The News Gazzette reports that Jimmy Johns Headquarters may be leaving Champaign Illinois:
CHAMPAIGN – The founder of Jimmy John’s said he has applied for Florida residency and may recommend that his corporate headquarters move out-of-state as a result of the Illinois tax increases enacted last week.
Jimmy John Liautaud told The News-Gazette on Tuesday that he is angry about the moves, which boosted the individual income tax from 3 percent to 5 percent and the corporate income tax from 7.3 percent to 9.5 percent.
(I love these sandwiches. Lucky for the moving headquarters won’t result in closing local franchises.)
The Governors of Wisconsin, New Jersey, Indiana and are all jumping for joy at the opportunity to lure businesses away from Illinois. Our governor Quinn is convinced businesses won’t move out of state. I wouldn’t be at all surprised if the more mobile businesses, like headquarters for franchises, do move.
You forget that Illinois always comes with a Daily or Blago provision which is implied into the bill for large businesses… Kick us a bag of cash under the table and we will allow you to interpret the tax laws to your advantage.
Yes, The Squid must be fed. Or you know what happens. 😉
Andrew
I’m still waiting for the shoe to drop in CA. What’s Jerry Brown going to do, or better, what’s the legislature going to allow him to do?
Florida is too hot in the summer, not to mention the bugs. Come to TN, no income tax but we still have seasons.
I would move if I could, but I can’t.
This tax increase stole exactly 1 full time job from my company. Somehow voters have got to wake up. We put out an add for jobs at 8.50/hr plus benefits and received over 250 applications in 1 week. Things have gotten far worse in the last six months despite the lies of the govt.
My wife and I were born and raised in Chicago, not here in Corpus Christi, Texas, but we got here as fast as we could.
The commute from Lake County to Milwaukee is much more pleasant than the commute to Chicago. The commute from O’Hare downtown is more stressful than a jaunt up the I-297 too. I wouldn’t take much, if any, convincing.
Come to Michigan. We’ve done plenty to encourage business development here the last 8 years. Actually that’s a lie, but come here anyway, Jenny is gone.
“Come to TN, no income tax but we still have seasons.”
Tennessee is great tax-wise if you aren’t poor. Sales tax is almost ten percent and you have to pay it even on food.
Boris– The solutions to sales tax on food is easy. Grow your own! 🙂
Illinois goes like this:
Tax Rates
The fundamental rate for:
* Qualifying food, drugs, and medical appliances is 1%.
* Items required to be titled or registered is 6.25%.
* Other general merchandise is 6.25%.
Local Taxes
Units of local government may impose additional taxes or fees, which the department does not collect. Contact your units of local government (county, municipal, mass transit, etc.) to determine if you must pay any additional taxes or fees.
The city of Chicago has extra sales taxes which is something of a disincentive to drive downtown to shop. Rahm Emmanuel is running for Mayor of Chicago. He’s proposing lowering the sales tax on most things but raising it on luxury services, which evidently includes tanning salons, dog walking, gym membership and other things. http://www.nbcchicago.com/blogs/ward-room/emanuel-sales-tax-114249829.html
I’m not quite sure what that will do to various small businesses in Chicago. Residents who hire dog walkers are obviously not going to drive their dogs to the ‘burbs to have them walked.
Boris (Comment#66828)
January 20th, 2011 at 9:17 pm
“Tennessee is great tax-wise if you aren’t poor. Sales tax is almost ten percent and you have to pay it even on food.”
As Wikipedia would say: “Regressive taxes tend to reduce the tax incidence of people with higher ability-to-pay, as they shift the incidence disproportionately to those with lower ability-to-pay.”
High sales taxes on food, housing, clothing, and other necessities do exactly that, especially in the absence of an income tax.
DeWitt Payne (Comment#66822)
Florida is usually about 92°F max in summer (but hot in the sun which is almost directly above), and after many years I am still surprised that there are so few bugs (except during the love bug season; these do not bite but dirty the car).
Old rule of economics. If you want more of something, reduce its taxation. If you want less of something, increase it’s taxes.
Case in point: Alberta raised royalties on oil and gas. The result was reduced income from royalties, as companies moved their focus to neighbouring provinces, and production fell in Alberta.
