TWO TRUTHS ON TAXES25 August 2014 | By ken in Society
Stranded on the Margins of Consciousness?
We can usually handle two sets of opinions, without having to conclude that one is wrong. But what about two truths, two conflicting sets of facts?
We have started getting accustomed to two truths about unemployment: the official government statistics that count the people looking for work and, then, the “adjusted” figures that include the profoundly unsettling numbers if those who have given up looking. Much of the media – at least the liberal media – have noted the second set of figures when the official ones are released, but every time we have to be reminded that the story is worse than it first appears.
It’s not hard to image the motivation behind the persistence of this disparity. Among other things, we all prefer the more optimistic story – and government officials do too, as that makes them look better as well.
Now we are confronting two truths about corporate taxes, as Andrew Ross Sorkin reminds us. “For years, chief executives have complained bitterly about the United States corporate tax code, arguing that it is too complicated and that rates are too high . . . . It is a compelling narrative.” But, Sorkin mildly notes, “it may be wrong.”
The official tax rate for corporations is 35%, but Edward D. Kleinbard, a professor at the Gould School of Law at USC and a former chief of staff to the Congressional Joint Committee on Taxation, comments: “Whether one measures effective marginal or overall tax rates, sophisticated U.S. multinational firms are burdened by tax rates that are the envy of their international peers.”
“What?” exclaims Sorkin in mock astonishment, noting Kleinbard’s revised figures: “Companies paid, on average, 12.6 percent, according to the Government Accountability Office . . . by deliberately stashing piles of cash abroad.”
It’s not difficult to grasp why companies continue to complain about a system they have successfully gamed. By keeping up a barrage of attacks, they preempt efforts at reform that could lead to higher and more appropriate taxes. Moreover, since voters dislike taxes themselves, they tend to be sympathetic.
But, more interesting is why we keep two sets of records. My guess: Because two competing truths keep us befuddled, uncertain or confused, as a result of which we are more likely to dismiss the issue. It is difficult to get upset or take action about what we don’t clearly understand.
Those who issue the official figures are clearly not guilty of fraud. Facts are facts. To be sure, it’s not their job to provoke action of, even, stimulate discussion and debate. But they are unconsciously complicit in furthering confusion and inhibiting action. It is very clear that very few corporations, legislators, regulators or other officials want the tax system to change.
Kleinbart notes that our tax system “is highly distortive and inefficient.” That is how it “growed,” over the years, responsive to lobbyists, special interests, donations to congressional campaigns
But to whom, then, can we turn for the kind of understanding we need, the common sense grasp of economic issues that professional experts have little interest in providing?