Can Turtles Fly?

Decline in American C Corporations and the Rise of Pass-through Entities Catherine Mulbrandon from VisualizingEconomics.com always does good work on economics and business graphics and this is another great one on American corporations and tax collections. It clearly shows something that is not widely understood by the public at large. Namely, the number of American C corporations--these are the ones that pay corporate taxes*--have declined significantly in the last few decades. The number of pass-through entities--these are ones that don't pay corporate taxes but instead the owner is taxed directly*--has risen. The biggest impact from all this is the reduction in corporate double-taxation (which benefits owners of such companies) and the decline in taxes being collected from corporations (which hurts government/society**). * I'm being very simplistic here and there is more complexity to the notion of how corporate taxes are paid ** This is only true if you beli...

Potential Impact of US Border Tax Bloomberg recently had an article quoting Deutsche Bank report on the impact of the proposed American border tax--there are several ones being floated around but this report seems to assume 20% tax, which is closer to the Republican House position--and there was a nice graphic of the impact on various countries. The biggest negative impact is forecast to be in Mexico, Vietnam, and Canada. All three will likely enter a recession immediately (assuming retaliatory taxes offsetting the GDP contraction aren't enacted). For some reason the data doesn't seem to include China, which will probably be the #2 loser from such a tax. (source: " Here's a Glimpse of the Global Trade Carnage From a U.S. Border Tax ," Jeff Black, Bloomberg, February 1, 2017) When we are closer to the imposition of the US border tax, which seems almost certain under the Trump administration, I'll write a more detailed post but here are...

Libertarians, classic conservatives and many on the right* love flat taxes and always seem to be in favour of flat taxes but I have never seen it ever last. I thought I would comment on it after reading that Estonia has started to abandon its flat tax . Apparently the first country to introduce flat tax in Europe, Estonia is starting to back off the flat tax. In my opinion, you just can't build a society with flat taxes. If anything, history seems to indicate that as societies advance, their taxes become more progressive. The flat tax helped a lot of ex-Communist states after they gained independence when no one was paying taxes and the system was completely dysfunctional, but it is hard to build a society with such a system. Wealth grows exponentially and hence accrues to the top few disproportionately--most investors probably know that 80% of the American stock market is owned by around 10% of the population--and it's hard to do anything at the societal level if most of...