There was also more unemployment, and reduced government income from corporate and personal income taxes.
Geniuses. Bloody geniuses.
Les–
Our increased taxes are supposedly temporary. This claim might prevent some businesses from making plans to leave. But I’m sure the businesses will avoid moving to Illinois until after the taxes are lowered.
The tax increase was also voted in by a lame duck session with many votes from representatives who had already been unseated. Unfortunately, passing legislation being what it is, there are insufficient votes in the incoming state house to actually get rid of it.
Speaking of franchises…you don’t think they’ll move Hamburger U do you?
If the experience of the state of Michigan is indicative, then without a doubt States with high taxes and otherwise business unfriendly environments will lose jobs to more competitive states. Illinois could be in trouble…
EDIT:
Les Johnson (Comment#66838)-Actually, that is based itself on an older rule of economics: people respond to incentives.
Heh, Cor’n you cope with it.
=================
Here in PA we have a temporary tax on liquor for the Johnstown Flood. Some how temporary means permanent!
Andrew_FL– I can’t guess what any individual business will do. RonnieMac’s has been in Oak Brook a long time. Off the top of my head, I can imagine things that could complicate moving hamburger U, including need to re-create kitchens, cafeteria, etc. McDonalds may also own the property in Oak Brooke.
Maybe higher taxes will influence them to leave– or not.
Jimmy Johns HQ evidently has roughly 100 employees. I don’t know what fraction are ‘fungible’ type staff (e.g. janitorial, lower-level clerical — who may be university students working part time while going to schoo) and what fraction are key employees who the company would pay to move to another location. I don’t know what sort of facility Jimmy John’s owned. But if they rented, moving head quarters might not be easier for them than McDonalds.
Alexej Buergin (Comment#66831)
“I am still surprised that there are so few bugs (except during the love bug season; these do not bite but dirty the car).”
.
An observation I also noted for many warm climates. I think it it related to the constancy of predation and constancy of growing season. Take mosquitoes for example (please take them!). Warm season swarms of these pests are common in cold climates, and ever worse the shorter the warm season. Where it is warm all the time, it seems there is too much continuous predation for this to be an effective strategy; a mosquito out in the open has a very short life expectancy where I live. So mosquitoes are mainly found where there is a lot of dense brush cover (and of course, water). Most places you can sit outside on a warm evening evening without being attacked…. which is impossible in Maine, for example.
SteveF–
Last summer was a terrible one for mosquitos. Jim and his brothers do a lot of hobby carpentry in the garage, so I put one small bug zapper in the garage, running 24/7. I put another in the side yard on the same schedule. The mosquito density peaks in the evening, but running the zappers 24/7 does keep the density of mosquitoes down. You can notice fewer mosquitoes in the bug zapper yard than neighboring parks and yards in about a week. I suspect it’s acts a bit like constant predation.
High food prices because of sales taxes = bad for poor (unfair we’re told)
High energy costs because of taxes and regulation = higher cost of everything = good for everyone (to save the planet we’re told)
Higher energy costs = higher food prices
Higher food prices = less food purchased
Less food purchased = less energy used to grow food
Less energy used to grow food = saving the planet
Higher taxes to pay for biofuel from food = higher food and higher energy prices for everyone
Where does it end?
slimething,
Got Tea? 😉
Andrew
Lucia,
There is a mosquito killing machine available that uses a propane gas flame to generate warmth & CO2 (to attract them) and a fan/filter system that sucks them out of the air. I have heard that it is extremely effective, both short and long term.. it can kill tens of thousands in a single day of operation.
.
But you would be adding to the GHG total. 🙂
SteveF
I do anyway because the zappers I have use electricity. I guess I don’t have zappers so much as I lure them with light and then trap and kill them.
My contraptions aren’t particularly efficient– but the capital investiment is low one you plug them in, the home owner really doesn’t have to do much. (Well… empty the traps.). I got two used ones off Craigslist. I looked at other contraptions but they tended to be incompatible with my requirements. (I don’t want to run power lines across the yard. i don’t want to be checking propane levels etc. )
If I had an uncovered outdoor pool I’d spend the money for the propane system that kills 10s of thousands in a day.
