Corporate Tax Makes US Strike Out

By Chris Freind

Imagine a baseball team with a self-imposed rule requiring its players to brandish a 50-ounce bat, while the other teams use the standard 32-ounce slugger — a huge difference when facing 95 MPH pitches.

Inarguably, there would be two results:

A. The team with the dumb rule would be in last place, for swinging significantly heavier bats would produce fewer hits, and thus fewer runs.

B. The players and coaches on that team would flee to greener pastures — namely teams without such a self-defeating rule. And players’ values would immediately rise because their productivity would increase. Less restrictive rules would free up players to focus on what they do best, and the extra coin in their pockets would provide even more incentive to work harder.

Common sense clearly dictates that the last place team re-evaluate its policies, make the necessary adjustments, and halt the exodus of its players. How? By allowing its players to use lighter bats, thereby creating a winning environment and achieving a financial windfall in the process.

Naturally, it would be insanity to go in the other direction — digging in even further, and threatening sanctions against anyone leaving the team.

Even a team so obtuse as to establish such a counter-productive rule would undoubtedly see the error of its ways and rectify a bad situation. Right?

Wrong. Welcome to the United States Congress, where both parties adamantly refuse to change one of the single largest factors keeping America in a stagnant, no-growth status: the world’s highest corporate tax.

The latest story regarding the onerous U.S. tax rate is making headlines — and waves — around the world, as American pharmaceutical giant Pfizer is attempting to buy Britain-based AstraZeneca (so far, four offers have been rejected). While Pfizer’s target has an extremely promising pipeline of cutting edge anti-cancer medicines, there is another compelling reason to acquire the foreign-based firm: massive tax savings.

If the deal goes through, Pfizer would “re-domicile” in the U.K., substantially lowering its corporate tax rate. Britain finally got with the program a decade ago, when it awakened and realized that its rate — over 30 percent — was driving away business. Since then, the rate has been lowered steadily, attracting wealth and working capital to its shores. The Brits now levy a 21 percent business tax, which will soon drop to 20 percent and possibly lower.

Compare that to the United States’ tax rate of 35 percent, and it’s a no-brainer why any CEO favors moving overseas. Making matters worse, the effective rates are actually higher, once state and local taxes are factored into the equation. So in Pennsylvania, a company pays the highest federal corporate tax on the planet, on top of the nation’s second-highest state corporate net income tax (9.9 percent), on top of local taxes (and Philadelphia is, cumulatively, the highest-taxed city in America).

But that’s not all. There are even more job-killing corporate taxes in the Keystone State, including the capital stock and franchise tax, several gross receipts taxes, public utility realty tax, gross premiums tax, and financial institutions taxes, including the Bank and Trust Company Shares Tax, Title Insurance Shares Tax, and the Mutual Thrift Institutions Tax. Getting the picture?

Rather than fix the problem — steadily sky-high rates that stifle innovation, cause job cuts, place a cap on new hires, and take capital from the free market (where it could be invested in projects and people) — Congress and many states continue to stand by their draconian policies. Instead of asking why companies flee, and what can be done to halt the exodus, government instead advocates penalizing those with the foresight to seek a more secure location, with some congressmen even advocating to make it a crime for businesses to leave.

In Pfizer’s case, it could potentially save $1 billion per year in taxes. And the money saved could hire more people, increase research and development, expand operations, bolster ancillary business, and otherwise fuel a productive economic engine. Unfortunately, that investment would occur overseas, creating little benefit in America. All this because our elected officials are too lazy and or too stupid to do what must be done: lower the tax rates.

Several points to consider:

1. There will undoubtedly be partisan comments that it’s the Democrats’ fault. True, that party deludes itself into believing higher taxes and making the rich (both people and corporations) “pay their fair share” will solve all of America’s problems. But this, like every major challenge America faces, has its roots in bipartisan failure. When it controlled the White House and Congress, the GOP did absolutely nothing to improve the situation (ditto for Pennsylvania, where Gov. Corbett and record Republican majorities accomplished squat in improving the state’s business climate and tax code).

