the new rentiers

by russell

I offer this without much comment, because I'm not sure there's all that much to say.

The top executives of Transocean Ltd. were awarded bonuses this year.  The bonuses included safety bonuses for, as the company put it in it's regulatory filing, "significantly improving the company's safety record".

You will, of course, remember Transocean as the operator the Deepwater Horizon rig that blew up and sank in the Gulf of Mexico not quite one year ago.

To be fair, the article mentions that they only got two-thirds of their safety bonus, which makes me wonder if their target was to not have three of the largest oil disasters in history occur during the fiscal year.

Only one?  Good job!  You get 2/3 of a cookie.

Total compensation for the CEO was about $5.8M, which included an $850K base.  The base represents an increase of 34% over last year.

Transocean Ltd is publicly traded company.  If you hold any of it (NYSE: RIG), that's your money being handed out.

Well done boyos.  Onward and upward.

Comments

[efgoldman]

I don't do sputter.
But this makes me sputter and spit take.
Holy FSM...
Beyond snark.
Beyond parody.
Beyond outrage.
These guys should be in bleeping JAIL!

[liberal japonicus]

There was also this that is related.

Goldman Sachs is facing a call from four leading orders of catholic nuns to review whether the pay awarded to chief executive Lloyd Blankfein and other top executives is excessive.

[Bernard Yomtov]

Goldman Sachs is facing a call from four leading orders of catholic nuns to review whether the pay awarded to chief executive Lloyd Blankfein and other top executives is excessive.

What a country!!!

[Tony P.]

I refuse to get outraged about this yet, because I am such an open-minded, fair-and-balanced fellow that I want to hear "the other side" first.

There MUST be another side, right? Let's just see which of the reasonable, articulate, pragmatic regulars around here care to present it.

--TP

[bobbyp]

The other side:

The grand captains of industry, having risen to the top by their smarts, ingenuity, and nimbleness as they deal with the cosmic upheavals of the ceaseless creative destruction of free markets, are rightly rewarded, nay they are obligated, to take the wealth they have either created ex nihilo or coaxed lovingly from the bosom of that tyranny called government. Thus they serve, paragons to liberty, nation, God. Unerring. Unfazed. Unbowed. Righteously unforgiving. Their steely blue eyes, gazing into the future, unblinking....and I am swept up in a sea of certitude whose self righteousness is matched only by its unerring ability to satisfy I, I, I......

I thank my lucky stars each and every day for that little which they have so nobly left for me, for I am not worthy: A 2003 Honda Civic with only 180,000 miles on it; two more weeks of unemployment insurance; three kids who are ashamed of me; a wife who could not understand and left; a small suburban house that is in foreclosure; and a WalMart nearby.

Thank God for America.

[Slartibartfast]

The eleven people killed in last year's explosion could not be reached for comment.

[Gary Farber]

G.E.’s Strategies Let It Avoid Taxes Altogether.

But there's no classs warfare.

It's the poor people who are draining the country. All those freeloaders who make under $20k a year, who don't deserve help. The unions which help working people get a living wage. They're the people we should be angry with.

They're just drains on the economy.

Not powerful dynamos of the economy like GE. Who help uplift... themselves.

But I'm sure it all trickles down.

Somehow.

[CCDG]

I suppose this is the part where I provide a fair and balanced appraisal, I might do a pretty good job in the GE case(although I wouldn't convince even myself), but in the Transocean case it is beyond common decency that anything called a safety bonus would be paid.

In this case, I could go on and on, from experience, about the inner workings of SOME boards and CEO's justifying these kinds of incredibly stupid and arrogant things when they are not in the best interest of the company, shareholders, employees, or, well, anybody because of their absolute certainty that they are just really special.

But I still feel compelled to try to remind people that the "some" is true here as it is in other places where people generalize.

[rea]

This week I managed not to destroy the world.

Can I have a safety bonus?

[russell]

But I still feel compelled to try to remind people that the "some" is true here as it is in other places where people generalize.

I agree that "some" is accurate, and an important thing to remember.

Not all executives of corporations receive compensation that a reasonable person would call outrageous or excessive.

A lot of corporate executives are responsible human beings.

The thing is, there's very little beyond their own personal sense of responsibility and that of the board and/or compensation committee to prevent them from, essentially, skimming ridiculous amounts of money off of the top of the corporations' operating budget.

If they get really, really egregious about it, some shareholders *might* complain. But that's actually pretty rare.

If you're greedy, or have an excessive sense of entitlement, or are just used to seeing a lot of zeroes and commas in the numbers you traffic in, there's not much if anything that enforces any kind of meaningful correlation between the actual performance and actions of the corporation you run, and your compensation for running it.

American senior executives receive, as a class, compensation something like twice what European executives receive, and something like 10 times what Japanese executives receive.

Sebastian and others will point out that a pure apples-to-apple comparison is not really possible, but I'm pretty comfortable with standing behind those rough order-of-magnitude numbers.

American executives make a sh*tload of money. And it's not their money, it belongs to the owners of the corporation, which is to say, the shareholders.

If I wanted to personalize it, I guess I could say that they're bad, greedy plutocrats.

But to be honest, I don't really want to personalize it. I'll just say that our social, economic, and financial institutions are organized such that a highly disproportionate amount of the wealth created by large enterprises goes to their managers.

They receive compensation that is not really justified by the value created by their personal contribution to the enterprise. They receive it because the institution is set up in such a way that they can.

So, rentiers. Not a personal thing, just as a class.

[hairshirthedonist]

Just by chance, I was checking out Michael Hudson today, and he posted yesterday on Greenspan's about-face regarding financial regulations v. free markets (Greenspan Returns to De-Regulation).

There's quite a bit about the rentiers in the banking sector, so I figured it was relevant enough to the general theme of the post to mention it.

Here's an excerpt:

The Federal Reserve Bank of Minneapolis has just published statistics showing that the wealthiest 1% of America’s population doubled its share of wealth over the decade ending in 2007 as the bubble reached its peak. No doubt this polarization is widening as the economy shrinks under the weight of its debt overhead. Mr. Greenspan acknowledges criticisms that Wall Street has used TARP and other bailout money simply to maintain “the outsized (to some, egregious) bankers’ pay packages.” But he points out that “small differences in the skill level of senior bankers tend to translate into large differences in the bank’s bottom line.” Skill is expensive.

What amazes me about mismanagers like Countrywide’s chairman Angelo Mozilo and his counterparts is that when the S.E.C., F.B.I. and state attorneys general open an investigation to see whether to charge them with criminal felonies, the bankers always insist that they were out of the loop, had no idea of what was going on, and are shocked, shocked, to find out that there’s gambling going on in this place.

If they are so unknowledgeable to be even more blind than the regulators and economists who warned about what was happening (requiring a $13 trillion government bailout), how can they insist that they are worth whatever they can grab? For that matter, how did they manage to avoid jail terms? This is the real question that “free market” economists should be asking.