Illinois, California, et etc., (and the Big Brother Fed’s) do seem to have thing’s just a might bassackwards about how to win friends, raise money, pay bills, and influence mean old enemies. Whereas the folks in China (of all places, Mao’s “Cultural Revolution” China, who would’a thunk it?) are growing at a 10% annual rate and will soon be Numero Uno and they’re lending US money. What am I missing? Please, someone, tell me, what am I missing here? Must be the floride we’ve been putting in the water. Those germs must have crawled up between our ears and eaten holes in our teeny tiny brains.
Pascvaks,
Think of it like the girlfriend/buddy who, once they found out they could influence you, seemed to tend to want to tell you what to do, even if it didn’t always work or was based on incomplete information.
Now imagine (a la climate science) that there is a group of people who are disposed to behave this way. Indeed, have been trained and enabled to behave this way.
It’s Humans Being. Water finds the cracks unless you do something to prevent it. If no one is preventing bad behavior, you get bad behavior. Small scales and large.
Andrew
Ref – Andrew_KY (Comment#66857)
It’s gotta be that !@#@ floride in the toothpaste; been using it for years; the older I get the slower and dumber I get; really! Bet those tough, rich, witty Chinese don’t use that stuff in their unchlorinated water. They’s smart and rich. We’ve gone from the greatest generation to the worst generation without skipping a single generation, it’s gotta be the !@#@ floride. Did FDR start that?
Boris your a complete moron. Try thinking for yourself and not repeating some idiotic mantra. What are you gonna tell us next, Obamacare is going to reduce healthcare spending? Yeah, add 40-50 million people and the cost is going to go down. You’d have to be on crack. Regarding the sales tax, the more you buy, the more you get taxed. Thus, people with more money who buy more pay more taxes, you idiot.
Pascvaks,
Oh it’s not the flouride. It’s where you get the information to base your beliefs on. If you spend 6 hours a day in front if the TV, the believable pictures become the believed, if you stare for long enough.
Somebody found out that TV (and other media) influence people who aren’t enabled to find out things for themselves or don’t care.
Andrew
As a native Illinoisan, I have come to expect very little from the state government and they more or less delivered what I expected this time. Very little was done to cut spending, and particularly for state workers and workers with state pensions and health care. The new tax law is supposed to control spending by specifying a rate of increase of state spending that if surpassed will cause the tax rate to go back to the earlier rates. Does that sound fiscally responsible? Those stipulations never hold and are only used for immediate political impact. Plus there are many ways to increase spending by raising fees and keeping the spending off from the books.
Comparing states by looking at income tax, sales tax and business tax rates provides a rather incomplete picture of the cost to operate in the state. We had competing editorials in the Chicago Tribune the other day between the WI and IL governors and a liberal writer in the Tribune was able to declare the IL governor the winner because he bothered only to compare income tax and sales tax rates. As I recall Governor Blago increased state revenues using not necessarily, direct taxes, but fees paid to the state government. Another major issue is workers compensation costs in Illinois compared to other states.
http://www.ibjonline.com/print_workers_compensation_claims.html
“Workers’ compensation is one of those costs that weigh in heavily when a business decides whether to come to Illinois or whether to expand its Illinois operations,” said Shattuck. “I just spoke with a company out of Decatur whose hourly cost for workers’ comp is over $2. The same company has a facility in Virginia where the cost for workers’ comp is 25 cents. When manufacturers are looking to compare the costs of production in Illinois versus other states, it’s a tough argument.”
http://www.nheconomy.com/recruitment/state-to-state-comparison.aspx
I believe before the tax increases went through IL was ranked by Forbes as the 37th for businesses. It is also well know that the tax increases will not do much to answer the long term problems of unfunded liabilities in IL for state funded pensions and health care. While I hold most politicians in low regard, I think over the years that Illinois has had a very despicable band of them and it would appear to be getting worse.
The MSM and local reporting in Illinois tends to be very lenient with the politicians and their irresponsible actions until one goes way over the edge like Blago when the media goes into a self righteous feeding frenzy that is supposed to somehow make up for the previous neglect.