To reverse this, it will take a leader with a clear, articulated vision and strong will. Sadly, calls for such a person keep echoing back, unanswered.

2. It’s bad enough that our taxes are so high, but to make the sin mortal, the money raised is squandered. High taxes can never be justified, but the pill might not be so bitter if at least the money was wisely spent. We all know otherwise.

3. Are there some lobbyist-generated loopholes in the tax code that allow for some corporate deductions? Sure. But they amount to a Band-Aid on a gaping wound, nowhere near enough to stop the hemorrhaging. If they were the panacea, companies wouldn’t have left and countless others would not be considering the same (such as Pfizer and Walgreens). The solution is not smoke-and-mirror deductions that benefit a select few, but a total overhaul of the tax code so that it is universally fair and competitive.

4. Politicians immediately posture against proposed mergers that could take jobs and cash overseas. But it should be obvious that, if American tax rates were competitive, such an exodus could be avoided in the first place. Same goes for the states: if tax rates are too high, expect companies to migrate to more favorable locations around the country.

“We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” So said the great Winston Churchill, and his countrymen have taken note. Yet Uncle Sam remains stuck in the bucket, continually striking out while knee deep in a mess of its own making.

 

Corporate Tax Makes US Strike Out

Pho Street, Delco Dining

Just had a real nice dining experience at Pho Street Vietnamese Restaurant, 204 Baltimore Pike, Springfield, Pa.

The price was very reasonable, and the food was tasty and quite different from the other area Asian restaurants.

Will Springfield become hip?

Fear not for right across the street is McGlone’s Stanley Kup Inn.

Pho Street, Delco Dining

American Liberty Tours

Carris Kocher of Concord, Pa. is   embarking on a new venture this summer called American Liberty Tours. The tours will explore our legacy of liberty and faith.

The first tour, Philadelphia’s Foundation of Faith, is scheduled for Thursday, June 26, and Saturday, July 12.

The second tour, Philadelphia’s Legacy of Liberty, is scheduled for Saturday, July 26, and Thursday, July 31.

Each tour concludes with an evening dinner featuring a guest speaker and a  question and answer session.

Cost is $125 per person. For information visit American Liberty Tours online at http://americanlibertytours.com/

 

American Liberty Tours

American Liberty Tours to be held this summer.

Obama Impeachment

The Taliban are welcoming the five high- ranking leaders released from   Guantanamo Bay as conquering heroes while the American given in their exchange is being reviled by those who served with him who are calling him a deserter and worse.

There are even reports that he has converted to Islam and taught the enemy ambush skills and bomb making.

Regardless, Barack Obama clearly broke the law with this trade.

Yes, the House should begin impeachment proceedings. His defenders who hide behind pseudo-gentility, passive-aggressive intolerance and a false air of reasonableness must be shouted down.

Obama has endangered our safety, threatened our freedom and is ruining our standard of living.

Now even the left is saying he broke the law.

Those who voted for him and believed his lies must be shaken to the point where they concede their mistake.

His arrogance has led to incompetence and now he endangers us all.

He must go.

Obama Impeachment

Barack Obama, Vice President Joe Biden and Biden’s son Hunter who is a board member of Burisma Holdings which is Ukraine’s largest private gas producer and is allied with Russian interests.

Obama Impeachment

 

 

Blacks Still Await Educational Equality

By Kevin D. Williamson

Sixty years ago, the Supreme Court handed down its epoch-making decision in Brown v. Board of Education. The aftermath of Brown changed a great deal, from the role of the Court in our constitutional and political order to the national attitude toward civil rights and the very foundations of our political discourse.

It didn’t much change education.

