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Tag Archives: Corporate Taxes

Yellen’s New Alliance Against Leprechauns

Over the weekend, largely at the urging of Janet Yellen, the Treasury secretary, finance ministers from the Group of 7 — the major advanced economies — agreed to set a minimum 15 percent tax rate on the profits of foreign subsidiaries of multinational corporations. You may wonder what that’s about, or why you should care. So let me tell you about Apple and the leprechauns.Apple Inc. has vast global reach. Its products are sold almost everywhere; it has subsidiaries in a number of countries....

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Can the Rich Pay for a Better America?

The budget proposal released by the Biden administration last week calls for almost $5 trillion in new spending over the next decade — that is, outlays in excess of its “baseline” estimate of the spending that would take place without new policies. Some of the extra money would be borrowed, but most of it — $3.6 trillion — is supposed to come from new revenues. President Biden has, however, repeatedly promised not to increase taxes on households making less than $400,000 a year. And his...

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Republicans Are Still Waging War on Workers

Has the Republican Party, which has championed the interests of big business and sought to keep wages low since the late 19th century, suddenly become populist? Some of its rising stars would have you believe so. For example, after the 2020 election Senator Josh Hawley declared that “we must be a working-class party, not a Wall Street party.” But while Republicans have lately attacked selected businesses, their beef with big companies seems to be over noneconomic issues. It bothers them a...

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Trump’s Corporate Tax Cut Was a Flop

This article is a wonky edition of Paul Krugman’s free newsletter. You can sign up here to receive it.Hello readers! Until 2017 I had a blog at The Times that was distinct from my column; it was, for the most part, where I put my wonkier, less readable work, often the homework that underlay the regular column. It was, you might say, where I talked to other dismal scientists, although anyone could listen in.When The Times folded the blog into the regular online paper, I retained the ability...

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Biden, Yellen and the War on Leprechauns

In the summer of 2016, Ireland’s Central Statistical Office reported something astonishing: The small nation’s gross domestic product had risen 26 percent in the previous year (a number that would later be revised upward). It would have been an amazing achievement if the growth had actually happened.But it hadn’t, as government officials acknowledged from the beginning. It was, instead, an illusion created by corporate tax games. At the time, I dubbed it “leprechaun economics,” a coinage...

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Bidenomics Is as American as Apple Pie

SectionsSkip to contentSkip to site index House Democrats are hoping to pass President Biden’s infrastructure bill by July 4, because of course they are. The Biden team is making a point of wrapping its economic initiatives firmly in the flag. First came the American Rescue Plan; now we have the American Jobs Plan paid for by the Made in America Tax Plan.And why not? Trumpism was, in part, about the appeal of economic nationalism, so it makes sense to try to snatch away that appeal on...

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Incidence and Welfare Effects of Corporate Tax Cuts (Extremely Wonkish)

OK, folks, this is basically to scratch my own intellectual itch — later this week Senate Republicans either will or won’t enact the biggest tax scam in history, and analysis won’t make any difference. But inspired by the Furman-Summers beatdown of Republican economists lending cover to disgusting dishonesty by their political masters, I found myself looking for a simple analytical representation of the effects of cutting corporate taxes. By simple, of course, I mean for...

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Tax Cuts, Growth, and Leprechauns

Yesterday the Tax Policy Center released its macroeconomic analysis of the House tax cut bill. TPC is not impressed: their model says that GDP would be only 0.3 percent higher than baseline in 2027, and that revenue effects of this growth would make only a tiny dent in the deficit. But Brad DeLong reminds me of a point I and others have been making: focusing on GDP is itself misleading, because we’re a financially open economy with a lot of foreign ownership already, and a...

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The Tax Foundation Has Some Explaining To Do

I’m hearing from various sources that the Tax Foundation’s assessment of the Senate plan, which purports to show huge growth effects and lots of revenue gains from this growth, is actually having an impact on debate in Washington. So we need to talk about TF’s model, and what they aren’t telling us. The basic idea behind TF’s optimism is that the after-tax return on capital is set by global markets, so that if you cut the corporate tax rate, lots of capital comes flooding in,...

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Leprechaun Economics, With Numbers

Yesterday I noted that most discussion of the growth effects of the Cut Cut Cut Act, such as they may be, focuses on the wrong measure. GDP might go up because lower corporate taxes will draw in foreign capital; but this capital will demand and receive returns, which mean that part of the gain in domestic production is offset by investment income received by foreigners. As a result, GNI – income of domestic residents – will rise less than GDP. And surely, as in Ireland with its...

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