Illinois has also been an attractive state for trial lawyers to practice and in fact in downstate IL there were a group of judges that were targeted for cases by trial lawyers.
LarryT: your
Here in PA we have a temporary tax on liquor for the Johnstown Flood. Some how temporary means permanent!
.
.
Yeah, same here. The Temporary Income Tax Act in Canada was brought in, in 1917. Of course, 1889 is a tad older.
.
Might be part of global warming speak. hotcold. dryflood. temporarypermanent.
Funny fluoride should come up, you know, when I was a baby they were recommending excessive fluoride treatment which has left white splotches on my teeth to this day.
But more in the realm of conspiracy theory, for those of you who have seen my avatar in the “recent comments” column on the main page, a quote from the pictured character, The Question:
“Topically applied fluoride doesn’t prevent tooth decay. It does render teeth detectable by spy satellite.”
Any chance you can get the tax increase thrown out? It passed with the bare minimum number of votes needed, after they appointed someone to a vacancy to vote for the tax increase, when Ann Williams wouldn’t take the seat she was elected to during the lame duck session.
MikeN– I doubt we can get it thrown out.
Pascvaks (Comment#66856)
January 21st, 2011 at 9:59 am
“Illinois, California, et etc., (and the Big Brother Fed’s) do seem to have thing’s just a might bassackwards about how to win friends, raise money, pay bills, and influence mean old enemies. Whereas the folks in China (of all places, Mao’s “Cultural Revolution†China, who would’a thunk it?) are growing at a 10% annual rate and will soon be Numero Uno and they’re lending US money. What am I missing? Please, someone, tell me, what am I missing here? ”
FYI, since we are talking about taxes on this thread (see http://www.taxrates.cc/html):
FOR CHINA
Personal Income Tax: up to max of 45%
Capital Gains: flat at 20%
National Sales tax: 17%
Corporate tax: 25%
Also, Consumption Tax is imposed on 14 categories of consumable or luxury goods (e.g. cigarettes, alcohol, petrol and motor vehicles etc). Consumption Tax rates range from 1% to 45%.
Also, Land Value Appreciation Tax is charged at progressive rates ranging from 30% to 60% on the ‘land value appreciated amount’ from sales or transfer of land use rights, buildings or other structures.
FOR USA
Personal Income Tax: up to max of 35%
Capital Gains: up to 15%
National Sales tax: 0%
Corporate tax: 15% to 35%
$0 – $50,000 15%
$50,000 – $75,000 $7,500 + 25% of excess over $50,000
$75,000 – $100,000 $13,750 + 34% of excess over $75,000
$100,000 – $335,000 $22,250 + 39% of excess over $100,000
$335,000 – $10,000,000 $113,900 + 34% of excess over $335,000
$10,000,000 – $15,000,000 $3,400,000 + 35% of excess over $10,000,000
$15,000,000 – $18,333,333 $5,150,000 + 38% of excess over $15,000,000
Over $18,333,333 Flat 35%
“The Governors of Wisconsin, New Jersey, Indiana and are all jumping for joy at the opportunity to lure businesses away from Illinois.”
Wisconsin is too cold. New Jersey hasn’t righted their ship of state, yet. Florida is full.
Come to Georgia. Delta is ready when you are.
Ref – Owen (Comment#66866)
See! I knew they were close but I didn’t know they’d already surpassed us. It’s worst than I thunk! We’re doomed! No wonder they have so much money! And they got all those people too! Let’s lease every backwater, in debt to their eyeballs state (along with all their people) to the Chinese for 99 years and see if they can whip them back into solvency. Wouldn’t hurt right?
Sure, Owen, here is what you are missing. I dont’ want to give the government more money. You think China is so awesome, move there. Notice there are a lot more rich people in the U.S. than in China. Your stupidity is quite amazing. Owen, if you want to pay more taxes, feel free to send more money to the IRS. China is spending within it’s means, we are not.
Look at me, look at me, I’m so smart. If the government forces everyone to pay them more money they will have more money! Awesome! Furthermore, you are a total hypocrite for praising China, along with Tom Friedman. As grand dragons in the global warming movement, both of you should be condemning China for killing the Copenhagen accords and for being the largest polluter in the world. The double standard is doubly troubling.
