Andrew Stuttaford, who edits National Review‘s policy-focused Capital Matters section, has a writeup in his daily newsletter on the consequences of a corporate tax increase, in which he quotes from my recent piece that ran on his site. Andrew’s analysis is excellent, and detailed.
The Washington Examiner‘s Sarah Westwood quotes me in an article about the proposed increase.
The Dispatch, an outlet founded by Jonah Goldberg to offer a less tribal voice for the right than the Trump-centered outlets, was also nice enough to draw from my National Review piece in their daily newsletter (scroll down to the “worth your time” section”.
I also discussed corporate taxes on the Rod Arquette show in Salt Lake City. I’ll post a link to the audio if I find one.
Congress is considering increasing the corporate tax rate from 21 percent to 28 percent to help pay for the big infrastructure bill it is currently assembling. Over at National Review, I point out that corporations don’t actually pay corporate tax. You and I do:
That is because companies pass on their costs. Some of the tax is paid by consumers, who pay higher prices. Company employees pay some of the tax through lower wages. And investors’ retirement accounts pay some of the tax through lower returns.
There is also an often overlooked rent-seeking story behind Treasury Secretary Janet Yellen’s proposal for a global minimum corporate tax rate:
It is not difficult to imagine a U.S. company lobbying heavily to raise its rivals’ taxes in lower-tax countries. This would make the U.S. company more competitive, but in strictly relative terms. Such a lobbying win could aid a company without it having to do the hard work of improving its products or offering consumers better deals.
At the same time, though, foreign companies could lobby to raise U.S. corporate-tax rates for similar reasons. Why bother improving your own company when you can just hurt your rivals instead? That is the real race to the bottom.
A global minimum corporate tax rate turns out to be a form of hidden trade protectionism.
Read the whole thing here.
Neither presidential candidate has much interest in limited government. But over at National Review, I look at some neglected down-ballot victories from the 2020 election. A divided Congress will prevent one party from running everything, regardless of who wins the White House. There were also several state-level victories across the country.
California voters partially undid the AB5 gig-worker law that made unemployment even worse during the pandemic. They also voted against an expansion of rent control, which is one reason California’s housing prices are so high.
Not that legislators will listen, but Illinois voters sent them a message to address the state’s pension crisis by cutting spending rather than raising taxes:
The Illinois legislature had already passed a separate tax hike bill, conditional on voters approving the amendment. Voters disapproved by a 55-45 margin, and taxes will remain as they are.
Voters in Oregon and several other states also continued to deescalate the drug war:
In order for people to respect the law, they have to be able to respect it. That was a major cultural cost of alcohol prohibition in the 1920s, and of the drug war today. Drug legalization allows law enforcement to focus on real crimes and ease an avoidable source of antagonism between police officers and the communities they serve—especially in minority areas where drug laws are disproportionately enforced.
Washington state voters registered disapproval of a plastic bag tax. This is a victory for my colleague Angela Logomasini, who has written about the issue here and here.
A lot went wrong in the 2020 election, as is true every year. But some things also went right. Now let’s build on those victories and create some new ones.
Read the whole thing here. Ideas for the next free-market victories are at neverneeded.cei.org.
Thomas Howell, Jr. from The Washington Times quotes me in a story about President Trump’s reinstatement of 10 percent aluminum tariffs against Canada:
“The timing is just terrible. The USMCA trade agreement is barely a month old, the economy is fresh off the worst quarter in American history, and here comes a tax increase on something everyone uses. It makes no sense politically, let alone economically,” said Ryan Young, a senior fellow at the Competitive Enterprise Institute.
The state of Illinois is implementing a tax break for new cloud data storage centers located in the state. The Center Square’s Greg Bishop quotes me in a story about it:
A special carve out for data centers is bad policy, Competitive Enterprise Institute Senior Fellow Ryan Young.
“A principle of good policy is that the rules should apply to everyone, not just a select few,” Young said. “By that measure, Illinois’ tax break for cloud data centers is bad policy.”
Young said Illinois’ exemptions applies to one sector and is only available to large companies.
“The sales tax exemption requires a $250 million upfront capital investment, which more or less restricts it to the Googles, Amazons and Oracles of the world,” Young said. “None of these companies need the help.”
He said if the point of the tax break is to make Illinois a better place to do business, then why not apply it to everyone.
“This tax break is corporate welfare, plain and simple,” Young said.
“Given Illinois’ perilous fiscal situation, the state’s taxpayers would be better served if Springfield concentrated its efforts on reducing spending and deficits rather than doing favors for profitable businesses,” Young said.
Read the whole thing here.
Alongside Charles W. Baird, whose writing I have enjoyed since my high school and college days in FEE’s The Freeman magazine (then called Ideas on Liberty), I am quoted in a Heartland Institute piece on unemployment and how to keep it low.
Most cultures have held trade and commerce in low regard. This is true in nearly all times and places, and whether people are rich or poor, religious or secular, and cuts across political beliefs. Governments don’t much like the merchant class either, even though this disdain is biting the hand that feeds. James C. Scott provides an example from ancient China on p. 131 of his thought-provoking 2017 book Against the Grain: A Deep History of the Earliest States:
One reason for the official distrust and stigmatization of the merchant class in China was the simple fact that its wealth, unlike that of the rice planter, was illegible, concealable, and fugitive. One might tax a market, or collect tolls on a road or river junction where goods and transactions were more transparent, but taxing merchants was a tax collector’s nightmare.
Proving that sometimes good guys can win, our friends at the Institute for Justice are celebrating a big win against the IRS. In a move supported by large, established tax preparation firms, the IRS tried to require all tax preparers to get licenses. The licenses, along with other requirements such as annual continuing education courses, would raise costs for smaller firms and put many individual preparers out of business entirely; one sees why large firms would welcome the extra burden. They would face less competition. IJ sued to put a stop to his perfidy and preserve a more open competitive process.
A few years ago, before IJ filed its lawsuit, now-CEI Adjunct Scholar Caleb Brown and I co-authored an op-ed warning why mandatory tax preparer licenses are a bad idea:
Since the IRS has the power to revoke registrations, tax preparers will have to be careful not to advocate too aggressively for their clients. Besides this chilling effect, mandatory registration reduces consumer choice.
There are at least 600,000 unregistered preparers. Many of them are retirees. Others have jobs, but prepare taxes on the side to help make ends meet. Still others are volunteers. They give their services for free to people who can’t afford a tax preparer. How many will give up, rather than jump through the proposed regulatory hoops?
The IRS estimates the total cost of the new regulations at $48.5 million, plus 1.71 million hours of paperwork and record-keeping burdens. That’s equivalent to 855 full-time jobs — and not the kind that will spark an economic recovery.
Read the whole piece here. Read more about IJ’s victory here, and see a short video they produced about the case here.
Have a listen here.
Stephen Slivinski, a senior economist at the Goldwater Institute, discusses solutions to the seemingly intractable problem of corporate welfare.
Have a listen here.
A new CEI study finds that the most expensive ingredient in beer isn’t grain, hops, or equipment: it’s taxes. Study co-author and Fellow in Consumer Policy Studies Michelle Minton has more on the problem, and how and how two bills currently before Congress might solve it.