Judgement Call

The fix for corporate income tax

May 31, 2013 05:30 UTC

Apple CEO Tim Cook (C) , CFO Peter Oppenheimer (L) and head of tax operations Philip Bullock are sworn at a Senate hearing in Washington, May 21, 2013.  REUTERS/Jason Reed

“It’s not fair,” my younger son would rant when, as a 5-year-old, life did not go his way.

I resonated to my son’s childhood dyspepsia as I listened last week to Apple’s chief executive officer, Tim Cook, defend his company’s use of perfectly legal accounting tricks to insulate billions upon billions of dollars of profit from U.S. taxes. His description before Congress of the way Apple skips past a loophole-ridden corporate tax code violated my sense of fair play as well as my populist instinct to go after fat cats.

But now a few days have elapsed. My inner economist has regained control. Yes, the corporate tax code cries out for change. But the right change would involve as many pro-business carrots as it does anti-business sticks.

Here’s a ridiculously smart plan, developed by economists who think about this subject all the time, that would raise some corporate rates but lower others. On balance, the plan would leave us with a simpler tax code that cuts out corporate trickery and encourages new investment.

Hating government while pining for gold

Apr 25, 2013 06:15 UTC

Gold? Why not bitcoins or conch shells?

A return to a gold standard makes perfect sense if your contempt for government runs so extreme that it trumps any consideration of consequences. As a practical matter, though, the idea of reinstating the gold standard lies somewhere between silly and perverse.

Yet passionate Republican stalwarts – including David A. Stockman, budget director under President Ronald Reagan, former presidential candidate Steve Forbes and former Representative Ron Paul of Texas – call for junking our dollar standard in favor of returning to a gold standard. The Republican Party’s national platform last year called for a commission to study a conversion to gold.

There’s also a new, fun money in town: a virtual currency known as bitcoins. Or consider conch shells: Societies from Africa to the South Pacific used seashells as money until well into the 19th century – though they wouldn’t fit well in modern pants pockets.

The fiscal crisis nears – or not

Mar 12, 2013 06:05 UTC

Few economists preach spending cuts as a cure for high unemployment. Yet that’s exactly what Congress decided when it imposed, starting March 1, across-the-board spending cuts (the “sequester”). Despite Friday’s mildly upbeat jobs numbers, the economy remains limp, with 15 million or so unemployed individuals who want to work. Federal spending cuts won’t make their plight any better.

Congress has known for quite some time that the federal budget will turn sour in 10 to 15 years, with expected outlays far outstripping expected revenue. For complicated, if not odd, reasons, Congress now feels compelled to do what it ordinarily shuns: cut federal programs and raise taxes. That might seem politically brave and responsible. But brushed up against facts, the case for Congress taking swift action wobbles, hitting wrong targets at the wrong time.

Of the many reasons politicians offer for cutting federal spending during economically straitened times, two cry out for attention. First, many liberals and conservatives say, Congress needs to stanch soaring federal spending. Second, conservatives say, federal programs are growing ever more intrusive, ever more threatening to private initiative.

Weighing immigrants’ economic power

Feb 1, 2013 13:14 UTC

“Now is the time to [reform immigration laws] so we can strengthen our economy.” So said President Barack Obama on Tuesday as he challenged Congress to give 11 million illegal residents of the United States a road map to citizenship.

“When you legalize those who are in the country illegally, it costs taxpayers millions of dollars, costs American workers thousands of jobs.” So said Representative Lamar Smith (R-Texas), senior member of the Judiciary Committee, earlier this week.

These statements contradict one another. One must be wrong.

Actually, both are.

There are powerful reasons to change the nation’s immigration rules, but economic necessity is not one of them. Yes, immigrants make a positive economic impact.  But little of the benefit, according to careful research, spills over to non-immigrant workers. The overall economy barely notices. Besides, there’s no evidence to suggest that illegal immigrants’ effect on the economy differs from that of legal immigrants.