Lucia, when clowns like Owen post extremely hypocritical statements like the one above, I think it should lead to a mandatory strikeout. Everyone, please support my suggestion to Lucia.
Andrew_Ky, I need your support here. I understand Lucia’s policy of not letting people go off topic but she should also not allow people to post completely hypocritical crap that make their calls for agressive climate policy a complete paradox.
owen.
you forgot
SSI tax
medicare tax
state income tax
state/county sales tax ( in ca is 8+%)
State Disability tax.
gas tax.
property tax.
death tax.
FWIW,
Pascvaks (Comment#66856) January 21st, 2011 at 9:59 am
“Whereas the folks in China (of all places, Mao’s “Cultural Revolution†China, who would’a thunk it?) are growing at a 10% annual rate”
People in China are engaged in increasing GDP in ways that can be easily quantified. in the West we have long been focused on areas which aren’t easily quantified which is an affliction of those country’s that have effectively stamped out ‘true poverty’. Not many people in the West actually starve to death.
There is no shortage of impediments to economic efficiency that we incur in the West for marginal increases in ‘intangibles’.
I.E. If we lowered mine safety standards the cost of energy would be less and our economy would be more efficient. The additional deaths wouldn’t impact our ‘average life expectancy’ in any statically relevant way.
As a society in the West we say a few dozen dead miners per year is an unacceptable cost and we are willing to accept a decrease in economic efficiency in order to reduce the likelihood of mine accidents.
In China they look around and realize that poverty is the biggest killer they have and a decrease in economic efficiency in order to save a few thousand miners decreases total life expectancy.
A fair portion of the big political battles in the West for the last 40 years has been over what level of economic inefficiency are we willing to accept in exchange for a marginal decrease in death and disease rates.
Lucia,
No tax, without exception, is ever “temporary”! Ever.
Income taxes were introduced in the US and Canada after WWI as “temporary” taxes to pay for the war effort. 90 years later…??
One of the core libertarian messages is that the key thing is to prevent governments from implementing new taxes in the first place, because once in place governments of all stripes will find new and novel ways to justify them. Once in place, a tax will stay, in one form or another, renamed and rebaptized.
As you know I have an academic background in political economy: if anyone on this thread can provide proof of a tax being repealed without being replaced in stealth by another, I will stand corrected.
The pig feeds itself, gets fatter and fatter and needs ever more food…
“Andrew_Ky, I need your support here. I understand Lucia’s policy of not letting people go off topic but she should also not allow people to post completely hypocritical crap that make their calls for agressive climate policy a complete paradox.”
Shoosh,
Lucia is usually (eeeeeessssh) fairly fair in letting people comment what they want, so I won’t criticize her for that. I support people commenting what’s on their minds, even if it is in error or crazy or incoherent. That’s what freedom is about.
But if she’ll allow me a small criticism, she tends to ignore things and emphasize things that generally coincide what her peer group tends to ignore and emphasize. All we can do is disagree and be grateful we can. It’s her blog.
Andrew
Shoosh–
We are discussing taxes & economics. Owen’s comment consists of:
1) quoting someone discussing China’s economy relative to ours and
2) posting substantive information comparing taxes.
I don’t happen to think China’s tax rates are helping their growth. There are other things going on in China. But I’m not going to strike out a perfectly on-topic comment merely because you, Shoosh, don’t like the information contained in it.
I would advise you that if you have a real counter argument provide it. For an example, see Steven Mosher or harry’s responses. They are substantive; yours is not.
tetris–
I agree that taxes are very, very, very rarely “temporary”. I suspect any business considering moving to the state would be aware that “temporary” tax hikes are probably permanent.
Owen, do you think China is growing that fast because of their taxing rates or in spite of it? Do you really think that taxing at those rates (if indeed those taxes are actually collected) would magically raise our GDP increases to the levels seen in recent years in China. Not even the most left wing Keynesians believe that.
Dr Shoosh,
Oh well, I knew our period of agreement would be short.
True wealthier people buy more and theoretically pay more tax, except of course when they employ tax accountants to minimise their tax payments.