Most Wall Street firms have paid substantial settlements, and Mr. Mozilo recently paid the Securities and Exchange Commission $67.5 million to avoid going to trial for civil fraud and insider dealing. But only Martha Stewart became an insider jailbird. For Wall Street, paying a civil fine “without acknowledging wrongdoing” blocks victims from recovering civil damages in the event that they try to sue to get their money back. Evidently the Obama Administration believes that to make the banks pay would simply require yet further bailouts of “taxpayer money.” By refraining from prosecuting, Mr. Geithner at the Treasury and other regulators thus can claim to be saving taxpayers – while permitting the large banks to have grown 20 percent larger today than they were when the bailouts began, by extorting high credit card fees and penalties, and using tax breaks and almost free Fed credit such as the $600 billion QE2 to make money by fleeing the dollar to speculate in foreign currencies and make casino capitalist bets.

[Chris J]

"There MUST be another side, right? Let's just see which of the reasonable, articulate, pragmatic regulars around here care to present it."

Easy. Standard response #1. "To get the best people, you have to pay top dollar."

And these are clearly the best people, or they wouldn't have those jobs. The ones that pay top dollar for only the best people.

[wj]

Gary,
for another side of the GE tax story, check this out:
http://www.theatlantic.com/business/archive/2011/04/yes-ge-paid-taxes-in-2010-were-pretty-sure/236802/

Apparently there is some reason to doubt the accuracy of the original sources.

[Gary Farber]

Wj, thanks for calling my attention to that, and I don't pretend to be an account, but Megan's defense seems a tad vague to me.

I think it's obvious that there's no precise determining of what's the "right" amount of taxes an international mega corporation should pay or some precise way to even necessarily measure what is or isn't paid, but I'm dubious that GE is paying what would strike me as remotely a fair share, no matter that I don't regard myself as competent, were I presented with access to all their financial infomration, to determine any numbers at all.

Perhaps I'm simply looking to my prejudices here, but I would say that if someone wants to defend GE as paying a fair amount of taxes to the United States government, I'd like to see them come with at least some approximate figures themselves, not merely say a variant of "oh, that's very complicated, and maybe the figured used in that story weren't fair."

Yes it's very complicated, and perhaps -- I'm not competent to judge, and neither does Megan present any actual even estimates of what she thinks the numbers might be -- the methods of comparison weren't ideal.

But in the end, what she says is:

The company paid estimated taxes all year, and seems to have some tax liability for the year, though no one right now knows how much. Including GE. Frankly, the company probably won't know for several years, as large companies essentially have branch offices of the IRS in their headquarters, and their tax bills are the subject of lengthy negotiation.

Yes, she says more than that, but to me, that's the key point, and my reaction is a big shrug.

Tell me that GE paid, oh, 10% of their profit to the U.S. government, and here's some evidence of that, and I'll look up with interest. Tell me that it's not fair to say they paid none, because maybe they paid some, and I'll tell you that that's a not very interesting and completely vague response, so far as I'm concerned.

I'm interested in the basic fairness of whether GE is making a reasonable contribution to the welfare of the citizens of the U.S., not the methodlogy of the financial reporting department of the New York Times and what accounting techniques were used. That's just me.

[Slartibartfast]

Megan's defense seems a tad vague to me

Megan's point could have been better made if she'd just pointed out that the NYT article on GE's income tax payments is based on little in the way of fact. That it's making claims or suggestions that are not supported.

I agree with some of what she says. Why don't we just get rid of corporate income tax, and BTW get rid of the special capital-gains tax classification that has people effectively paying less tax on what amounts to income.

The immediate result would be a lot of tax accountants and lawyers out of work, but the long-term result would be reallocation of people and brains to areas other than tax avoidance.

If what GE is doing is legal, then guess what? They're doing it because our Congress made laws that made it possible for them to do it; actually incentivized them to do it. I don't blame GE for not paying taxes, if that's what is happening; I blame our tax code. Isn't it the IRS that polices its own tax code? If the IRS doesn't have a problem with GE's tax strategy, then your problem lies with the tax code the IRS is enforcing, not GE.

IMHO, of course.

[Slartibartfast]

problem lies with the tax code the IRS is enforcing, not GE

s/your/the

[Hartmut]

Problem is that the GOP 'budget repair' plans include heavy cuts to the IRS. They already have too few agents to work as a powerful deterrent against tax-cheating (and be it by filing tax returns with more than 20K pages as GE did). Crippling the IRS looks to me to be one of the major goals (shared by a lot of Dem polbeings too). Killing taxes is of course the preferred solution but hampering collection is second best (with the additional advantage that one can still complain about tax(rat)es being too high).

[russell]

Couple of quick things on the GE tip.

First, agreed that ultimately the responsibility for devising and enforcing an equitable tax regime lies with we, the people, and not with GE. GE, however, brings enormous resources to bear on the task of distorting what we, the people, might wish to suit its own ends.

Megan's AARP example aside, when we talk about GE and normal taxpayers, we are not talking about peers.

I would actually be open to eliminating the corporate tax in exchange for taxing capital gains and dividends at the same rates as income. I'd even be willing to carve out an exemption for investments that actually create net new income for whatever they were investing in.

I would like to see some discipline in how retained profits were accounted for and handled, so that "investment in the enterprise" doesn't all turn into "private jet and golf memberships for C-levels". Good luck with that, of course.

You could probably do all of that, plus lower the top marginal rates, and still come out even. Wealthy people would in may cases just end up paying more taxes. So my guess is that it's a non-starter.

If I were really, really going for the cherry on top, I'd ask for a clarification that the word "person" in the 14th Amendment refers only to natural human persons. All of that together would give us a nice, clean distinction between human beings constituting a sovereign polity on one hand, and legal entities constructed under law to aggregate and employ capital on the other.

No more weird alien pseudo-lifeforms cluttering up our public business.

Of course, that last is the craziest of crazy talk.

But a guy can dream.

[Slartibartfast]

Crippling the IRS looks to me to be one of the major goals (shared by a lot of Dem polbeings too).

You could easily thwart that by simplifying the tax code, in ways that both russell and I could support. Simpler tax code == smaller IRS == WIN for everyone.

Complex tax code makes a large and intrusive IRS mandatory, and incentivizes large & expensive corporate tax-avoidance efforts. My inexpert opinion says that if we stop forcing corporations to pay tax, and tax capital gains income as income, corporations might find more money to reinvest in business ventures, and (furthermore) corporations would not be passing on their corporate tax burdens to people who purchase their products. The right people (capital gainers) would get taxed, and the wrong people (end consumers of pretty much everything) would reap the benefits.

russell's "private jet and golf membership" comment make me think that there may be holes in the rules that define "income". If you're being compensated in any way by your employer, that is (or should be) classified as income, and taxed as such. And accounted as part of your compensation package.