There is much to say about Brown, and much that will be said. On the constitutional question, many conservatives at the time — and many conservatives now — shared the views of Barry Goldwater, who was himself an advocate of desegregation. “It so happens that I am in agreement with the objectives of the Supreme Court as stated in the Brown decision,” he wrote in The Conscience of a Conservative.  “I believe that it is both wise and just for Negro children to attend the same schools as whites, and that to deny this opportunity carries with it strong implications of inferiority.” Senator Goldwater’s complaint was constitutional:
To my knowledge it has never been seriously argued — the argument certainly was not made by the Supreme Court — that the authors of the Fourteenth Amendment intended to alter the Constitutional scheme with regard to education. Indeed, in the famous school integration decision, Brown v. Board of Education  (1954), the Supreme Court justices expressly acknowledged that they were not being guided by the intentions of the amendment’s authors. “In approaching this problem,” Chief Justice Warren said “we cannot turn the clock back to 1868 when the amendment was adopted. . . . We must consider public education in the light of its full development and in its present place in American life throughout the nation.” In effect, the Court said that what matters is not the ideas of the men who wrote the Constitution, but the Court’s ideas. It was only by engrafting its own views onto the established law of the land that the Court was able to reach the decision it did.
That was the view of most of the editors of National Review at the time, although the remarkable discovery I made — remarkable to me, at least — in my recent course of reading this magazine from its first issue through the middle 1960s is how relatively little we had to say about those questions. Brown  is remarked upon, and so is the Civil Rights Act of 1964, but compared with issues such as Communism and the Vietnam War, they occupy very little space, and they are considered mainly, though not exclusively, in legal terms. Those terms are of course important, and conservatives who are instinctively inclined to agree with Senator Goldwater would do well to consider the contrary opinion of Robert Bork, whose views on such matters are not to be discounted lightly:
The Court’s realistic choice, therefore, was either to abandon the quest for equality by allowing segregation or to forbid segregation in order to achieve equality. There was no third choice. Either choice would violate one aspect of the original understanding, but there was no possibility of avoiding that. Since equality and segregation were mutually inconsistent, though the ratifiers did not understand that, both could not be honored. When that is seen, it is obvious the Court must choose equality and prohibit state-imposed segregation. The purpose that brought the fourteenth amendment into being was equality before the law, and equality, not separation, was written into the law.
Justice Clarence Thomas, noting that Brown was roundly criticized for its reliance upon sociological and psychological theory, comes to a similarly straightforward conclusion. The Court, he writes, “did not need to rely upon any psychological or social-science research in order to announce the simple, yet fundamental truth that the Government cannot discriminate among its citizens on the basis of race.”

Conservatives, at the time, were torn between their desire that government should make no distinctions between the races and their antagonism toward judicial imperialism. Conservatives, then as now, also were deeply influenced by their belief that the law could only do so much to remake social realities. The Republican party has a remarkably consistent belief, from the Lincoln era through the present day, that the main drivers of salubrious social change must be free enterprise and economic self-improvement. It is for that reason that Senator Robert Taft of Ohio — “Mr. Republican,” the Senate’s leading conservative — floated a largely forgotten proposal in 1946 that would have been the most sweeping civil-rights reform since the Reconstruction amendments, focusing mainly on the problem of employment discrimination. David Freeman Engstrom revisited that episode in a  2006 article and documented that the Taft bill, unlike many similar earlier offerings, contained very strong enforcement mechanisms, giving it real teeth, up to and including the implementation of hiring quotas. The Taft measure won the support of the noted black labor leader A. Philip Randolph, but was rejected by the NAACP and the AFL, the latter in part very probably because, as Mr. Engstrom notes, the Taft plan would have “exposed union locals to regulation.”