The real point about these sale taxes, as Owen said, is they impact disproportionately on the poorest as they are immediate, affect the products which they, of necessity, spend most of their income on, and being poor they do not have access to the ‘tax avoidance’ community.
Lucia, Owen’s own logic is a counter argument in itself. He’s telling us we should emulate China’s economic policies without noting that they have massive pollution problems. Excuse me, does not China produce half the world’s steel? Doesn’t that produce…..lots of co2? Excuse me, isn’t there a big cloud of smoke over most of the Shanxi Provinces? You know what, just forget it. If Owen was talking about Spain, you wouldn’t even be seeing a comment from me.
Here is the best example I can give you to illustrate why this is a paradox. People who support Obamacare often point to European healthcare models. However, they omit the fact that in those countries, if the doctor screws up, you don’t get a 50 million dollar settlement lawsuit. Instead, you get a whoops, sorry. This is a major difference. Another major difference is malpractice insurance. There’s nothing else I can do. A global warming advocate has told us we should emulate the most polluted country but no, Lucia doesn’t see anything wrong about that.
You could at least acknowledge the hypocrisy.
Owen and others you might want to look at the link below to learn of the China bureaucracy and who pays the taxes there. Perhaps the Chinese and Illinois politicos could get together and compare notes.
http://factsanddetails.com/china.php?itemid=306&catid=8&subcatid=49
@Dave Andrews
Simple answer to that Dave and Owen did make 1 good point. Note the “1”. His one good point was the food tax. Solution: just eliminate it for everyone. Also, I have no problem with lowering the income tax on the poor. Furthermore, you cannot hire someone like a tax accountant to offset a sales tax. Once you buy the item and pay the sales tax, you can’t offset it somehow later. Now, you can get a tax credit for buying something like the Volt. However, keep in mind that you are stating that even though the top tax bracket already pays a disproportionately high amount of the total income taxes, you feel the gap should be widened further, and the rich should pay even more. All we need to is cut spending, which is what the Republicans are trying to do. I would completely eliminate the tax code and start over.
I have a suspicious feeling this comment might get a strikeout but it must be said. I would really like a hover board. One of my life dreams is to have a hover board and throw snowballs at people as I zip by. I have come to the sad realization that I probably never will have one. We’re sitting on underground mountains of energy and apparently now we’re not supposed to use them. Now, we’re supposed to pretend that all energy is to come from a pinwheel or the sun. How long have we known the power of the sun can be harnessed? How about lightning? Didn’t Ben Franklin fly a kite that was struck by lightning?
Dr. Shooshmon, phd. (Comment#66859) January 21st, 2011 at 10:36 am
lol
The lesson from Illinois – buy muni bonds.
Dr Shoosh,
Obviously you cannot offset sales tax, but the wealthy have plenty of opportunity to avoid tax in other areas which are not available to the poor.
A couple of years back here in the UK the heads of a number of Hedge Funds admitted in testament to a House of Commons Select Committee that despite their considerable incomes they ended up paying lower effective rates of tax than the people who cleaned their offices!
tetris: “, if anyone on this thread can provide proof of a tax being repealed without being replaced in stealth by another, I will stand corrected.”
The home mortgage deduction has survived despite various changes to the tax code applicable to the deductibility of interest.
Owen (Comment#66866),
I think you need to be a little careful comparing tax rates in different countries, especially corporate rates. The most important issue is if corporate profits distributed to shareholders as dividens are then subject to personal taxes as well. In the USA, this is for large corporation 35%, on top of which there is personal tax. At the top of the individual income brackets, the after tax income in a person’s pocket for $1 of corporate profit is 0.65 * (1- personal rate).
This leads to a much higher net rate, and causes contortions by corporations to avoid distribution of profits to shareholders.
.
Lots of countries have higher official corporate rates, but tax only once. Apple with apples, you know.
