I'd looked over the highlights of her career to date when Biden selected her to be Treasury secretary and nothing stood out as particularly egregious.
But as John Tamny at Real Clear Markets shows, this move to institute a global corporate income tax shows a complete lack of understanding of how wealth is created and how societies advance.
Tamny's not only a keen economic mind, he's a great writer. He sets the table for making his point thusly:
What’s the most common "people" sight in any public place, anywhere? At this point in our evolution the answer is easy: hunched over individuals tapping away on smartphones. It doesn’t matter one bit if the locale is rich or poor. The gadgets are everywhere.
The other day at the library your writer spied a homeless man, surrounded by presumably all of his worldly possessions. Those possessions included a smartphone. He had it hooked up to a power source outside the library’s main entrance.
Please think about this for minute or two. A homeless American man was charging a communications device that wasn’t available in capability and speed to the richest of the rich probably even five years ago. Certainly not ten.
It’s a reminder that what the rich enjoy exclusively is always and everywhere a preview of what we’ll all eventually enjoy if markets remain free, and wealth largely stays where it’s created: in the private sector.
About wealth more broadly, its creation is largely a consequence of entrepreneurs mass producing the former baubles of the rich. Those who wring their hands about inequality unwittingly expose themselves as doltish, and heartless too. In truth, a soaring wealth gap is the surest sign of a shrinking lifestyle gap. See the homeless man at the library in 2021 America.
Now, he's ready to get to Yellen's global-tax idea and how it's going to create a "level playing field" among the world's national economies' treatment of companies that do business in them:
Up front, Yellen’s implicit acknowledgement is that members of the American right were correct all along. Businesses are people, and people respond to tax rates. If they become too onerous, people migrate away from them. It turns out people are mobile, which means corporations are.
Yellen wants to ensnare corporations. This explains her call to allegedly avoid a “race to the bottom” whereby corporations take their wealth and talent to the tax situation that most protects the wealth of their shareholders. In other words, if non-U.S. countries would just stop competing with the U.S. by lowering their corporate tax rates, Yellen et al needn’t fear U.S. companies exiting the U.S. Yes, Yellen aims to trap U.S. businesses.
It speaks to how simplistic and mean-spirited is her seriously expressed view about taxation. Yellen wants the U.S. Treasury to own more of the profits of U.S. companies, but she doesn’t want to have to compete. Better if other countries pursue tax mediocrity of the U.S. kind. If other countries are not dynamic, and aren’t forward thinking in their approach to taxes, then the U.S. won't have to be.
To be elear, dynamic and correct when it comes to corporate taxation is a zero tax rate. To understand why, never forget that corporations as taxpaying entities are a fiction. Shareholders pay taxes. By definition. They have shares because they saved a portion of their after-tax income. Which means a corporate tax amounts to double taxation of individual earnings.
He in no uncertain terms makes it clear that Yellen hasn't a clue about some very basic things:
People want money for what it can be exchanged for, and it’s increasingly true that very little money can be exchanged for staggering value. See the ubiquity of smartphones yet again.
All of which speaks to the abject foolishness behind Yellen’s plea to other countries to join the U.S. in overtaxing corporations. She’s calling for the confiscation of the very wealth that is relentlessly pushed to higher uses in order to create more and more once-out-of-reach goods for the masses. The U.S.’s poorest have smartphones today, so what will it be tomorrow?
That’s the unknown question. The only thing the mildly sapient know is that if Yellen gets her way, that tomorrow won’t be as abundant as it should be. It won’t because Yellen believes her boss and his lieutenants in Congress are better at allocating resources than the world’s greatest companies. That’s really sad.
Now, wait a minute, Barn, wasn't your most recent LITD post about how corporate wokeness is making it damn hard for free-market champions to defend corporations against this kind of nonsense?
Indeed it was, but this exemplifies a basic free-market principle: It's nice if both parties in an economic exchange are admirable. In fact, for an economic environment to thrive in the long run, it's essential. But the principle on which a basic exchange hinges - both parties coming away from an agreement each has freely entered into feeling that they have achieved real value - applies in any case.
Taxing corporations even if they are woke doesn't solve anything. All it does is hamper human advancement.
No comments:
Post a Comment