So: those luxury offsite meetings? Those should be reported, and should bear some tax burden.

The glowing discussion of why corporate taxes should be eliminated probably has got a certain swiss-cheesy look to the more trained. I'm ok with that. It's just an idea; if it's got holes in it, let's talk.

[Rob in CT]

It's true: complexity in the tax code favors those with the resources to exploit that complexity (and help create the complexity in the first place, arranged to their benefit).

Rip out the deductions and re-do the rates accordingly.

[CCDG]

"russell's "private jet and golf membership" comment make me think that there may be holes in the rules that define "income". If you're being compensated in any way by your employer, that is (or should be) classified as income, and taxed as such. And accounted as part of your compensation package."

While these these are sometimes reported as income for indivduals they are usually sales and marketing/travel expenses.

Most golf memberships are corporate memberships, although the top executives get personal memberships and expense them as entertainment expenses back to the company.

Luxury offsite meetings are much more variable in actual luxury, cost and benefit to the corporation.

For example, I did a cost study several years ago on having a corporate meeting at four locations in NA. Three locations were company offices and the fourth was Manadalay Bay in Las Vegas.

After comparing flight costs for all participants, hotel discounts, meeting room costs, etc for 20 people from nine locations Las Vegas was the cheapest place to have the meeting, along with the added benefit of (almost) everyone being happy to get a trip to Vegas in February.

Other more exotic places didn't make that cost cut. Orlando was close but the flights weren't as cheap. New Orleans in July is a really cheap place to have a meeting that sounds like a boondoggle. You can get really cheap flights and great luxury hotels for very good rates.

Just saying.

[Hartmut]

The complexity of the tax code is irreducible because that's what the designer intended, not a result of entropy. ;-)

[Slartibartfast]

The complexity of the tax code is irreducible because that's what the designer intended, not a result of entropy. ;-)

I think the notion of "designer" does not apply in connection with most of US code, tax or otherwise. It's more like a series of accreted deposits. A coral reef, if you will, that's built on many prior generations of coral.

Which is why I sometimes think that it might be a good idea to junk all US tax code every few years. But then we'd never agree on a replacement, so there goes that notion.

[hairshirthedonist]

New Orleans in July is a really cheap place to have a meeting that sounds like a boondoggle.

Sounds like a sweat-fest to me.

[Hartmut]

An old idea about keeping the code(s) managable is to built in sunset provisions that cannot be changed with a mere pro forma vote (an inverse constitutional amendment so to speak). But as we all have seen recently this opens the door wide to electoral/political blackmail.

[Turbulence]

You could easily thwart that by simplifying the tax code, in ways that both russell and I could support. Simpler tax code == smaller IRS == WIN for everyone.

I don't think either of these statements are true.

First, there's no reason to believe that a dramatically simplified tax code would be feasible. Every single piece of complexity benefits someone, so there's a huge constituency for fighting any "COMPLETELY REVAMP THE TAX CODE" proposal. But there's no real constituency backing that proposal either. So just in terms of political economy, such a proposal is not going to happen.

But maybe I'm wrong. Can you point to any country that has, in one fell swoop, radically simplified its tax code in the normal course of affairs (i.e., not right after a rebellion seizes power)?

Also, I don't really want a smaller IRS. I want a larger IRS. I pay my taxes. But there are lots of people, especially small businesses that don't. I'm sick of paying for their lazy free-riding butts. I want an aggressive IRS to come down on them and make them pay.

Moreover, I want the IRS to make my life easier by sending me my tax form already filled out so I can just sign it and submit it. They already know everything I'm going to tell them since they need to verify it and they're a lot less likely to screw it up than I am. I get that this will be useless for maybe 20% of tax filers, but for the remaining 80%, it would make tax time much less stressful and less time consuming. You can't do that with a smaller IRS though.

[russell]

Just saying.

I'm not really that worried about stuff like offsite meetings.

The CEO at Transocean got over $600K in perks, including vacation and housing allowances. One guy, $600K in perks.

Stuff like that I think belongs under the heading of "income". In his case, it was accounted as such, in some cases and places it often is not.

This doesn't just apply to C-level guys at big companies. My wife and have friends who run a B&B out of their home, when they travel they can frequently write off some of their expenses as market research or something. My wife and I were in NYC last January, we spent an afternoon browsing design places in SOHO, my wife is an interior designer so she could write off some of her travel costs.

The C-level guys just blow it up kinda huge.

Net/net, I would have no problem with tightening up or eliminating a lot of what falls under the heading of "the cost of doing business".

What hasn't been discussed here, and which would be really helpful in addressing these kinds of sweetheart deals, would be to broaden the range of stakeholders who participate in corporate governance.

Even a meaningful and effective voice for shareholders would be a start.

It's quite often a self-serving old boy's club, and it's not their freaking money. And yes, I do repeat myself on that point, because people seem to forget it.

It's not their money.

[Slartibartfast]

I want a larger IRS.

Ok, then. I don't. I'd prefer not to need a larger IRS.

[Turbulence]

I'd prefer not to need a larger IRS.

Oh, I too wish human nature were radically better than it actually is. I just don't see much point to wishing.

[hairshirthedonist]

We can discuss our ideal scenario in the hope that we can get closer to it, even if we never actually get there. Given the tax code we have, there's quite a bit of room for simplification that would fall well short of a complete overhaul. (Plus, what good would the internet be, especially when it comes to blogs, without all the pie-in-the-sky wishing?)

[Slartibartfast]

Can you point to any country that has, in one fell swoop, radically simplified its tax code in the normal course of affairs (i.e., not right after a rebellion seizes power)?

It's not necessary to have a precedent. We'd never do anything new if we required a prior example before we attempted something.

I just don't see much point to wishing.

I'm not wishing, I'm telling you what my preference is, just as you were telling me what your preference is.

[Turbulence]

It's not necessary to have a precedent. We'd never do anything new if we required a prior example before we attempted something.

You must forgive me, I'm a conservative. And as a conservative, I'm a bit wary of radical social experiments on a mass scale that have never been tried before. I don't know of any developed countries that have a corporate income tax rate that is as low as 10%. Wouldn't it make more sense to start with that rather than with zero?

I mean, if I suggested cutting the personal income tax to zero and letting the government make up the difference by raising corporate income, estate, excise and sales taxes, I assume that most people would say 'that's crazy'. After all, the economy is a complex thing and I don't think we can even imagine the long term consequences of such a shift. I'm not really seeing why your proposal should be thought of as any different. They're both extremely radical.

[Slartibartfast]

I'm a bit wary of radical social experiments on a mass scale that have never been tried before.

I'm not talking about a radical social experiment. I'm talking about a reduction in the complexity of the tax code.

"radical" is your assessment, not a fact.