Compared with effective marginal corporate
tax rates among the broad group of the 18 other
OECD countries, rates in the United States in 2003 were
close to the group’s average for equity-financed investments
in machinery, substantially above the average for
equity-financed investments in industrial structures, and
substantially below the average for debt-financed investments
in machinery.
http://www.cbo.gov/ftpdocs/69xx/doc6902/11-28-CorporateTax.pdf
Also …
The United States’ effective marginal corporate tax rate is
relatively high for equity-financed investments but relatively
low for debt-financed investments. Thus, the extent
to which effective marginal tax rates distort decisions
about international investments depends on how the investments
are financed. For example, although the
United States’ effective marginal corporate tax rates for
equity-financed investments are higher than the average
for the other OECD countries, rates for investments financed
by a combination of debt and equity may be
lower than the average if a sufficient fraction of the investment
is financed by debt.
@Bugs
Well we disagree on a lot of things but at least we can have a laugh!
From the table in the above CBO report:
Taxes on Corporate Income in OECD
Countries in 2002 as a Percentage of
Gross Domestic Product
United states 1.8
Unweighted average 3.4
Weighted average 2.5
A historical look at corporate tax revenue as a percentage of GDP since 1968 for the U.S. can be found in Table F-4 here .
RB
My point is that since the ever growing “pig” requires ever more food -and at the very least the same amount of food- even if some tax seemingly disaapears of some deduction seemingly remains, the “pig” will find other ways -real estate levies, road taxes, gasoline taxes, take your pick- to make sure there is at least the same amount of swill in the trough. The trick being that while the deduction seemingly remains, the unrelated e.g. gasoline tax goes up.
It is not until the “pig” is put on a forced diet -i.e. meangful and serious cuts in spending- that there is any possibility for a reduction in taxes, and then only after the what now amounts to a “tax surplus” is used is used to pay down the accumumulated debt overhang [or hangover, if you will 🙂 ]
Canada [until then known in the US as the “land of the Northern peso”] did precisely that during the latter half of the 90s – early 2000s under one its best Finance Ministers ever -Liberal Paul Martin [not my party of choice, but unto Cesar, etc..]
Government program spending was cut back, red tape was cut everwhere, plus several other things, and the resulting “surplus” was used to pay down the debt. As a result Canada enjoys one of the lowest debt/GDP ratios in the developed economies, and as of this year has corporate taxes that are close to half of the US average. So it can be done, but only if there are the necessary political cojones.
That said, keep in mind that – assuming expenditures in check- any “surplus” means overtaxation. And finally, any government action that in any way impedes of hinders economic activity is a form of taxation. Just think EPA C02 regulations 🙁
“A historical look at corporate tax revenue as a percentage of GDP since 1968 for the U.S. can be found in Table F-4 here .”
Look at the projections for deficits/surpluses going forward from 2008 in the link from RB and what they are currently.
On further reading, I am amazed at how wrong the CBO got the federal government expenditure, revenue and deficit projections in the short term, particularly, but also how it differs in the long term from what most sensible projections are currently into the long term – and on almost all items. I believe this is the office of the government that graded the cost and net revenues of Obamacare.
The problem with these forecasts is that the CBO takes Congress at its word for what they will do in the future and not what everyone else with any sense of the historical behavior of Congress knows they will probably do. Then Congress people are able to turn to the CBO reports and gradings and show that things are not going to be so bad. The MSM picks up on this, and instead of attempting to shine some light on what probably will happen, without questioning, reports the CBO projections as some valid scholarly work when in fact it is just a blackbox that allows the irresponsible Congress (and administrations) to spend like mad currently while promising to make up for it in the future.
If insanity is defined as doing something that always gets the same result over and over expecting to get a different result, then relying on CBO analysis is insane. They are always wrong. The bias is always in favor of higher taxes and higher spending. They always underestimate costs of a new program and overestimate revenue from tax increases.
Shooshman,
You’ve extrapolated mightly what I said when I gave the Chinese and US tax rates in reponse to Pascvaks who was raving about China and how they, a former bastion of collective thought, are doing so much better that are we in rate of economic growth. I just wanted to point out that it probably was not their lower tax rates.
I never raved in any way about China, nor did I hold them up as an example. As a rapidly growing former third world society, they are consuming vast and increasing amounts of fossil fuels (that is worrisome indeed, and I’m glad your green instincts kicked in there Shoosh). Their government, however, is pumping money and emphasis into green technologies, and they will soon lead the world in photovoltaic and other green technologies. Perhaps there actually is a role for government!
