays $300,000,000 in federal corporate income taxes, that's a "large amount." Never mind the fact that the corporation is paying an effective tax rate of 10%, it's still a "large amount."

"The 35 Percent Corporate Tax Myth"

Profitable corporations are subject to a 35 percent federal income tax rate on their U.S. profits. But many corporations pay far less, or nothing at all, because of the many tax loopholes and special breaks they enjoy. This report documents just how successful many Fortune 500 corporations have been at using loopholes and special breaks over the past eight years. As lawmakers look to reform the corporate tax code, this report shows that the focus of any overhaul should be on closing loopholes rather than on cutting tax rates.

It’s important to note a key piece of this report’s methodology. The report only includes corporations that were consistently profitable over the eight-year period from 2008 to 2015. In other words, if a firm had a loss in even one year, it is excluded from this report. By leaving out corporations that had losses (which means they wouldn’t pay any tax), this report provides a straightforward picture of average effective tax rates paid by our nation’s biggest and consistently profitable companies. Two hundred and fifty-eight Fortune 500 companies were consistently profitable in each of the eight years between 2008 and 2015. Most of these companies were included in our February 2014 report, The Sorry State of Corporate Taxes, which looked at the years 2008 through 2012. There are new companies in the report, including Netflix, which entered the Fortune 500 after 2013. In addition, some companies were excluded from the study because they lost money in 2013, 2014 or 2015.

Some Key Findings:

• As a group, the 258 corporations paid an effective federal income tax rate of 21.2 percent over the eight-year period, slightly over half the statutory 35 percent tax rate.
• Eighteen of the corporations, including General Electric, International Paper, Priceline.com and PG&E, paid no federal income tax at all over the eight-year period. A fifth of the corporations (48) paid an effective tax rate of less than 10 percent over that period.
• Of those corporations in our sample with significant offshore profits, more than half paid higher corporate tax rates to foreign governments where they operate than they paid in the United States on their U.S. profits.

These findings refute the prevailing view inside the Beltway that America’s corporate income tax is more burdensome than the corporate income taxes levied by other countries, and that this purported (but false) excess burden somehow makes the U.S. “uncompetitive.”

Other Findings:

• One hundred of the 258 companies (39 percent of them) paid zero or less in federal income taxes in at least one year from 2008 to 2015.
• The sectors with the lowest effective corporate tax rates over the eight-year period were Utilities, Gas and Electric (3.1 percent), Industrial Machinery (11.4 percent), Telecommunications (11.5 percent), Oil, Gas, and Pipelines (11.6 percent), and Internet Services and Retailing (15.6 percent). Each of these industries paid, as a group, less than half the statutory 35 percent tax rate over this eight-year period.
• The tax breaks claimed by these companies are highly concentrated in the hands of a few very large corporations. Just 25 companies claimed $286 billion in tax breaks over the eight years between 2008 and 2015. That’s more than half the $527 billion in tax subsidies claimed by all of the 258 companies in our sample.
• Five companies — AT&T, Wells Fargo, J.P. Morgan Chase, Verizon, and IBM — enjoyed more than $130 billion in tax breaks during the eight-year period.

[rainbow]

...no one ties to escape free market capitalism

The reason no one tries to escape free market capitalism is that it doesn't exist.

Well, it does, in the real world.

No it doesn't.

I've already explained this to you, but you are not applying your mind.

You've explained your view, but you're wrong.

I'm not wrong.

Explain to me how a system which puts control of the market into the hands of a small minority, the Capitalists, can be describes as a 'free market'.

You can't.

...so you lose once again.

[Brian Peacock]

Capitalism isn't about minimising, alleviating, or avoiding poverty, but maximising capital resources.

It's a byproduct of capitalism.

Intent is irrelevant. Results are relevant.

Fair enough. So we'll just say that poverty is a by-product of capitalism. Now what, and where does that leave the premise of the thread title?

[JimC]

For multi-national corporations, the old saw "nothing is true except for death and taxes" has disappeared - corporations (until the revolution) are immortal, and, in many jurisdictions, they don't pay any tax either...

