NYC Letter: The Taxman Cometh -- The Global Minimum Tax

Day 1,117 of CHOPE

When a company wants to expand it needs a proven record of success to finance the expansion. Not so the government. Government need only borrow or tax or print money -- or borrow and tax and print money to finance its big ideas. And big ideas need big money.

WHITE HOUSE ECONOMIC ADVISER:
'WE NEED A GLOBAL MINIMUM TAX'

February 13, 2012 (TWS) - Gene Sperling, director of the White House's national economic council, said today at an official meeting that "we need a global minimum tax":

He [scil., Mr. Obama] supports corporate tax reform that would reduce expenditures and loopholes, lower rates for people investing and creating jobs in the U.S., due so further for manufacturing, and that we need to, as we have the Buffett Rule and the individual tax reform, we need a global minimum tax so that people have the assurance that nobody is escaping doing their fair share as part of a race to the bottom or having our tax code actually subsidized and facilitate people moving their funds to tax havens.

... But we will say more, perhaps not in gory detail, but in more detail, before the end of the month. And in terms of the revenues, the president is looking for shared sacrifice. This budget is a Democratic budget that has savings in Medicaid, it has savings from new beneficiaries, Medicare in 2017, it has agriculture civilian retirement savings. It has a lot of very tough choices.

What is Team Barry's global minimum tax? It hardly seems possible in an election year Team Barry would float some sort of world tax -- à la Jack Chirac's 2006 "air-ticket solidarity levy" (item №5), a resounding flop.

What else could it be? America already has tax law in place for the overseas operations of American companies, which of course achieves the exact opposite of its intent by discouraging repatriation of corporate foreign profits. Ed Morrissey at Hot Air remarks that a further squeeze "would make the situation worse by pushing those corporations overseas entirely. The Obama administration has floated that proposal on occasion, though it has always been rejected on a bipartisan basis because of the disaster it would mean to the US economy."

A final note, if money has been legally earned and legally transferred to a legal tax haven "nobody is escaping doing their fair share". Tax law has never been about fairness, if it were America would have a flat income tax of 18% or thereabouts with no exceptions. Tax law has become an incomprehensible tangle of favors and pay-offs and damns (and this) and government candy (and more candy) and honeypots.

An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation.

Chief Justice John Marshall,
ruling in McCulloch v. Maryland
March 6, 1819

The power to destroy is preeminent in progressive tax schemes. When government appropriates to itself the greater part of the nation's wealth, it destroys private initiative and influence. A world tax -- giving the whole world a claim against the nation's prosperity -- will do as much and more, poking the little hole that becomes a little tear that becomes an irreparable gash in the nation's sovereignty.

CHOPE.

Awaiting the "gory details".