Economic policy reports, blog postings, and media stories of interest:
Jared Bernstein provides a useful reminder that while most businesses are small, most workers are employed at large businesses.
So, summing up, small businesses, say those with 100 workers or less, account for a minority of both workers and payrolls, and are not the primary engine of job growth.
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Why then all the favoritism in policy circles, which is especially problematic if you listen to the one-sided agenda of their guy on the Diane Rehm show (e.g., his organization is against extended unemployment benefits because their members allegedly report that recipients won’t take jobs until their benefits run out; Larry Mishel, along with a bunch of folks who called into the show, did a good job of calling him out)?
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In part, because they need and deserve help. Larger firms have fewer credit and cash flow challenges, nor do they operate on such tight margins. It’s easier for larger firms to sell into and expand foreign markets, which is especially useful to them right now, as that’s where the growth is.
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But the political clout of small businesses and the misrepresentations of folks like the guy on this show are a big problem in our politics. In this regard, small is not beautiful.
Jonathan Cohn of The New Republic raises some interesting questions in an account of the demise of the CLASS Act, which would have helped American pay for long-term care like nursing homes.
We know conservatives don’t like universal health insurance if it means government coverage. We know conservatives don’t like universal health insurance if it means a private coverage with a mandate. And, based on their reaction to CLASS, we know conservatives don’t like universal health insurance if it means a private coverage without a mandate.
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But if they don’t like any of those options, what’s left? Could it be that conservatives just don’t like universal health insurance at all? That they simply don’t believe it’s possible or worthwhile to make sure everybody can pay their medical bills, the way every other developed country does?
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It sure seems that way.
Economic policy reports, blog postings, and media stories of interest:
TaxVox explains why a temporary tax holiday for firms that return foreign profits to the U.S. is “still a bad idea.”
The reality, sadly, is quite different. There is no evidence that a similar break created any new jobs when Congress tried it in 2004. Instead, most of the repatriated dollars went to shareholders in the form of dividends or stock buybacks (which raise equity prices).
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Yet, multinationals are salivating over the prospect of a holiday. Jesse Drucker over at Bloomberg reports that 160 lobbyists are working the issue. Even Apple and Google—normally bitter corporate rivals—are singing from the same hymnal.
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No wonder. The [Sens. Kay and John] Hagan-McCain bill would allow firms to pay just an 8.75 percent tax to bring home overseas earnings—far lower than the top corporate rate of 35 percent. They can get the rate down to 5.5 percent if they increase payroll in 2012 (not hard if the economy improves as many expect).
And, in an added twist, TaxVox notes the following:
But with corporate tax reform in the wind, a holiday today could provide an extra windfall. Here’s why:
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Corporate tax reform could include both a lower rate and a shift to a territorial system, which would exempt foreign earnings from any U.S. tax (and require overseas firms to pay U.S. tax on what they earn here). But the real key will be the transition from today’s rules to the new system. It is likely, given big budget deficits, that earnings already sitting overseas would be taxed at a rate higher than 5.5 percent or even 8.75 percent. So, savvy multinationals would much rather bring the dough back now at an extremely low rate and avoid paying a bigger transition tax in a couple of years.
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It’s a win-win. Maybe they get lower rates and reform. If not, they’ll get a big break today and perhaps another holiday down the road. Sweet.
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