Warren Has a Good Beginning for Ending Corporate-Tax Avoidance

Your examples are great places to start. Is the military good for everyone? How have we been using it since WWII, and how has that worked out?

Is spending on roads good for everyone? Is the Interstate Highway System’s effect on the American lifestyle and built environment, on average, a positive one?

How is education funded? How is funding related to outcomes? Can you improve outcomes by spending more?

How closely does the political process track popular will? What considerations determine whether something gets funded and how much?

The world may be less puzzling (or at least, puzzling in different ways) when you become more familiar with the complexities and controversies in these questions.

But then company owners ought to be able to drop the limited liability feature and receive a lesser tax burden, right? I'm suspect Apple's owners would be happy with that trade. Unlimited liability in exchange for a zero percent tax rate? Bring it on. What, realistically, is the most damage that a computer is going to cause? The damages from patent infringement are often limited by the economic harm, which is at any rate likely to be far less than profits.

Not to put words in your mouth, but if I had to guess you would not be willing to offer companies this out. I think that should make you question whether limited liability, specifically, is why companies should be taxed.

My definition is that everyone has skin in the game and feels the same pain when it comes to raising or lowering existing taxes or creating new ones. Any thing else is a wealth transfer and theft from one to give to the other.

Having everyone feel the pain proportionally, would have all taxpayers questioning the efficiency of how their money is used. When most taxpayers don't feel the pain is when government starts wasting money. Why pressure governments to provide more bang for the buck when you're not the one footing the bill.

Furthermore, you're also distorting the cost of labor and distorting how taxes are handled. Those that don't pay any taxes end up providing artificially cheap labor. If a worker needs $10/hour for it to be worth their while and the taxes they pay are $0, businesses will pay $10/hour. If they need $10/hour for it to be worth their while and their taxes are $2, the business will have to pay $12. If the product/service the business provides sells for $20/hour, the business gets $10 in the first scenario and $8 in the second scenario. The business actually makes more in the scenario where the labor doesn't pay taxes and businesses are better at avoiding taxes through clever accounting so less money is likely to be raised than a flat percent that everyone pays with no loopholes.

Having the rich pay all the taxes also gives them the most economic incentive to make modifications to the system in their favor, and it puts the most money in their pocket to spend on lobbying activities. In the example above, the business has up to $10/hour of profit to allocate to lobbying with when they are paying the taxes.

At the end of the day, the market will adjust to all the distortions you bake into the system, hiding the true cost of inputs needed to produce goods and services, which reduces market efficiency.

Overall, society is better off if things are priced as accurately as possible since people can make more accurate decision about the worth of providing goods and services. This also applies to making sure the costs of externalities are priced into the goods and services provided.

https://en.wikipedia.org/wiki/Limited_liability

"There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax."

This is Protestant work ethic taken to a corrosive extreme. This is Romney playing to an audience that believes those who take government assistance are conniving malingerers looking to squeeze every penny they can out of hard working taxpayers. It is an indictment of people who had the audacity to be born without the ability to fully support themselves. It begrudges them for daring to ask for a home, food, healthcare and maybe even a few spare moments of happiness.

In my opinion, this type of thinking is the greatest moral failing of the 21th century. It frees the thinker of any social responsibility by demonizing those least equipped to defend themselves.

I do not agree with many of Elizabeth Warren's policy proposals. Her thinking on technology is dangerously benighted. I will not vote for her. But the essence of Warren's argument is that we need to rethink the relationship between the most successful members of society and the least. Tax loss carryforward is a standard accounting practice that makes rational sense. Nevertheless, it's the type of policy that helps those who need help the least, and I think we need to start to rethink these kinds of policies.

We as a society can continue to pass legislation that favors the strong and punishes the weak. What we can't do is look at ourselves in the mirror afterwards and continue to believe that we live in a humane, compassionate, egalitarian society.