Corporate taxes and corporate welfare destroy jobs long-term. Governments should lower taxes and stop picking specific firms to give hand-outs. This is a flawed strategy.
Burger King and Tim Hortons’ proposed merger ignited calls for more government involvement in failed corporate welfare programs. Happily, a few voices, mainly Republicans, pointed to the real issue that needs addressing: ineffective corporate taxation policies that’s nudging companies to relocate abroad, and causing them to retain significant cash outside the USA. Corporate taxes reduces retained earnings needed to create jobs. Government do not create jobs. They should provide the conditions for job creation.
Corporate Taxes and Corporate Welfare Destroy Jobs
Corporate taxes and corporate welfare detract from effective business performance. Long term they destroy jobs. Naive politicians want to boycott Burger King. They claim this transaction will shelter income from the USA’s corporate taxes. But they have mentioned the oppressively high US corporate tax rate of 35%. Indeed, it’s hard to imagine the US has one of the highest corporate tax rates in the world. Go figure!
Burger King’s management has a responsibility to look after its shareholders’ best interests. This present decision is good stewardship. However, liberals will disagree because they wear anti business blinkers.
Politicians, particularly tax and spend liberals like President Obama, want more job creation and more taxes from corporations. These goals conflict. Sustained job creation won’t happen under current conditions in one of the highest global tax locations. (more…)
Will McGuinty and his gang suffer consequences? Of course not. He prorogued parliament, akin to rebooting his computers and wiping out ‘unsaved files.’ He rode into the sunset to draw his pension with his legacy of lying, cheating, driving up debt, taxes, and budget deficits firmly entrenched. Where is the accountability? It does not exist in the public sector.
Harper Government Wants Performance Improvement
It took seven years in office, expanding government, and wasting billions, for the Harper government to start talking performance improvement in the public sector. How many government departments operate effectively and efficiently if judged by the private sector’s performance criteria? How many government ministers would be tolerated by efficient and effective private sector organizations?
The public do not associate efficacy with governments. No doubt, that’s why we tolerate so much waste and asinine decisions from elected officials. Public service unions have been able to secure pay and benefits hike because unlike the private sector, governments have access to unlimited funds. They tax, spend, borrow, tax, and repeat the cycle. Unions press for more, and more, and sometimes do less work. Still, many governments accede to unions’ demands. To be sure, higher public service wages merely add to overpayments to ministers and other politicians.
When will society wake up and realize that governments do not create productive jobs? When will folks start to demand accountability from politicians? Our country cannot continue to pay civil servants at current levels, especially with their defined benefits pension plans. Many companies realized years ago that defined benefits plans are unsustainable in the long term.
Minister Clements needs to realize that providing an edict about performance appraisal in itself achieves nothing. Who sets the standards? Who monitors whom? Is this a charade as depicted by the famous British TV series Yes Minister?
Will unions and bureaucrats decide to invest time in performance appraisals procedures rather than in doing their jobs well? What’s the incentive for public sector unions to get their workers to be more effective? Will any Canadian government challenge unions, eliminate all closed shop arrangements in the country, and downsize the public sector substantially? Governments should sell areas it has no right to be in such as Canada Post and the CBC. As well, it should contract out needed government activities to carefully screened effective private sector firms.
I close with this positive experience and pray it will snowball. This morning, I visited Service Ontario, Woodlawn, Guelph branch to renew my health card and driver’s licence. As I observed the operations, and from the service I received, apologetically, I commented to the person serving me that I was surprized a government department operated so effectively. The employee smiled and said the office was outsourced and employees were not part of the public sector. I should have known!
Article first published as Bush-era Tax Cuts–Government Doesn’t Need The Funds on Technorati.
In an election year, it is good politics to ratchet up the blame-game, and so the debate to extend Bush-era tax cuts will continue. I am surprised only a few people are talking about what I believe are central issues: the likely use of extra taxes, and the need for funds. What will the Federal government do with more tax revenues? Does it need more money? The answer to the first is, they will waste the funds. That’s what governments do; check their track record. Therefore, the answer to the second is, no.
Neither the deficit nor debt will drop if the government hikes taxes on high-income earners. More funds mean greater likelihood of creative useless spending. We can trust government to find outlets to spew out money without positive results.
The new consumer protection agency is an example of more government spending for no clear results. Why not reduce significantly the many oversight departments, and focus those remaining to work effectively with proper accountability?
Certainly, financial institutions need to be more transparent, but do we need another government department? The excesses leading up to the 2008 USA housing meltdown was obvious. What were regulators doing then? What was Congress doing? Even I saw it coming. Hiring or shuffling 900 more public servants will change nothing, especially when the real issue is a need to remind individuals to take responsibility for their actions. We must stop accepting the blame game. Politicians need to recognize victims as victims.
