–Warren Buffett’s brilliant comments on the corporate tax.

Twitter: @rodgermitchell; Search #monetarysovereignty
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Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.

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History is loaded with examples of people who are clever at one thing, and as a result, believe they are clever at all other things — but turn out to be really stupid at those other things.

This phenomenon is particularly prevalent among people who have made money, and who believe this proves their brilliance (perhaps because rich people surround themselves with praise-spewing sycophants).

A former client, the gum-making Wm. Wrigley Jr. Company, run by the Wrigley family, was a virtual money-printing machine. It spun off so many millions, the Wrigley’s invested in such endeavors as Catalina Island, the Arizona Biltmore Hotel, the Biltmore Fashion Park and the Chicago Cubs — all financial disasters.

So astute was patriarch Philip Wrigley that he died without having created a will, thereby allowing the federal government to gobble up many of those millions, which in turn forced the panic sale (in 1981) sale of the Cubs for only $20 million (most recent valuation: $845 million).

Clearly it was someone money-addled, who first used the line: “If you’re so smart, why ain’t you rich?”

In this same vein, eighteen months ago, we published Why Lower Corporate Taxes Won’t Create More Jobs. Oh, really? Friday, Feb 24 2012, in which we detailed some particularly ridiculous comments by the acclaimed stock-trading genius, Warren Buffett:

“The idea that American business is at a big disadvantage against the rest of the world because of corporate taxes is baloney in my view. In the 50s and 60s, corporate taxes were 52%, and we were making all kinds of [job] gains.”

In essence, Buffett who made his billions buying stocks astutely, though not actually running those businesses, had decided that high corporate taxes are not an impediment to corporate profits.

Apparently, the people who actually do run businesses, disagree:

Wall Street Journal
U.S. Firms Move Abroad to Cut Taxes
By JOHN D. MCKINNON And SCOTT THURM

More big U.S. companies are reincorporating abroad. One big reason: Taxes.

A few (companies) cite worries that U.S. taxes will rise in the future, especially if Washington revamps the tax code next year to shrink the federal budget deficit.

Aon expects to reduce its tax rate, which averaged 28% over the past five years, by five percentage points over time, which could boost profits by about $100 million annually.

Eaton (said) the tax benefits would save the company about $160 million a year.

Ensco followed rivals such as Transocean Ltd., RIG, Noble Corp. and Weatherford International Ltd. that had relocated outside the U.S. The company said the move would help it achieve “a tax rate comparable to that of some of Ensco’s global competitors.”

Despite protestations by Mr. Buffett, the “Wizard of Omaha,” taxes actually do cut company profits.

Even worse, corporate taxes remove dollars from the private sector and send them to Washington, where they no longer are part of the economy and effectively are destroyed.

Businesses do two very nice things for America:
1. They create goods and services that improve our lives.
2. They employ people, paying salaries that also improve our lives.

So one might think a government that cared about our lives, would do everything possible to encourage business success. And one of the things our Monetarily Sovereign government easily could do is eliminate corporate taxes.

After all, a Monetarily Sovereign government neither needs nor uses tax dollars.

Note the above phrase, “a government that cared about our lives.” This government does not care — at least not about the lives of the less-than-rich, for corporate taxes are not paid by top corporate executives.

Corporate taxes are paid by the lowly workers and by customers, and therefore help widen the gap between the rich and the rest.

As we have discussed so many times before, the need for federal deficit reduction is the BIG LIE, a monstrous and cruel lie, developed to widen that gap, and the people who promulgate that BIG LIE either are economically ignorant or are intentionally cruel.

Most “ordinary” Americans fall into the first camp; the President, Congress and the media mostly are in the second group.

Taxing corporations is like starving the goose that lays the golden eggs. It makes no sense unless — unless the goal of the President and Congress is to give the very rich even greater power over mainstream Americans.

Eliminating the corporate tax (including FICA) would:

1. Slash unemployment
2. Increase Gross Domestic Product
3. Reduce poverty
4. Increase the quality of life for every American (except for the very rich, whose lives cannot be improved).
5. Close the wealth and power gap between the rich and the rest

And that is why this President and this Congress, bribed by the rich (via campaign contributions and promises of lucrative employment), will not eliminate corporate taxes.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty Monetary Sovereignty

As the lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

6 thoughts on “–Warren Buffett’s brilliant comments on the corporate tax.

