Corporate Political Contributions as Tax Break

As most people know by now, Hostess Brands  -  the maker of such American junk food staples as Twinkies, Ding Dongs and Wonderbread - announced last week that it had failed to come to terms with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and its 5000 striking members, and thus was entering Chapter 11 bankruptcy to unwind the company, sell off its assets and eliminate 18,500 US jobs.

Call it the supertax. It could be coming to a province near you, if you make enough money. Taxing the rich has become a popular tactic for political parties across the country and campaign fodder in more than one provincial election. But the wealthy have other ideas and are exploring tax shelters like never before, says Don Carson, partner in taxation at accounting and consultancy firm MNP LLP. As marginal rates go up, the Holy Grail of wealth management is to reduce taxable income.

The air is just different owning business equity rather than earning a fixed income with a salary.  Can you smell it? I left Goldman in 2004 and have been downwardly mobile, career-wise, ever since.  I’ve also never been happier.

State comedians like to say "Let's tax the rich more!" They're missing an important point. The whole point of the State is to enable insiders to steal.Most insiders are negative taxpayers. The value of State subsidies is more than the value of any tax they pay. If someone is an insider and a negative taxpayer, there's no point raising their tax rate. If someone is negative taxpayer, the fact that they pay taxes is an illusion.Who decides how much a CEO gets paid?CEO: How much should I get paid?

Over the last year, I've frequently lamented the United States' increasingly absurd position on corporate taxes - maintaining one of the highest corporate tax rates in the world and routinely demonizing standard international business tax practices, while other countries (like Canada) are racing to eliminate tax burdens in order to enhance their domestic companies' global competitiveness.  Unfortunately, the last few weeks have produced a depressing cavalcade of similar news.

I tweeted something yesterday about how despite what conservative businessmen may say, the macroeconomic forecasts they pay for are invariably powered by Keynesian (or, I guess, New Keynesian) models. That was really supposed to be a joke about how the real business cycle theories beloved of certain free market types have failed the market test, but I was surprised to discover substantial pushback on the idea that businessmen are generally conservative.

Jonathan Bernstein submits: No, the Supreme Court hasn’t ruled lately on these two issues to my knowledge, at least not directly. But unless you’ve been living in a cave, you know that last Thursday, the 21st, the Court struck down longstanding restrictions on corporations’ political campaign spending. The headline highlights some likely results.