"on a scale that have never been tried before" is your assertion, though; not mine. I'd want a cite on that.

I mean, if I suggested cutting the personal income tax to zero and letting the government make up the difference by raising corporate income, estate, excise and sales taxes, I assume that most people would say 'that's crazy'.

That's a nice hypothetical and all, and a nice assumed outcome, but it's not well-related to what I'm talking about.

They're both extremely radical.

Thanks for your opinion!

[Turbulence]

I'm not talking about a radical social experiment. I'm talking about a reduction in the complexity of the tax code.

Oh, I know. I'm doing exactly the same thing when I talk about my "eliminate all personal income taxes plan". I mean, don't you agree that your statement above applies just as well to my plan?

"radical" is your assessment, not a fact.

I've asked you if you know of any cases where a developed country has pulled anything like that off. You didn't suggest any. I looked a bit at this Wikipedia page and as far as I can tell (I might have missed something), there are no developed countries with corporate income tax rates of less than 10%.

Now, does that prove that your 'let's eliminate the corporate income tax' idea is radical? No, of course not: whether a policy is radical or not is inherently subjective. But it does suggest that despite the vast array of different policy options present in the world, no one has been able to make a zero-corporate-income-tax regime work.

Could that be because no one ever had the brilliant idea that you, Slarti, had? Possibly, and I'd certainly be more amenable to the notion if it was written by Ugh, someone who does taxes for a living and knows a lot more about tax law than you do (no offense). I'd also be more amenable if you could point to any reputable economist who suggested the idea. But you're proposing a massive change in our economy and you don't seem to have any models for what the repercussions will be. That seems...irresponsible I guess.

Just out of curiosity, if 'let's eliminate the corporate income tax' is not a radical tax policy proposal, what would you consider to be a radical tax policy proposal? Do you consider my 'let's eliminate the personal income tax' idea to be radical? What about a 'let's eliminate all income taxes and replace them with a VAT' plan? Or is there no tax policy proposal on Earth that you find radical?

[CCDG]

Turb

From The Roadmap

Ryan proposes:

"•Replaces the corporate income tax – currently the second highest in the industrialized world – with a border-adjustable business consumption tax of 8.5 percent. This new rate is roughly half that of the rest of the industrialized world."

[Slartibartfast]

I'd say of all the various drawbacks of elimination of corporate tax that might be pointed out, that you think it's radical is rather less persuasive on the good idea/bad idea axis.

I've asked you if you know of any cases where a developed country has pulled anything like that off. You didn't suggest any.

I'm not really interested in having that discussion with you, Turbulence. Since I'm not claiming that other people are doing that, I'm under no burden at all to show you that they are.

Similar lines of discussion about how brilliant my little idea was will similarly go unexplored by me. I'm just not interested. But feel free to discuss by brilliance with other commenters!

no one has been able to make a zero-corporate-income-tax regime work

Really? It's been tried and it failed?

Where?

I'm not sure what you mean by "no one has been able to make [it] work". Work for what? You have some ends in mind that only corporate income tax would accomplish? Or that corporate income tax would accomplish optimally? I completely don't get this formulation.

[Turbulence]

Slarti, I'm curious about how you would answer the questions I raised earlier about what constitutes radical in your mind. Would you mind answering them? They were:

...what would you consider to be a radical tax policy proposal? Do you consider my 'let's eliminate the personal income tax' idea to be radical? What about a 'let's eliminate all income taxes and replace them with a VAT' plan? Or is there no tax policy proposal on Earth that you find radical?

If you don't want to, that's fine of course, but I am genuinely curious as to where you draw the line. Thanks in advance.

[Tony P.]

Without looking it up, I bet there was a time when introducing a corporate income tax in the US was a "radical" idea. Maybe it was "unprecedented" too; I don't know.

What I'm fairly sure of is that any taxes collected by the federal government have to be paid BY somebody. No matter how we "simplify" the tax code, this much has to be true: if lower rates on high incomes, or estates, or corporate profits actually end up collecting more revenue from high-income earners, or wealthy heirs, or profitable corporations, then those categories of persons will be paying more money to the IRS. They will have less money to "invest" or "create jobs" with.

Seriously: if you run a corporation that manages to pay roughly zero dollars of tax under a code that nominally taxes your profits at a 35% rate, why the hell would you want tax reform that makes you actually pay taxes?

People and corporations earn dollars and spend dollars. They pay taxes with dollars. If rich people or big corporations do not currently pay their "fair share" of dollars, and you propose to collect more dollars from them by "simplifying" the tax code, they will laugh in your face because rich people and big corporations are not stupid.

They are so not-stupid in fact, that they will subsidize your political campaign or your think tank if you're willing to sucker not-rich people into believing that cutting rates at the top is a sneaky way to make rich people pay more dollars.

--TP

[CCDG]

here is another serious proposal to replace the corporate income tax,pay for healthcare reform and reduce the deficit....with a VAT tax.

Unless someone has a better idea, we should eliminate the corporate income tax and replace it with a 2% VAT. That raises more revenues. Now we've cut taxes and have more money. This is a politician's dream. Then add a 1% VAT to pay for health reform and a 2% VAT to pay down deficits. To the cries of "regressive, regressive" include exemptions for food, health and housing for the poor. TV has just reported that 47% of households paid no income tax last week; and multi-nationals like GE paid zero. Small business corporations have been paying the corporate income tax. I asked a small business corporate owner if he would like to replace his income tax with a 5% sales tax. He said, "I can take that in a New York minute." Finally, if they want to blab politically about taxing the middle-class, remember a VAT is on consumption, not income.

The more you consume, the more you pay. And canceling the corporate income tax, which averages 27%, reduces production's profit 27%, which reduces the cost to all consumers. The 5% VAT is a winner for the poor, the middle-class, and the rich, and it is absolutely necessary in the trade war. One hundred thirty-two countries engage in the trade war with a VAT that's rebateable on exports. Producing in the United States for delivery in China, there's an average payment of 27% corporate income tax, with a 17% VAT added when it arrives in Hong Kong, for a total of 44%. But producing the same article in China for delivery in the United States, the 17% VAT is rebated when it leaves Hong Kong; arriving in the United States, no income tax, for 44% less cost. Corporate America's profits from production in China are not subject to the corporate income tax unless repatriated. So by canceling the corporate income tax outright you've given the same advantage to production in the United States that you have been giving Corporate America to produce in China. Now Congress has started rebuilding our economy and paying down the deficit.

[Tony P.]

Unless someone has a better idea, we should eliminate the corporate income tax and replace it with a 2% VAT. That raises more revenues. Now we've cut taxes and have more money.

"More money" FROM WHO? If you want more dollars to flow into the Treasury to close the deficit, reduce the debt, or do any other good thing, SOMEBODY has to pay more dollars. If not "corporations", if not "the poor, the middle-class, and the rich" for all of whom "the 5% VAT is a winner", then WHO?