  1. Can you provide evidence that lower or no corporate taxes will create jobs? Please do not state corporations off-shore solely because of their tax burdens and don’t give the retort that since they must the evidence does not exist.

    Like

    1. Answer your own question with an argumentum ad absurdum.

      1. If corporations were taxed at 100% of income, how many jobs could they create?

      2. If corporations were taxed at 0% of income. would they create more or fewer jobs?

      Which creates more jobs, #1 or #2?

      Like

  2. What about this idea:

    Instead of doing what is the CONVENTIONAL METHODS of dealing with the debt and deficits…let’s have Government do something different?

    if selling BONDS (aka People LENDING to the Government) got us into trouble with “unsustainable” debt and deficits…..

    then Government LENDING to the Bondholders should reverse the DEBT trend.

    why not, instead of Government “paying down” the National Debt….we let bondholders use their Bonds as DOWNPAYMENT, BACK to the Government to get something BETTER to hold, under what I’m terming a “GRACE LOAN?”

    Here’s how it works:

    Joe Bondholder schedules an appointment with his Treasury Rep. He wants to come in and take out a “GRACE LOAN” for a Treasury Certificate that is FIVE TIMES BIGGER than what he’s got coming to him, from the Bonds he’s holding against Government.

    Joe’s looking to make more money from the Banking System Circulation, from the aggregate INTEREST that Treasury Certificate he’s looking to take out this “GRACE LOAN” with the Government, will net, when placed on deposit, in the Hands of the FEDRSV, than what he was making in BOND YIELDS each year, and he hears that under the terms of this “Grace Loan” he’s about to take out with the Treasury…the INTEREST he’s standing to get, would be just as TAX FREE as what the YIELDS he was getting, just sitting on them.

    Joe’s also looking at something else, however….in fact, TWO THINGS….One, he’s looking for the ability to take out loans from Banks, just by showing his claim to this Treasury Certificate, that he has…

    Under what he hear’s being worked out, he can literally walk into any bank, show this Claim to the TC, sign a few forms, and walk out with any amount of money, under terms as long as he wants (for the low payments) and the collateral would be just the TC he’s got claim to. OR….shares of another person’s claim to THEIR TC.

    That’s right…under what would be worked out….Joe could SELL SHARES of his TC on deposit with the FEDRSV, and the potential is, were he to sell shares to his WHOLE CLAIM to the TC, (that is Five times bigger) he could stand to gain MORE MONEY than what he stood to gain waiting for the Bond’s Maturity to come….and under the terms of this “GRACE LOAN” from the Government…just as TAX-FREE as what the Maturity was.

    So, under the terms worked out in the Grace Loan Joe’s taking out with the Treasury, The two things that he agrees to in order to have Government keep him under GRACE (meaning, not having to pay anything out of pocket to service the loan, to keep it “current, and in good standing with the Creditor, Government”) is ONE: Neither Government nor Joe would try taking anything out of the TC, in other words…leave it stand….and that TWO: any interest exceeding the interest Joe would have gotten in the yields…(maybe Twice the limit, perhaps) 25% of that excess interest returned to the TC, gets withheld back to the Government! (Hey! It _IS_ a loan ,after all) but all the rest of the interest he’s going to get, he can pocket or recirculate back into the TC, (just as TAX-FREE as his BOND YIELDS were, if he just pocketed or revolved them into holding NEW BONDS to hold.)

    So what happens is that once the deal gets finalized, all that Joe would have to do, is present his BONDS that he’s holding against Government, as TENDER, for the DOWNPAYMENT, BACK to the Government, to secure the Grace Loan, where the Government would accept the Bond back and figure out how much they would have had to TOTALLY PAY upon it, to calculate how big this Treasury Certificate is going to be, to let Joe walk out holding a borrowed (but under GRACE) claim to it.

    Now, the way to get it into the Hands of the Fed, (and here’s the idea with that:) either we have Government deposit it in a way that DISPLACES a TC that the FED’s already holding (that’s being used as basis for the notes that are in the FED, now, and was used as a debt-cancelling maneuver to get the paper dollars and coins out into circulation…which would cause it to be almost like a bond held against the Government by anyone…which is handled in another maneuver that i’ll get into in another post…)

    OR….through the FED (as a Trustee of sorts) splitting up that TC, and redepositing it in all the Banks, lending houses, and credit card companies that use the Dollar (and therefore the FedRSV) for their currency!