This is largely a myth. Corporations generally pay large amounts of tax.

Definitely not a myth in Oz, as far as large overseas corporations are concerned. The current fairly conservative government is concerned enough that they are actively working on ways of making them cough up their fair share...

[Forty Two]

For multi-national corporations, the old saw "nothing is true except for death and taxes" has disappeared - corporations (until the revolution) are immortal, and, in many jurisdictions, they don't pay any tax either...

This is largely a myth. Corporations generally pay large amounts of tax.

Your reply is largely bullshit. They pay tax somewhere, just often not in the country where the profit was primarily earned.

Ah, well if a corporation has profits of $3 billion, and it pays $300,000,000 in federal corporate income taxes, that's a "large amount." Never mind the fact that the corporation is paying an effective tax rate of 10%, it's still a "large amount."

The average effective corporate tax rate on profits from new investments made in the U.S. is 24 percent; the average effective corporate rate on profits from new investments made by companies in other “Group of Seven” (G-7) industrialized, democratic countries, weighted by the size of their economies, is 21 percent.

Now, I have no quarrel with modifying the tax code, up or down, depending on the needs of the government. But if effective tax rate is already averaging 24%, I'm not sure how much higher I would think is fair. If there are companies out there skewing the average down by paying no or very little in tax, I think an examination would be due as to why that's happening, and then a remedy can be created.

[Forty Two]

I'm not wrong.

Explain to me how a system which puts control of the market into the hands of a small minority, the Capitalists, can be describes as a 'free market'.

You can't.

...so you lose once again.

One way to state it is that a free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are relatively free from intervention by a government, price-setting monopoly, or other central authority. A free market contrasts with a regulated market, in which a government intervenes in supply and demand through various methods such as tariffs used to restrict trade and protect the economy. Prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy. Some regulation, however, can be a part of a free market if the regulation is necessary to control significant market power, inequality of bargaining power, or information asymmetry. No market in the real world is ever going to be entirely unrestricted or unregulated, but that doesn't mean there aren't free markets.

Capitalism is not limited to venture capitalists, who raise capital and pursue ventures. Capitalism is sellers selling and buyers buying, so when you buy a new refrigerator, you're engaging in capitalism. And, you have a price(s) you're willing to pay, and they have products to sell. The price is set by supply and demand, meaning if the demand for refrigerators goes down, then that puts downward pressure on price. In a free market with consumers pursuing their interests (higher quality/maximum needed features/best appearance, etc. for the lowest price) and the seller's pursuing their interest, selling more product for as much over cost of production as they can get, then a free, competitive market will set the prices.

[Forty Two]

Capitalism isn't about minimising, alleviating, or avoiding poverty, but maximising capital resources.

It's a byproduct of capitalism.

Intent is irrelevant. Results are relevant.

Fair enough. So we'll just say that poverty is a by-product of capitalism. Now what, and where does that leave the premise of the thread title?

Poverty exists in all systems as yet designed or tried by mankind. The free market system, however, has been the best remedy to lift the most people up and out of poverty. Nobody suggests that it is a tool for the complete elimination of poverty. But, then neither are the alternatives, and the alternatives are worse.

[Forty Two]

For multi-national corporations, the old saw "nothing is true except for death and taxes" has disappeared - corporations (until the revolution) are immortal, and, in many jurisdictions, they don't pay any tax either...

This is largely a myth. Corporations generally pay large amounts of tax.

Definitely not a myth in Oz, as far as large overseas corporations are concerned. The current fairly conservative government is concerned enough that they are actively working on ways of making them cough up their fair share...

I think about 25% is a decent share, give or take. However, I'm not much of a fan of income taxes in general. I would welcome their overall elimination.

The original US income tax was not meant to be paid by most citizens, and rates were not high enough to significantly undermine the spirit of enterprise. For example, under the original system applied today, single taxpayers today would pay no tax on any earnings up to almost $55,000 and married couples on earnings up to almost $75,000. A one percent tax rate would be in effect on incomes up to about $400,000. The top rate of 7 percent would not take hold until earnings hit almost $9 or $10 million. Round numbers converting to today's dollars.