The post-Reconstruction Republican party believed at its core that the South was backward because it was poor, rather than poor because it was backward, and this line of thinking was implicitly and sometimes explicitly extended to African Americans throughout the country, as it is today. The theory was that incremental social change, driven largely by improvements in economic conditions, would accomplish what mere de jure equality could not. James Burnham, writing on the tenth anniversary of Brown  in the June 2, 1964, edition of National Review, sharply criticizedBrown and the Court, partly for the attempt to superimpose the justices’ idealism over state and local law, as well as what he called “natural” processes, but because the post-Brown regime failed to deliver: “The verdict pronounced by the facts leaps to the eye, and is implicit even in the many tenth-anniversary recapitulations published in the journals that rate Brown  alongside the Ten Commandments and the Declaration of Independence. Brown is an abysmal failure, strictly on its own terms.” Mr. Burnham’s next paragraph could be published today with only a slight revision of the numbers:
The rate of school integration — the specific problem dealt with in Brown — has been no more rapid in this decade since 1954 than in the decade before 1954, when, without benefit of the Court, it was progressing slowly but continuously under the influence of economic change, social pressures, shifts in community sentiment, and the state of local law. Today, after a decade of Brown , 91 per cent of Negro students in the Southern and Border states still attend segregated schools. . . . In the Northern cities, the widespread de facto school segregation, resulting from residential patterns, has not been significantly changed.
Mr. Burnham’s observations in 1964 are not radically different from those of Eleanor Barkhorn writing in The Atlantic just last year. She notes that in 1969, after the Department of Education had begun robust enforcement of Brown , 77 percent of black and 55 percent of Hispanic students attended schools that were predominantly minority, whereas in 2010 the numbers had hardly budged for blacks (74 percent) and moved in the direction of more segregation for Hispanics (80 percent). And in 2010, she reports, more than 40 percent of minority students attended schools that were almost exclusively (90–100 percent) nonwhite.
It is for that reason that the constitutional debate, important as it may be, seems to me sterile.

Those Taft Republicans were in many, perhaps most, ways correct about the relationship between economic progress and broader social progress. Until after World War II, the South was desperately poor compared with the rest of the country, with incomes on average one-third those in the Northeast. The post-war economic boom was the main factor in changing that — no law, no public policy, no federal program was nearly as significant. For all the talk about economic inequality, sustained, robust growth and economic innovation can incrementally but radically change our quality of life. A middle-income American in the Northeast 100 years ago was much better off than a middle-income Southerner, but both were very poor by our standards. The difference between them was nowhere near so great in real terms as the difference between them and us.

African Americans have been as well served by economic innovation and growth as anybody — probably more so. There is no performance gap in, say, the car that a black family living in a largely black neighborhood in a largely black city can buy compared with what a white family in a white neighborhood in a white city can buy. A black family with $25,000 to spend has the same choices as a white family with $25,000 to spend. A black family that can afford a Mercedes has the same choices as a white family that can afford a Mercedes. The same is true for most products.

It is not true for education, the most important product that is still delivered on a Soviet central-planning model rather than through markets. A middle-class black family living in a largely black neighborhood is likely to be served by relatively inferior public schools. Across income groups, blacks are less well-served by the monopoly education system than whites are. That is not so much a product of the fact that African Americans are relatively poor, though they are, as of the fact that they reside in relatively poor communities. There are many young people in families of very modest means who benefit from going to schools in communities populated by people who are much better off than they. (I was one of those.) But that benefit is, statistically speaking, less available to black families. And as a practical matter, it is almost certain to remain so as long as K–12 education is dominated by model in which ZIP code is destiny.

Brown was and is important as a statement of principle, but law has a limited ability to change the facts on the ground. Free markets, on the other hand, remake the physical world anew with revolutionary speed. One of the footnotes to the Brown  decision considers possible remedies, one of which — “Negro children should forthwith be admitted to schools of their choice” — suggests what is still an excellent policy option, though one that should be applied universally rather than restricted to black students. The relative lack of black educational progress in the post-Brown  era highlights not only the deficiencies of the politically dominated model of economic production — and education is an economic good — but draws attention to the critical distinction between government funding of services and government provision of services. Food stamps have not interfered with innovation in the growing, distribution, preservation, or retailing of food, because government does not attempt to operate  farms, food-distribution networks, or grocery stores. It does operate schools, with consequences that have been disastrous generally but especially for African Americans. Even accounting for the income disparity between blacks and whites, the groceries, clothes, housing, electronics, automobiles, and other normal market goods is radically better for black Americans today than it was 30 years ago, to say nothing of 60 years ago. The same cannot be said of schools.