Still, the USA does not have a monopoly on squandering tax dollars. Canada is just as bad. Take our Federal bureaucrats. We have many pristine waste examples, but probably this is best. It is beyond stupid; it is insane. Our Federal government increases funding for office accommodation automatically with increases in salary costs. Do you believe this?
We must strive incessantly to shrink government, try to get them to change archaic spending formulae, and like Governor Walker’s government, reign in public-sector unions. Even so, I think the bigger picture is to reform the tax code in Canada and in the USA. Doing this requires a thorough understanding of how government gets its tax revenues. It has one primary source. Business.
Superficially, it appears that all government’s tax revenues come from two sources: businesses and individuals. However, individuals’ incomes come from businesses, so all taxes flow out of businesses directly and indirectly.
Businesses are the productive jobs’ creators in the economy. If government taxed businesses’ distributed profits, but not their retained profits, businesses would have more funds to reinvest. This should be a key plank of government’s job-creation focus. Businesses’ alternatives in this system would be either to retain profits tax-free for growth, or pay dividends, net of taxes, as they do with employees’ compensation.
People say that my proposal would encourage businesses to pay executives excessively with retained profits. So? Executives would pay taxes on their excessive compensations. I suggest that all business tax gimmicks, benefits, and write offs, would be eliminated. The proposal is simple: businesses would pay no taxes on retained profits, and file no tax returns. It would withhold taxes when it paid salaries, commissions, and bonuses to individuals, including executives, and when it paid dividends to shareholders. Government would then have to cut its tax departments substantially as it simplified its tax code.
For individuals, there would be tax brackets: 0, 7.5 and 15%. How would government replace lost funds? Government would have to shrink. It is time to reverse government’s expanded role in the economy. Let’s look realistically at government’s role. Certainly, we must look after weaker folks in society, but we need to reject victim, and system-abusive behaviors. As well, we must have proper checks and balances in the market economy, but we must let the market select winners and losers.
Public-sector unions will oppose this proposal and will fight for the status quo so bureaucrats continue to use tax dollars loosely. Government must be prepared for a long hard fight. Ronald Reagan and Margaret Thatcher made bold moves; Scott Walker, too.
We cannot continue with the present government Ponzi scheme of using tomorrow’s tax dollars to pay yesterday’s spending. Later, society will pay. Have we looked at England and Greece lately? Is France the next intensive care patient? With current archaic budget principles and policies, and existing entitlement programs, the USA’s economy will continue to be sub optimal.
After my brother returned from studying at Harvard, and I graduated from Massachusetts Institute of Technology (MIT), my dad warned me to be careful lest I become an educated fool. He stressed that such a person loses touch with reality readily, tends to be ignorant, arrogant, egotistical, and usually alienates people.
My dad did not graduate from high school, but by hard work, and diligence, he ended his career running a small business, successfully. His philosophy was basic: before opining or deciding on any matter, understand it, learn from others who know about it, try to simplify it, and subject it always to a practical, fairness, reality test.
As I observed candidate Obama talking about his foreign policy, I recalled my dad’s advice. Among the many matters Obama spoke about naively then that made me think about my dad were these two. First, his plan soon after being elected, to sit down with Iran and Cuba’s presidents to apply diplomacy to solve USA’s foreign relations issues with these states. Second, his goal to close Guantanamo Bay in his first year. In foresight, it was obvious he was behaving like an educated fool; hindsight removed any doubt.
President Obama can benefit from my dad’s advice. I continue to watch Obama, and his advisers try to ‘fix’ the US economy using leftist rhetoric and failed socialist’s policies. He remains under the delusion that government creates jobs, and so, he keeps spending, and lambasting businesses, society’s true job-creation entities. On economic matters, repeatedly, I see him displaying traits of the educated fool.
My dad would use Obama’s requirement that religious organizations offer their employees contraception benefits, as the perfect example of the educated fool in action.
Full article first published as Is Obama’s Decision On The Contraception Mandate a Tipping Point? on Technorati.com.
Statistic Canada (StatsCan) reported end 2009 Canadians’ household debt was a record $1.4 trillion, or 144% of disposable income. According to a recent report by the Certified General Accountants Association of Canada (CGA) this debt to income ratio is the worst among 20 advanced countries in the Organization for Economic Co-operation and Development.
Individual Canadians and Canadian Governments took on more debt during the recession. Interest rates have been at historic lows, and can only go up. Will individuals be able to service debt at higher interest rates?
Not many folks seem to realize present personal debt levels aren’t sustainable. Canadians have lived with easy, cheap credit for so long, they do not see dangers of continuing to buy now and pay later. Sadly, when the credit crunch comes, Canadians will blame banks, Government, and others … everybody, but themselves!
Folks with low variable rate mortgages must understand nobody made them take these mortgages. It’s easy to blame finance institutions for individual, irresponsible debt acquisition, but at the end of the day, each mortgagee signed a contract … the financial institution “didn’t make you do it!” Borrowers are not victims!
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