    So either way, what the TC is supposed to do, is MAXIMIZE the return Joe Bondholder is supposed to get. As well as, put MORE PLACES in, across the country for money to have a birth, circulation, and a proper extinguishing…..instead of JUST 12 places money has to head back to, to be extinguished…now through the FED, as a RE-DEPOSITOR, it can have HUNDREDS or THOUSANDS of ways to be extinguished, while at the SAME TIME be a CASH COW for the Bondholders,

    (special note: where I was talking about DISPLACEMENT, at the FEDRSV, of TC’s already there….what happens if the Local Bank Depositors, promised a certain interest rate for depositing with that Bank, feel, that there is DISPLACEMENT happening at the Local Bank, where they feel that the Bank is Borrowing MORE from the TC, to lend to borrowers, thinking that the Bank is MAXIMIZING their profit margin on the return, at the Local Bank Depositor’s expense? Ok…what about SELLING DEPOSITORS Shares of the TC sliver, so that it balances out? More to talk about this idea later….)

    ….and this whole idea works, just having the Banks work for them, instead of what many people inside the TEA PARTIES/Conspiracy Theorists say, is the OTHER WAY AROUND….

    But there’s a problem…..and it might be a BIG ONE where it comes to this idea, being able to extinguish the debt WITHOUT raising taxes, slashing spending, or doing all the things one thinks needs to be done in dealing with the Government debt.

    It has to do with the 14th Amendment, Section 4, where it says “The validity of the public debt of the United States…shall not be questioned.”

    Now, as is, under that Law, Joe Can’t use his Bonds as Down payment Back…Time terms are part of the “Validity that cannot be questioned.”

    However….looking at the simple POSTAGE STAMP, where without one the US MAIL has to return the mail to the sender for “Insufficient postage” (if it can…)…and with it, it goes on to it’s intended recipient….

    Or with the CUSTOMS STAMP on the page of the Passport: without one, That Passport can’t let that holder entry into the country, but with one, the Passport will…

    A GOVERNMENT STAMP, applied by authorized persons, upon the face of any Physical Bond, or upon any SWORN SPECIAL AFFIDAVIT representing either Bonds that Must stay in place for whatever reason, or, any ELECTRONIC VERSION thereof….could change the nature of the Bond, from one that is handled under ONE SET of rules to ANOTHER set, where the BOND could be retired by DOWNPAYMENT, LEGALLY, and it would allow Government to retire the Debt owed….

    therefore, if you’re dead certain that this nation is “Monetarily Sovereign” then why are you still clinging in any way shape or form to the idea that “Government Debt = Private Wealth?” or the “slice of the pie” analogy?

    Because I just showed you, Rodger, a very simple maneuver (albeit, with a lot of words to explain) that Government could get rid of the Debt FASTER than anyone has ever thought of…that acts as a “check and balance” against Government abuse of “Monetary sovereign-ness,” and through that “check and balance” system a distributed way for money to circulate and retire FASTER, and through that idea, a way where Banks work for US better…just by using our TOP-LEVEL TOOLS in better ways….

    Then why aren’t you getting on my bandwagon?

    Is Hamilton’s idea of “National Debt = National Blessing” still an axiom to you that must be defended at the expense of national tranquility?

    When you strip it all down to its essentials…with the idea of Monetary Sovereignity, how can the idea of TAXING THE RICH be anything but a cheat?

    because as long as the Nation has a National Debt it must “owe” to bondholders, and the manner of “paying” it is TAXATION…..

    then it really doesn’t matter, Rodger, whether TAX HIKES or SPENDING CUTS get done….

    because even the homeless person with just a penny to their name, is, in the eyes of the Government, RICHER than the GOVERNMENT, because the Government is in DEBT, more than the poor person has money!

    so by that measure, EVERYONE’S RICHER THAN THE GOVERNMENT….

    and the ULTIMATE DEBTOR to the system (the Government) in order to honor the DEBT, has to be ULTIMATE DEBT COLLECTOR, to pay the Bondholders off…..

    and when anyone says “Well we have to CUT SPENDING” then it’s the POOR (who are really rich in Government’s eyes) that suffer, because it’s their programs that are easier to cut, than it is the “necessary” spending…despite all the concern given….

    because the REALLY RICH and well-to-do, find ways to make LOOPHOLES in their TAX BURDEN, in the whole “debt” debacle…(and you know this)

    So what the whole INCOME TAX SYSTEM is really doing, is taxing the POOR, round-robin style….which makes the whole deal a complete vicious circle…

    …the longer you go after the RICH…for being RICH!