We may celebrate the sentiment behind Brown, but it would be far better to take meaningful steps to make the aspirations of 1954 into a reality sometime before 2054. When the politicians make their sentimental speeches about how far we’ve come since then, ask them where they stand on school choice, consumer-driven education, and other reforms. And then ask yourself which party is still living in 1954.

Kevin D. Williamson is roving correspondent for National Review.

Blacks Still Await Educational Equality

Blacks Still Await Educational Equality

Billion Dollar Budget Gap

The Pennsylvania House reconvenes  today, June 2, and  will begin finalizing a budget proposal for the  2014-15 fiscal year.  The deadline is the end of this fiscal year which is June 30.

The House will be in session for the vast majority of June to finalize a budget along with other critical legislative priorities, says State Rep. Jim Cox (R-129)

According to the Independent Fiscal Office, year-over-year revenue is actually up, with Personal Income Tax up roughly 5 percent over last year.

Cox says this is indicative of continuing employment gains and a growing economy throughout the Commonwealth.

He points out however that revenue growth overall has fallen far short of expectations, leaving a more than $1 billion budget gap between estimated and actual revenues.

Cox says the full report is in the PDF file at this link.

He notes that budget news can be tracked at the websites www.pahousegop.com and  www.pabudget.com.

Comments by legislators about the budget can be heard at http://www.youtube.com/user/PABudgetNews

 

Billion Dollar Budget Gap

Billion Dollar Budget Gap

Inquirer Owner Lewis Katz Dead

Lewis Katz

Lewis Katz, 72, the co-owner of the Philadelphia Inquirer whose side just won a bitter struggle for control of the paper, is among the seven killed in a plane crash last night, May 31, in Massachusetts.

The crash happened about 9:40 p.m. as  the Gulfstream IV was taking off from Hanscom Field in New Bedford for Atlantic City.

Also killed were passengers Anne Leeds, 74; Marcella Dalsey, the executive director of the Drew A. Katz Foundation and president of KATZ Acdemy Charter School;  Susan Asbell, 68, of Cherry Hill, who was a member of the planning committee of the Boys and Girls Club of Camden County; and three crew members whose names were not released.

Katz was in Massachusetts to attend an education-related event at the home of historian Doris Kerns Goodwin in Concord.

Former Pennsylvania Gov. Ed Rendell  declined to attend due to a another engagement. He would have been on the flight.

On May 27, Katz and H.F. “Gerry” Lenfest paid $88 milllion  to interests led by New Jersey insurance executive George Norcross III to achieve controlling interest of the Inquirer and its affiliated products.

Inquirer Owner Lewis Katz Dead

 

Pittsburgh Author Predicts Earthquake

David Nabhan, a former California teacher now living in Pittsburgh, says the West Coast is going to be hit by a massive earthquake before the summer is over.

Nabhan is the author of “Earthquake Prediction: Answers in Plain Slight” in which he says earthquakes can be predicted.

So he is predicting one.

Nabhan says the quakes occur when lunar and solar gravitational tides are conjoined and that they happen either at dusk or dawn.

“Just imagine the muscle required to move our oceans around every day. Our fractured fault lines are not immune to this,” he says.

He says the next big quake will be between July 12 and Sept. 9 between 4:45 and 7:55 a.m. or p.m.

Hat tip KDKA.

Pittsburgh Author Predicts Earthquake

Pittsburgh Author Predicts Earthquake