Financial Transactions Tax

Google Double Dutch

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Sounds like a sex act, doesn't it? In a way, it is. Business Week has a HOWTO on not paying U.S. corporate taxes, courtesy of Google. shell game

Next time you hear about how we need to lower taxes to make America more competitive, think of this story. International tax law must be a lucrative career. Grand Puppeteer of global money flows, all to play nation states and their corresponding corporate tax codes against each other. The game is to not pay taxes anywhere.

To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector. Its rate since 2007 has been 2.4 percent.

All perfectly legal, Business Week explains how Google profits end up in Bermuda, and shows how multinational corporations pit national tax codes against each other.

A lesser evil of a transaction tax

You know where I stand, I hate the very concept of a transaction tax, but if we were to have one, then let me go the "lesser evil" route. Because as it stands, what's been proposed will not work. First the guy who posted about financial markets was spot on. You'll kill what's good about the markets along with bad. Companies need capital, hell the government now needs a stock market because it owns so much stock (as citizens, it would be nice if Uncle Sam made a profit on that stock so it could redeploy that capital to say infrastructure, I'm just saying.). Robert challenged me to come up with an alternative to meet his objections, so I will give it a go.

Taxing Wall Street to Fund Jobs and Recovery on Main Street

This was written and posted by Mitchell Hirsch last week at Working America's 'Main Street' blog, where he is a featured guest blogger. Mitch was kind enough to email me his HTML text to cross post it here. 

What if Wall Street's financial transactions could be taxed to help fund job creation and economic recovery on Main Street? Politically the idea is vastly appealing, especially in the wake of Wall Street's bailouts and the resurgence of its obscene bonus plans. But as it turns out a financial transactions tax also makes a lot of economic sense.

The basic idea is fairly simple. Impose a small percentage tax of anywhere from .02% to .5% on things like securities trades and derivatives transactions, thereby generating an estimated $150 billion annually.