> 2: End the tax deduction companies get for providing health-care to employees.
Right now, large employers receive a group discount from whatever insurance provider they choose. So to bring down healthcare costs in the US, which are 4 times that of the civilized world, this motley crew of economists suggests to eliminate the group discount. That'll work.
That’s not what they’re talking about. They’re talking about the fact that when your employer pays premiums for your health insurance, that a not considered taxable income. That is regressive (higher income people get more health insurance benefits).
> Yes, Joe Plumber's firm pays corporate tax in PA, but any multinational with a decent lawyer pays no tax anywhere. Incorporate in Bermuda, license the IP. In the interest of fairness one could abolish corporate tax, but one could also come down on tax oases. Why isn't that even suggested?
The idea of licensing IP from Bermuda captures the media’s imagination, so there is a lot of coverage of such efforts, but it actually doesn’t add up to much. Most companies simply can’t take advantage of such tricks because they don’t deal with intangible products. Wal-Mart’s effective tax rate is 25% for example. The average effective tax rate for the S&P 500 was about 18% in Q4 2018. That’s higher than the average effective corporate tax rates in say the Netherlands.
Corporate tax avoidance just isn’t a very big deal. Estimates are that legal corporate tax avoidance costs $100-240 billion in revenue across the entire OECD: https://fortune.com/2019/10/16/corporate-taxes-unpaid-g20-su.... That’s just 1.7% of the $15.6 trillion those countries raise in taxes each year. Why does so much media ink get spilled about such a small issue?
> We are supposed to have a consumption tax instead. The wealthier you are, the more likely are to invest. Less wealthy people do not have that luxury, what comes in goes out that month. It seems to be an attempt to shift the tax burden away form the politically connected class.
It’s an attempt to shift to consumption taxes, which economists broadly agree are the most efficient kind of taxes. Which circles back to my original point. You perceive the policy in terms of its effect on the “politically connected class.” But there is a rational, economic reason to favor such a tax regime even if the wealthy didn’t have greater political connections.
The “political connections” reasoning doesn’t hold water to me. We’ve always had rich people. But over the last 50 years, pretty much every developed country has dramatically reduced corporate and investment taxes. Are the rich more politically connected than in 1970? I don’t see any reason to believe that’s true. What has changed over that period is economic theory on taxes. That seems to be the real cause.