--TP

[liberal japonicus]

The VAT is an interesting example. Encountering it in the UK was interesting, and when my relatives from the UK visited, one of the first things they commented on was the sales tax and how different it was in psychological terms.

The wikipedia article on VAT has a number of different countries, and I like me this:

Because exports are generally zero-rated (and VAT refunded or offset against other taxes), this is often where VAT fraud occurs. In Europe, the main source of problems is called carousel fraud. Large quantities of valuable goods (often microchips or mobile phones) are transported from one member state to another. During these transactions, some companies owe VAT, others acquire a right to reclaim VAT. The first companies, called 'missing traders' go bankrupt without paying. The second group of companies can 'pump' money straight out of the national treasuries.[citation needed] This kind of fraud originated in the 1970s in the Benelux-countries. Today, the British treasury is a large victim.[5] There are also similar fraud possibilities inside a country. To avoid this, in some countries like Sweden, the major owner of a limited company is personally responsible for taxes.

However, the last sentence (though there is no reference) is this:

This is circumvented by having an unemployed person without assets as the formal owner.

At least it would help us deal with the homeless...

[liberal japonicus]

Ahh crap, here's an attempt to fix it,

But if it doesn't, little help? Also here is the link for wikipedia on VAT

[Turbulence]

Ryan proposes:...

Given that Ryan made up a bunch of ridiculous numbers in order to make his budget "work", I'm not sure we should treat it so seriously. It is pure fiction after all.

As for a VAT, it might or might not be a good idea on its own merits, but it is really not compatible with tax simplification, even if you eliminate a whole slew of taxes in exchange. VAT regimes are incredibly complicated and require companies and individuals to deal with them at many levels. As LJ points out, they also lead to a great deal of gamesmanship, not unlike the sort of tax evasion gamesmanship we have with our current system. Advocating for VAT in the name of tax code simplification doesn't make any sense.

[wonkie]

Why should we free corporatios from their resposiblity to apay memebership dues to our society?

Corps use the infrastructure. They need schools to educate future employees. They need to be defended against crime, terrorism, or invasion. Many corporations are polluters and should pay for the EPA and regulators. I'd be surprised if there is a corporation in existance that doesn't engage in some activity that needs to be regulated to protect the public interest and they should contribute taxes to pay for that, too.

Taxes are membership dues. Why should corporations be exempt? Especially now that they have the free speech rights of people.

[Gary Farber]

It's true: complexity in the tax code favors those with the resources to exploit that complexity (and help create the complexity in the first place, arranged to their benefit).

Rip out the deductions and re-do the rates accordingly.

I'm not inclined to wade into more than the very edges of any conversation on the tax code, because I know when I'm wandering out of areas where I know what I'm talking about, but this was part of the idea behind TEFRA, and I actually supported those elements.

I agree that simplifying the tax code so it de-incentivises avoidance, and otherwise doing the stuff that Russell and Slart are talking about are generally good goals.

I'm going to stay out of any more specific discussion of taxes, though; I know enough to have some general notions of what principles I favor, but I also have enough sense to leave any detailed discussion to those who really know the subject, and related subjects, and I'll either:
a) read with interest; or:
b) engage in MEGO.

:-)

[Gary Farber]

For example, I did a cost study several years ago on having a corporate meeting at four locations in NA. Three locations were company offices and the fourth was Manadalay Bay in Las Vegas.

After comparing flight costs for all participants, hotel discounts, meeting room costs, etc for 20 people from nine locations Las Vegas was the cheapest place to have the meeting, along with the added benefit of (almost) everyone being happy to get a trip to Vegas in February.

Other more exotic places didn't make that cost cut. Orlando was close but the flights weren't as cheap. New Orleans in July is a really cheap place to have a meeting that sounds like a boondoggle. You can get really cheap flights and great luxury hotels for very good rates.

Just saying.

Speaking as someone who worked on running conventions since he was 15, spent 15 years reading all the trade magazines (Successful Meetings, Meetings & Conventions, and Meeting News), and keeps up on the business of convention-running to some degree (or the serious hobby, as it is, for many friends of mine), I could have told you this at any time in the past thirty years, and I'd have been much cheaper than your study. :-)

Of course Vegas is super-cheap for meetings; it's what they're there for. Ditto any destination that is off-season and has good meeting space, is otherwise cheap, has high vacancies and therefore low rack rates, has a good hub airport, and therefore is willing to negotiate away all sorts of stuff, and so on.

You don't want a major metropolis, but Reno is also good. :-)

But also will depend on season. Gotta go off-season.

[Hartmut]

Without looking it up, I bet there was a time when introducing a corporate income tax in the US was a "radical" idea. Maybe it was "unprecedented" too; I don't know.

What do you think was the reaction to the idea of introducing a personal income tax?
And parts of the Right still consider it an abomination right from hell (some 'theologians' that literally believe that are currently very active and also very close to leading political figures).

[hairshirthedonist]

Taxes are membership dues. Why should corporations be exempt?

I don't think most of the advocates here for the elimination of corporate taxes are doing so to give corporations a pass of some sort. I think it's more a practical matter of finding a better way to raise the same or more revenue without the large-scale, sophisticated avoidance schemes that large corporations tend to employ.

Now, you might argue that there are other ways to achieve this goal other than simply eliminating corporate taxes altogether, and you might be right for all I know. But those arguing for eliminating corporate taxes (again, here) would still not be doing so out of charity to corporations, AFAICT.

(Dammit, I had another point to make and my phone rang. The coversation pushed it right out of my head. Maybe later.)

[Slartibartfast]

I'm curious about how you would answer the questions I raised earlier about what constitutes radical in your mind.

That depends of course on the sense of radical that you're asking that question from. In the sense of extreme change, corporate income tax accounts for approximately 12% of tax revenues, so we're really talking about approximately $300b. So: yes, that's a fairly large number, and it's not clear to me at all that any substantial portion of this could be recouped by elimination of the capital-gains rate as a special classification for income. Probably the whole structure of tax rates would have to change to make it revenue-neutral. This kind of change would of course present huge problems for people whose entire financial plan depends on the tax structure currently in place, so in that sense, too: radical, in the sense of big changes.

But not necessarily radical on the scale of, for example, replacing personal and corporate income tax with property tax, IMO. That would change a whole lot of incentives. Not necessarily all for the bad, but quite a lot would change. People and businesses in a position to adopt tax-avoidance strategies would find themselves moving to different parts of the country, for example. I haven't looked at VAT specifically, so I'm not prepared to assess it as radical.