    Here are but a few thoughts of mine…what’s your reaction, Rodger?

    Sincerely,

    Kapt Blasto 28 Aug 2013

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    1. Also, Rodger, here’s one more thing….

      With GRACE extended to Bondholders, keeping them from having to Pay anything…What Government could do, seeing if money is being retired TOO FAST, and not enough LOANS are extended out to have money circulate….is BORROW AGAINST THE GRACE EXTENDED to buy up some of the Shares to retire enough TC’s out there….

      See, if you’re the Law, and you’re having your Central Bank play opposite the Congress, to keep a check-and-balance against monetary abuse on all sides…..

      you could have your Central Bank hold account of all the GRACE you’re extending to Bondholder-turn-borrowing-claimholders. and what YOU, in the Guise of Government would do, is Borrow against the GRACE extended out…so that way things even out! Meaning: As you borrow against the Grace, an equal amount of what is owed, is lifted off the Bondholders-turn-borrowing-Claimholder’s back, that he’s protected by GRACE, anyway, from having to pay!

      So what’s happening here, is that you’re not only honoring Article 1, Section 8, Clause 2 in an even MORE EFFICIENT WAY that wouldn’t have TAXPAYERS footing the bill, you’re still regulating the Money supply, just by using the money you borrowed against the GRACE held upon Bondholders you extended to protect them from having to pay….and you’re also honoring Article 1, Section 8, Clause 5, but in a way that no one even thought of before…

      Again, Rodger, it’s using your TOP LEVEL COMPONENTS WISELY, and not STUPIDLY…..

      It’s not driving your car, going down the road in reverse, when you should be going with your nose pointing in the direction you want to go…

      Again, Rodger…your thoughts please?

      Like

    2. You need to read more of Rodger’s articles to comprehend what this “debt” amounts to … a federal savings account that Congress has decided to generously provide to rich people with savings .. .it also has some operational factors in monetary policy, but that could be altered … most of it seems to be a PR effect to make it seem as though Congress has to borrow its own Dollars from banks that borrow from the Fed.

      The Treasury functionally doesn’t have a real debtor relationship with the Fed, since the Fed pays 100% of its profits to the Treasury, including profits the Fed earns from T-Bond interest.

      ALL bank accounts are the “debt” of the account provider because they are the “asset” of the account holder, today, and centuries ago. Just basic accounting.

      All money that has ever existed (before even “standardized money” by govts) is simultaneously a debt and an asset of counter-parties. In the case of standard money created by a sovereign state, the system we have, all money including cash is a debt of the issuer, because it’s the asset of the holder.

      In one sense, the only way to “eliminate govt debt” is to eliminate money. In another sense, if the govt stopped selling T-Bonds to private sector banks (Primary Dealers at Tsy auctions) and just sold them to the Fed, all existing “govt debt” T-Bonds would expire at maturity and disappear.

      However, that debt & interest system is ONE way, albeit lopsided and anti-progressive, for the Govt to GIVE money to its citizens, for the mere act of collecting and saving net financial assets and depositing those in fed govt accounts, directly, or indirectly via bank savings.

      Debt is not a swear word.

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  3. Rodger,
    Michael Hudson discussed both corporate taxes and corporate tax RATES, on Real News Network and in an article on Corporate Tax Havens, off-shoring, all kinds of tricks. The one I liked was “selling” the company Logo to a shell corp in the Caymans or other no-tax haven, then “leasing” that Logo back with steep payments that reduce tax liability. The only problem is the money is stuck offshore.

    Hudson’s responses were a bit complex.

    One, mere corporate tax RATE hikes are meaningless. 100% of zero equals zero.

    Two, taxes should not be on corporate income per se, but on certain Economic Rents that some corporations amass more than others.

    Three, very high MARGINAL tax rates over 70% under Eisenhower did in fact CREATE JOBS because while lower corp tax rates helped business esp small, large Marginal tax rates encouraged VERY LARGE businesses to invest more in benefits, wages, and hiring more people, instead of handing those funds over to Govt.

    Tax CUTS that eliminated those high marginal rates encouraged corporations to keep the profits, NOT expand employment or wages, and pay the executives and shareholders more.

    Like

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