Owen,
There is NO role for government in this. The Germans, Spanish, Danes and other European governments all walked into the trap of thinking that governments can ever pick winners. History teaches us emphatically that governments are totally incapable of doing anything of the sort, including in “renewable” energy. In December, one the coldest on record in the UK, wind energy when it was most needed, provided 0.5% of electricity in the UK…
Germany closed the books on its “green technology/green jobs” after 10 years, after it was shown that every single one of the purported 30, 000 “green jobs” cost US150,000 per year in subsidies. Frau Merkel said no thanks.
The Spanish simply repealed all the green energy subsidies when it turned out they couldn’t afford them when the financial manure hit the fan, in the process bankrupting the entire green energy sector and adding tens of thousands to the unemployment rolls.
The Chinese are currently building several “eco cities” that are all Potemkin villages for the very simple reason that there no jobs where they are built.
Without obscene subsidies, solar and wind are stone dead. Meanwhile it is now becoming obvious to all but the blindest that the world is “awash” in low footprint natural gas and we are finding more crude by the day. All of this against the backdrop of more and more data that show the AGW story to be a sham.
Tetris,
I disagree. I think it is up to the government to look strategically at the future and, in the case of something like potential global warming, to fund research and to set national objectives.
And regarding your contention “All of this against the backdrop of more and more data that show the AGW story to be a sham,” I have no idea what all this data is that you seem to be pointing to.
Actually US income tax rate goes as high as 36.5% for federal payments, because there is a Medicare tax as well, for which the cap was removed under Bill Clinton.
Owen,
Based on everything we have learned over the past couple of years disproving the CO2 driven AGW story line, you still appear to hold it as true. In which case it is a belief system, not a fact based view of the world.
The economic and technological graveyeards are full with evidence of governments’ utter lack of capability in picking “winners”. In spite of that they continue to do precisely that with taxpayers money.
And windmills are precisely that: windmills. There is a perfectly good story about a fellow chasing them…
“If insanity is defined as doing something that always gets the same result over and over expecting to get a different result, then relying on CBO analysis is insane. They are always wrong. The bias is always in favor of higher taxes and higher spending. They always underestimate costs of a new program and overestimate revenue from tax increases.”
The problem is that in economics it is well known that increasing taxes does not bring in the revenue expected with a simple minded calculation of all things the same except the rate of taxation. On the other hand it is well known that reducing taxes does not decrease tax revenues as much as would be expected from the simple minded calculation. What the CBO does is use very simple minded calculations as I expect they want to avoid the unknowns of exactly how much taxation is a negative effect on economic growth -as the magnitude of the effect is also related to a number of other factors.
I believe the CBO has made remarks in passing to the limitations of their calculations. The problem is that the MSM and politicians will use these numbers for their own purposes and without any of the caveats that are really obvious to most careful observers. They are crazy like a fox.
I forgot to add that Obamacare was graded by the CBO based on 10 years of revenues and expenditures, and besides some rather obvious problems with double counting Medicare savings during that period, the CBO projections are for 10 years for netting the program. Since the revenues get a head start on the expenditures of approximately 3 years, the 10 year picture can and does change dramatically in the following years. Again the CBO pointed to this in passing, but yet politicians and MSM use the “official” 10 year scenario.
Illinois is not so good at picking business concern winners either as a story in the Sunday Chicago Tribune points out. “A fast growing Chicago meatpacking company received $8 million (in capital) with the help of state tax credits and then went bust four months later”.
The Squid Giveth and The Squid Taketh Away:
http://chicago.cbslocal.com/2011/01/24/breaking-court-tosses-emanuel-off-ballot/
Andrew
Andrew–I just saw that. I wonder if the Ill. Supreme Court will hear another appeal?
Lucia,
I don’t know, but I feel like I need to go take a Calgon bath just reading about Chicago politics. Heaven only knows the dirty pool going on in there. I’m sure I don’t want to know the details! O_o
Andrew
Back in, baby!
http://firstread.msnbc.msn.com/_news/2011/01/25/5915616-ill-court-issues-stay-rahm-back-on-the-ballot
Andrew