But I'm thinking that this notion of eliminating corporate income tax might be radical in the sense of advocating extreme measures to retain or restore a political state of affairs. What I mean by this is: corporate taxes are, I believe, paid by the customers of said corporations. To the extent that GE pays sales taxes, GE customers incur extra cost. But it's not cost in proportion to customer income as income tax is; it's the same for every purchaser of a given unit of product. Tax on a gallon of gasoline, for example, hits the handyman who's just barely breaking even comparitively much harder than it does the guy who is driven to work in a limo. Now, you might object to a comparison between corporate income tax and excise tax, but I say that they're comparable. In fact, if you look at the history of corporate income tax, it began as an excise tax on corporate income. Excise taxes are (according to this Wikipedia entry, which I understand could very well be inaccurate) by design intended to be passed on to the consumer. Wouldn't it be better, in the social-justice sense, if the burden of such taxes were shifted more to people who have more money to afford them?

I don't want to go into an enormously more detailed unpacking of where I'm coming from, here, so I hope this will suffice.

Why should we free corporatios from their resposiblity to apay memebership dues to our society?

I suppose that all depends on whether you consider corporations to be citizens. Which gets back to the whole are-corporations-people question, I think.

Corps use the infrastructure. They need schools to educate future employees. They need to be defended against crime, terrorism, or invasion. Many corporations are polluters and should pay for the EPA and regulators.

Corporations pay state & local taxes that fund education and local law enforcement. I'm not arguing for removal of those things. Corporations on the other hand would probably just as soon do without the EPA and other regulators and see those as a hindrance. Who needs the EPA are people. Who should shoulder the cost of such things in a more immediate way, IMO, are people who derive large amounts of income from ownership of corporate stock.

And you know who needs corporations just as much as corporations need education for the workforce? The workforce does. It's a two-way street. States compete to have corporations move in and set up shop by offering them reduced tax burdens and other incentives. It's not just because the corporations have buddies inside government, it's because having that Mercedes-Benz factory in your state means hundreds of decent-paying jobs that benefit the local economy.

I'm completely open to assessing regulatory fees on as a separate expense, though. It's not something I've given a lot of thought to, though.

[hairshirthedonist]

Oh yeah, this:

Seriously: if you run a corporation that manages to pay roughly zero dollars of tax under a code that nominally taxes your profits at a 35% rate, why the hell would you want tax reform that makes you actually pay taxes?

It would depend on how much you spend on avoiding taxes at the current rates versus how much you would have to pay under the new regime. But then you'd still have to deal with the accountants and lawyers who would be out of work.

[Ugh]

The reason for a second level of tax imposed on corporations was once explained to me as the price corporations pay for their limited liability. Since we now have LLCs that have limited liability without the second level of tax I'm not sure the explanation holds up anymore. I kind of like wonkie's thought that corporations should pay a second level of tax as they are considered separate legal entities with certain rights, which seems to make a fair bit of sense (but again, we would still have the LLC anomaly).

I don't think eliminating the corporate income tax would be too radical if it meant we just treated all corporations as pass-throughs and taxed their income directly to their owners. This tends to be unfeasible, however, when corporate ownership becomes sufficiently diffuse and liquid that it's impossible to account for who earned what (which is why publicly traded entities in the United States are generally taxed as corporations regardless of the form in which they are organized). So what generally happens in countries that have adopted an integrated tax system (or a partially integrated one) is that the corporate income tax is retained, but shareholders get a credit for such tax when dividends are paid, to create (or approximate) a single level of tax.

However, just eliminating the corporate income tax without taxing any income to the owners until it was distributed creates several problems, many of which we faced a few decades ago when the corporate rate was much lower than the individual rate. It creates even more problems if there is a different marginal rate for capital gains and ordinary income.

Anyway, everyone deeply involved in this thinks we will end up with some sort of VAT (though all the politicians are terrified f the idea) along with a change to how we tax income earned outside the United States (as in, we won't). These things may or may not be accompanied some sort of other fundamental tax reform for corporations and/or individuals, but nothing is certain, other than "something 'impossible' has to happen" as someone put it this week at a tax conference.

[Turbulence]

corporate taxes are, I believe, paid by the customers of said corporations. To the extent that GE pays sales taxes, GE customers incur extra cost.

Ah, I see now. You're working from a very simple model of tax incidence. I believe this model is incorrect (whether GE passes on corporate income taxes to customers depends on elasticity and is not static), but now that I see that you're using it, I can understand where some of your economic policy notions come from. So I thank you for taking the time to explain.

Corporations pay state & local taxes that fund education and local law enforcement.

Some do. Some don't. For example, Amazon doesn't pay sales tax in most states in which it does substantial sales business.

Corporations on the other hand would probably just as soon do without the EPA and other regulators and see those as a hindrance.

How odd. Most corporations have a huge interest in not having high employee absenteeism caused by chronic asthma brought on by air pollution. Most beach front hotels have a huge interest in not having sewage dumped on their beaches.

Who needs the EPA are people.

And thus corporations since people are assets. That's why most companies have a group called 'Human Resources'.

[Phil]

Corporations pay state & local taxes that fund education and local law enforcement.

Some do. Some don't. For example, Amazon doesn't pay sales tax in most states in which it does substantial sales business.

What's more, granting an exemption from local and/or property taxes for a specified number of years is the number one tool in the toolbox of municipalities trying to convince corporations to relocate, or to keep them from moving.

[Ugh]

granting an exemption from local and/or property taxes for a specified number of years is the number one tool in the toolbox of municipalities trying to convince corporations to relocate, or to keep them from moving.

And that sort of harmful inter-state tax competition really needs to stop. We're currently treated to things like the spectacle of Northrop Grumman basically holding a competition among Virginia, DC and Maryland to see which jurisdiction would give it the best tax holiday in exchange for its corporate headquarters (NG having already made the decision that it makes sense to be closer to the pentagon than California).

Congress could stop if they wanted to but they don't seem to want to.

[russell]

Taxes are membership dues. Why should corporations be exempt?

To me, the question is why corporations are even thought of as members in the first place.

I would trade corporate personhood for whatever revenue we get from corporate taxes in a New York minute.

[Turbulence]

Congress could stop if they wanted to but they don't seem to want to.

That's something I've never considered. What could Congress do to stop states from competing in this way?

[Ugh]

What could Congress do to stop states from competing in this way?

The first thing that comes to my mind is to use what John Yoo once called in my Con Law class the "bribery clause" of the Constitution and withhold federal highway (or other) funds from states that grant company specific tax preferences or holidays. This would be harder than imposing the uniform 21-year old drinking age in the same manner, but it probably could be done. It may also be possible to do this directly via Congress's power to regulate interstate commerce or its power to enforce the negative commerce clause, but that seems less certain.

[Ugh]

One thing I don't understand is why don't the G-7, or G-20, or OECD countries get together and tell Bermuda, the Cayman Islands, Switzerland, and other tax havens to change their tax policies or be excommunicated from the international community. Heck, the G-7 could probably do this themselves by imposing economic sanctions, a tourist travel embargo, and taxing corporate profits booked there directly.

