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Saturday, May 10. 2008
Learned from Kudlow on the radio today: Corporate business taxes in New York State and New Jersey are the highest business taxes in the world.
Of course, businesses taxes are nothing more than covert taxes on everyone, from the company's employees, to the people who buy the product, to the investor: business taxes are passed on in the form of lower wages, higher prices, and slower growth.
If we desire economic growth, job growth, and prosperous employees, there should be no taxes on the profits of public corporations. (Surely we could handle the resultant loss of tax accounting and tax attorney jobs, because the country is full of burgers needing flipping - and other jobs "Americans won't do.")
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Business taxes are a little more than covert taxes. They also kill off businesses, which is not a covert tax at all.
Taxes reduce the number of possible profitable transactions, by taking a ``wedge'' out of the mutual profit necessary to both sides to produce any voluntary transaction.
You want lots of voluntary transactions because each transaction raises the standard of living of both sides. That's why the transaction happened. The more transactions, the higher the standard of living of the nation.
Taxes reduce trading in general, which means in the final extreme that everybody raises their own food, makes their own shoes, and so forth, taxed back into the tenth century.
And producing no tax revenue at all.
All that's covert is why it's happening.
Good post. I would add that Obama called the 18 cent gas tax vacation a shell game, but then argues for a damaging corporate "windfall profits" tax which is also nothing more than a shell game based on the illusion that there is even such thing as a special class of profit that falls outside the range of market forces. It is still the consumer who pays, but a tax based on populist ire also distorts investment in ways that end up costing the consumer on top of the direct cost of the tax itself. When will it sink in: corporations don't pay taxes, corporations are merely the tax collector. A windfall profits tax is as much a tax on consumers as any other corporate tax.
Obama's economic and tax policy is incoherent and based upon his subjective feelings of fairness. Idiot!
Just think, New Jersey has a Goldman Sachs wonder boy as governor. All he wants to do is financial flim flam versus addressing the real problem - spending and outrageous benefits for state employees.
Barrett is quite right about Corzine, a man who bankrolled his way to political power in a state where that is particularly easily done. Unfortunately for Corzine, Jersey's fiscal problems are well beyond his ability to write checks. The state has enormous institutional corruption on the one hand, and enormous taxes on the other. NJ is approximately $35 billion in debt.
The solution? Well, the state remains in deep denial about its problems. A marketing firm has been hired to 'correct' the state's 'image' of corruption, and Corzine is attempting to raise revenue by taxing everything from fast food to gasoline. (The gasoline and proposed highway taxes, which would hit truckers the hardest, are basically a disguised tax on ALL consumer goods.) Problem is, every attempt to raise taxes has been shot down by Corzine's fellow Democrats. They don't want to catch hell from their constituents. And as far as the 'image' of corruption - it'll take a lot more than an ad jingle to fix that.
One solution for Jersey's leaky ship would be a rising tide that floats all economic boats. Basically, that's what Jersey's leaders are doing - buying time while waiing for that winning Lotto card to turn up. Hey, you never know.
The only real solution is this: The state has to hit bottom, just like NYC did in the 70's. It's on the way down now, but there's still much further to go. The public outrage hasn't coalesced yet. (That is to say: They're still not mad enough to elect a Republican.)
You are right about that. Corzine, despite all of his claims about fiscal discipline, was the first governor in New Jersey to propose a state budget in excess of $30 billion.
New Jersey elected Menendez, who was under federal investigation for corruption, as Senator.
The dirt in this state is very deep.
Government, both state and federal, has a spending problem. The federal budget is $3 TRILLION. NJ has a $30 billion plus budget. There is not a revenue problem. I just wish the electorate would wake up for 5 minutes.
Brother Barrett, I've told many that if Corzine had truly been interested in 'reforming' Jersey's politics, he should have funded a zillion upstart election campaigns and investigative reporters (web-based, natch). Instead, he bought out the party bosses to run for governor. (The idea was, it's easier these days to jump from Governor to President than from Senator to President - he HAD ben a US Senator.)
For Corzine, it's about his ego. So he greased the wheels for his rise to the Governorship. Problem is, he can't bypass the powers he enriched in matching his climb. He needed the unions (working for state government) behind him to get in, but as Governor the unions are part of his problem. He needed the backing of the Ward Healers and other slimy local power brokers to get in, but now they expect to keep getting state aid thrown their way and it's not there.
Had he run campaigns AGAINST a deeply corrupt system, he might be able to rouse public support in changing that corrupt system today. But he used the slime to get in, making them even MORE powerful, and now he can't fix the state's problems because he has no allies in whose interests it is to help. Jersey is truly screwed.
Yes, and the taxpayers rationally vote with their feet, making it all worse. England has the same thing.
Right, BD. Those who can ARE leaving New Jersey, the most recent figures acknowledge this. I would leave now myself, but you know what: Someone should stay and chronicle this, and we don't have newspapers here worth a damn.
Right now we have a local hospital scandal breaking. It's fun to watch the politicos run from responsibility, like so many cockroaches.
Blue states in financial trouble, California, New Jersey, Massachusetts, Rhode Island, others?
Red states in financial trouble: 0
That oughtta be enough info for a voter, right there.
You want to see the Laffer State Economic Competitiveness Index. Buddy's not far off, but the overall picture is complex. For one thing, it tends to be about whether one party has been overly dominant for a long time (in which case, corruption tends to be embedded - certainly the case in NJ).
And some 'Republican' states are poorly run, some 'Dem' states are well-run. There are always mitigating circumstances and stories behind the story. By and large, though, things are what you'd expect...
(OK, I was rejected as spam, so I broke up the link)
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