As for the corporate income tax, it was imposed in 1909 at a rate of one percent and included a $5,000 exemption. Again, translated into today's dollars, companies would face the one percent rate with an exemption of something like $100,000 or more. Again, round numbers converted to today's dollars.

As the income tax expanded, however, so did the government coffers, and the rate of government spending increased by something like 13,000% from 1913 to the end of the century.

Let's do a low, flat income tax at most, on higher incomes only.

[Animavore]

Another excellent article from Nick Hanauer criticising the "trickle--down" myth.
http://evonomics.com/new-social-securit ... y-hanauer/

[Svartalf]

tl;dr, anybody still believing in trickle down economics is a blathering idiot anyway.

[Forty Two]

Supply-side economics corrects a fundamental mistake in Keynesian economics. Most everyone has heard of supply and demand, but Keynesian economics, known as demand management, left out supply. Keynesian high tax rates did not control inflation. Instead, high tax rates contributed to inflation.

The Keynesian policy caused “stagflation” and worsening “Phillips curve” tradeoffs between employment and inflation, because high marginal tax rates caused a reduction in labor input and a reduction in the rate of saving and investment. What was happening was that people and companies were responding to higher demand by raising their prices instead of their output.

Supply side economics was a correction of an oversight, not a magical formula. Before the days of the high speed Internet and US offshore outsourcing, supply-side economics revitalized the economy’s ability to grow without having to pay the price of rising rates of inflation. Stagflation and worsening trade-offs between inflation and employment resulted from an incorrect economic policy mix that pumped up demand with easy money while restraining real output with high tax rates.
Supply-side economics corrected that mistake.

[Hermit]

a free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are relatively free from intervention by a government, price-setting monopoly, or other central authority. A free market contrasts with a regulated market, in which a government intervenes in supply and demand through various methods such as tariffs used to restrict trade and protect the economy. Prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy. Some regulation, however, can be a part of a free market if the regulation is necessary to control significant market power, inequality of bargaining power, or information asymmetry. No market in the real world is ever going to be entirely unrestricted or unregulated, but that doesn't mean there aren't free markets.

Capitalism is not limited to venture capitalists, who raise capital and pursue ventures. Capitalism is sellers selling and buyers buying, so when you buy a new refrigerator, you're engaging in capitalism. And, you have a price(s) you're willing to pay, and they have products to sell. The price is set by supply and demand, meaning if the demand for refrigerators goes down, then that puts downward pressure on price. In a free market with consumers pursuing their interests (higher quality/maximum needed features/best appearance, etc. for the lowest price) and the seller's pursuing their interest, selling more product for as much over cost of production as they can get, then a free, competitive market will set the prices.

Looks good on paper. In practice prices are increasingly set by the owners of the means of production, which over time tend to form formal or informal cartels or monopolies. They also determine the prices their suppliers get paid for the parts they contribute to the end product. And then there's the wages aspect. The days of unions having the employers over a barrel, to the extent that this situation even existed, are well and truly gone. Now the best case scenario is picking applicants off one by one. "Take it or leave it." Usually that is followed by exporting the factory to some other country anyway, such as is the case with Carrier at the moment. Despite Trump's much publicised intervention and despite more tax concessions to the factory owners another 300 of the remaining 800 jobs have just been axed.

[Hermit]

The average effective corporate tax rate on profits from new investments made in the U.S. is 24 percent; the average effective corporate rate on profits from new investments made by companies in other “Group of Seven” (G-7) industrialized, democratic countries, weighted by the size of their economies, is 21 percent.

Never mind the average effective corporate tax rate on profits from new investments. What matters is the average effective corporate tax rate on profits, full stop.

[Hermit]

Poverty exists in all systems as yet designed or tried by mankind. The free market system, however, has been the best remedy to lift the most people up and out of poverty.

You keep forgetting or ignoring the fact that almost the entire world's nations are operated under a free market system in one form or another, so you need to be more granular when speaking of the effect of the free market on poverty in order to make a meaningful statement. Which free market system are you speaking of? The type that is practised in, say, Somalia, the USA, or Finland?