While I'm playing God I suppose they could all get together and agree to coordinate on the basic features of their tax systems but that seems far less doable then telling the Caymans et. al. to shove it.

[Turbulence]

Ah, thanks for explaining. It seems like a good idea that might lead to an explosion of federalism demagoguing. Then again, we seem to have that anyway....

One thing I don't understand is why don't the G-7, or G-20, or OECD countries get together and tell Bermuda, the Cayman Islands, Switzerland, and other tax havens to change their tax policies or be excommunicated from the international community.

Maybe it is just the principal agent problem? Getting the tax havens in line would be good for the US as a whole but would be bad for some large businesses in the US who have leased legislators. Although if you expanded your bag of coercive tricks to include bombing, you might get more GOP support. Perhaps Bermuda is engaging in financial terrorism?

[Ugh]

Although if you expanded your bag of coercive tricks to include bombing, you might get more GOP support. Perhaps Bermuda is engaging in financial terrorism?

I sort of stole the idea of going after tax havens from a David Cay Johnston (former NYTimes tax reporter who now writes for Tax Notes) article where he suggested we invade Bermuda (or maybe it was the Caymans) over their tax policy (facetiously, of course, but he was serious about the damage the tax havens cause).

[Slartibartfast]

Most corporations have a huge interest in not having high employee absenteeism caused by chronic asthma brought on by air pollution. Most beach front hotels have a huge interest in not having sewage dumped on their beaches.

All of this sort of assumes that corporations will act in their own long-term best interest, which I don't think is a given. In addition, the beachfront hotels in question are corporations who would have a vested interest in other corporations/actors being regulated by the EPA, at least in your example.

I think that if corporations really acted in their own self-interest, the EPA wouldn't be nearly as needed. Or have I missed some key point, here? Heck, even individual people fail to act in their own best interest much of the time.

[russell]

Heck, even individual people fail to act in their own best interest much of the time.

And so, we stumble upon the fly in the free market ointment.

[Turbulence]

All of this sort of assumes that corporations will act in their own long-term best interest, which I don't think is a given...Heck, even individual people fail to act in their own best interest much of the time.

I'm not sure that "corporations acting in their long-term best interest" is required. Having medical waste on the beach isn't a long-term problem: it is a very immediate short term problem from a hotel owner's perspective. Certainly, I've heard plenty of business owners complain about the cost of healthcare to their business.

In addition, the beachfront hotels in question are corporations who would have a vested interest in other corporations/actors being regulated by the EPA, at least in your example.

Well, yes, that's my point: most corporations have a strong interest in the EPA performing its regulatory duties. That's why I disagreed with your claim that only people and not corporations have an interest in the EPA regulating things.

I think that if corporations really acted in their own self-interest, the EPA wouldn't be nearly as needed.

Since different corporations have different interests, I don't think this is true. It is in the interests of almost every business in Myrtle Beach SC to not have medical waste on the beaches. But it is not in the interests of the private waste disposal company. If you believe that businesses act in their own interests, then we still need an EPA in this case.

[Slartibartfast]

I think your arguments are at odds with each other, Turbulence. On the one hand, you say most corporations have a strong interest in the EPA performing its regulatory duties, while on the other hand you come up with an example where one company (beachfront hotel) has a strong interest in the EPA doing its duty, while another one (waste disposal company) doesn't.

A corporation has a vested interest in regulation, in your examples, when those regulations constrain another corporation from doing things that affect the first corporation's bottom line. The second corporation in this example, do they or do they not have an interest in the EPA regulating them?

If you believe that businesses act in their own interests, then we still need an EPA in this case.

I don't believe that corporations always act in their own best interests, but I don't think that I said that the EPA is not needed at all if they do. After all, part of acting in one's best self-interest is avoiding actions that might kill off the customer base, or anger the customer base to the point where they take their business elsewhere. Just as a couple of examples.

[Slartibartfast]

And so, we stumble upon the fly in the free market ointment.

Freedom to fail is one of our most prized liberties, isn't it?

[russell]

Freedom to fail is one of our most prized liberties, isn't it?

I would say yes, it is.

My point was not that people should somehow be prevented from failing.

My point was simply that the assumptions that are the axioms of free market theory - everyone acts in their own enlightened best interest, everyone has more or less the same information, etc etc - basically don't match the reality.

Why am I a lefty? Because I think it's fine for the government to intervene in the economy when that's in the public interest.

Why would that be necessary? Because left to its own devices, the economy will often run off of the freaking rails.

Why does that happen? Why doesn't the economy always balance itself in ways that are, generally, good? Because what the textbooks tell is so, isn't always so.

I recognize you were not necessarily arguing the opposite. Your statement caught my eye, and I commented on it, that's all.

Whenever I hear people making suggestions about public policy that are based on theories of economics, I always think of this joke.

[Turbulence]

On the one hand, you say most corporations have a strong interest in the EPA performing its regulatory duties, while on the other hand you come up with an example where one company (beachfront hotel) has a strong interest in the EPA doing its duty, while another one (waste disposal company) doesn't.

Perhaps you're confusing "most" for "all"? I don't see any contradiction here....

I thought this was obvious, but maybe not, so I'll try and flesh it out. In a resort town, most (but not all) businesses depend on the beach being safe enough to keep the tourists coming. Every hotel, every restaurant, every dive shop, every trinket shop needs the tourists. A medical waste disposal company doesn't sell to tourists; it doesn't care about the tourists all that much. But the cost of disposing medical waste is a really crucial immediate issue; that's much more important than whether some tourists step on a syringe on the beach.

A corporation has a vested interest in regulation, in your examples, when those regulations constrain another corporation from doing things that affect the first corporation's bottom line. The second corporation in this example, do they or do they not have an interest in the EPA regulating them?

They have a small interest but it is outweighed by the profit they earn from dumping close to shore. So they have a net interest in polluting and not having an EPA stop them.

I don't believe that corporations always act in their own best interests, but I don't think that I said that the EPA is not needed at all if they do.

Forgive me, but I don't see how to reconcile that with your earlier statement "I think that if corporations really acted in their own self-interest, the EPA wouldn't be nearly as needed"; perhaps I'm missing something obvious.

After all, part of acting in one's best self-interest is avoiding actions that might kill off the customer base, or anger the customer base to the point where they take their business elsewhere. Just as a couple of examples.

True, but environmental pollution is easier to evade responsibility for than many other externalities. If you've got the market for medical waste disposal sewn up, it doesn't really matter if your customers are angry, does it?

[Hartmut]

I am currently dealing professionally with the problem of one company (or a group) trying to use regulatory agencies to harm the competitors. A certain important chemical is produced in different countries using three different processes. Each of these processes has one or more big environmental flaws. An anonymous group, which I believe for certain reasons to be US-based, currently feeds agencies of the EU and of EU member states with material that tries to discredit the process used in the EU (but not in the US). The third process (also not used in the US) is also presented as flawed (but not as much as the one of the EU). The conclusion is an open call to ban the process used in the EU. A switch would be hideously expensive, the replacement would be have higher operational costs and would have trouble getting a permit at the old locations due to saftey concerns (unlike the US plants they are located near population centers). In case of success there would be no production of the chemical in the EU for several years and after that the US product would be the cheaper one (unlike now). Given that the chemical in question has a huge growth potential and that currently the EU controls 90% of the market, the incentives for this maneuvre are obvious.

[Hartmut]

Sorry for being a bit cryptic in the post above but parts of the material I have to deal with are confidential, so I can't name names or too many details. No military or nuclear connections though.

[hairshirthedonist]

"Chemical" ...or Soylent Green?

[Hartmut]

green (for a certain value of green) ;-)

[Slartibartfast]

I thought this was obvious, but maybe not, so I'll try and flesh it out. In a resort town, most (but not all) businesses depend on the beach being safe enough to keep the tourists coming.

It's probable that in a resort town that's true. But I'm more interested in the general case.

Forgive me, but I don't see how to reconcile that with your earlier statement "I think that if corporations really acted in their own self-interest, the EPA wouldn't be nearly as needed"; perhaps I'm missing something obvious.

I don't see how the two statements are incompatible. One says that EPA intervention would (IMO, of course) be less necessary if corporations acted in their own best interest. Not completely unnecessary, but less necessary. I'm not seeing incompatibility; sorry. Maybe if you could explain the perceived conflict I can 'splain further.

If you've got the market for medical waste disposal sewn up, it doesn't really matter if your customers are angry, does it?

Good point. It'd be better if you'd remarked that the customers of said business(hospitals, etc) could be perfectly content, while the local populace might be the angry ones. There would undoubtedly be stuff like that going on, which is why I specifically avoided saying that the EPA would be not needed if corporations were to act in their best interests. I think that the general case might be rather less clear-cut than the one you describe. And in the general case, self-interest would keep people from breaking existing environmental regulations because they know there can be civil or criminal penalties for doing so.

That's part of self-interest, no? Being aware of potential consequences?

I think this line of argumentation you'd taken would work much better if I were arguing for eliminating the EPA, but I'm not doing that. The argument I'm making roughly analogizes to that we'd need less of a police presence if the general citizenry (including potential criminals) were to heed their own best interests more.

[Hartmut]

And in the general case, self-interest would keep people from breaking existing environmental regulations because they know there can be civil or criminal penalties for doing so.

...provided that one considers the likelihood to be caught high enough to worry.

[Turbulence]

It's probable that in a resort town that's true. But I'm more interested in the general case.

I think the resort town example has broader implications for the general case. All businesses need workers. It is more difficult to consistently show up for work and be focused on your job if you are either suffering from pollution-induced asthma or are caring for family members who are.

And in the general case, self-interest would keep people from breaking existing environmental regulations because they know there can be civil or criminal penalties for doing so.

Without an EPA, how exactly would that work? The EPA is responsible for most environmental rule making. One reason that the EPA exists is that Congress is not capable of making specific fine-grained environmental regulations. Sans EPA, there are no environmental regulations, which means that there can be no "crime" associated with breaking the non-existent regulations. As for civil penalties, I really don't see how that could work. How does a hotel determine where the waste on the beach came from?

It'd be better if you'd remarked that the customers of said business(hospitals, etc) could be perfectly content, while the local populace might be the angry ones.

But that's not true. Even if the hospital is enraged, if there is only one supplier in the area, they're going to use them, because the alternative is shutting the hospital down. You can't run a hospital without a waste disposal contract.

Slarti, FWIW, the point that you raised that I feel is most mistaken is "Corporations on the other hand would probably just as soon do without the EPA and other regulators and see those as a hindrance. Who needs the EPA are people." I think I've demonstrated that that's just not true.

[Slartibartfast]

I think the resort town example has broader implications for the general case. All businesses need workers. It is more difficult to consistently show up for work and be focused on your job if you are either suffering from pollution-induced asthma or are caring for family members who are.

Who needs the EPA are people." I think I've demonstrated that that's just not true.

Interesting. It sounds as if you just demonstrated that it is true, or at least partially true.

I think that we're having some overlap of agreement, but somehow we're not communicating. I blame myself.

Without an EPA, how exactly would that work?

Again (let me quote myself, here): I think this line of argumentation you'd taken would work much better if I were arguing for eliminating the EPA, but I'm not doing that.

...provided that one considers the likelihood to be caught high enough to worry.

Even completely amoral self-interest has to balance the likelihood of getting away with it against the possible consequences if you should get caught. The blind belief that they won't get caught is what has stupid criminals getting their stories published on failblog and the like.

[Turbulence]

Interesting. It sounds as if you just demonstrated that it is true, or at least partially true.

I noticed that you deliberately cut out a portion of the quote. In so doing, you changed the meaning of my comment. This behavior is not consistent with honest debate. If you engage in sufficiently selective editing, you can find contradictions in anything.

There are other points I could make, but once another party in the discussion engages in this level of mendacity, I don't find it worth my time.

[Slartibartfast]

Mendacity? I too will flounce from the thread.

This isn't the first time you've accused me of doing something I have not done, and probably won't be the last. SS, DD.

[Gary Farber]

Turbulence responds to Slartibartfast:

I don't believe that corporations always act in their own best interests, but I don't think that I said that the EPA is not needed at all if they do.

Forgive me, but I don't see how to reconcile that with your earlier statement "I think that if corporations really acted in their own self-interest, the EPA wouldn't be nearly as needed"; perhaps I'm missing something obvious.

Yes. They're two quite different statements, not at all contradictory. That's what you're missing that's obvious.

We all have blind spots at moments when something doesn't make sense to us. Usually if we come back after more sleep, or later, it then makes sense to us, though sometimes it may still need to be restated in other words.

In this case, among the several differences between the two statements, one is an "if" statement, and the other is not.

I noticed that you deliberately cut out a portion of the quote.

Funny, I notice your quote is right where I can read it. I notice that you also only quoted part of what you responded to. What do you suggest is an objective standard for quoting in a discussion thread that won't allow for accusations of mendacity?

I suggest you not, in fact, accuse others of mendacity. Period.

It's a mind reading claim, it's a failure to act as if the person you are interacting with is in good faith, and it's disruptive of civil and meaningful conversation. It's vilification and abusive of other commenters. I trust you take my point.

Kindly don't accuse others of lying. Suggest they're mistaken: that's fine. But unless you somehow have proof of intent to lie -- and I'd ask how you couldM have such proof: please don't make such accusations here against other commenters.

Thanks, Turbulence.