“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.
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Paul Krogman: Corporate Artful Dodgers
Tax Avoidance du Jour: Inversion
In recent decisions, the conservative majority on the Supreme Court has made clear its view that corporations are people, with all the attendant rights. They are entitled to free speech, which in their case means spending lots of money to bend the political process to their ends. They are entitled to religious beliefs, including those that mean denying benefits to their workers. Up next, the right to bear arms?
There is, however, one big difference between corporate persons and the likes of you and me: On current trends, we’re heading toward a world in which only the human people pay taxes.
We’re not quite there yet: The federal government still gets a tenth of its revenue from corporate profits taxation. But it used to get a lot more – a third of revenue came from profits taxes in the early 1950s, a quarter or more well into the 1960s. Part of the decline since then reflects a fall in the tax rate, but mainly it reflects ever-more-aggressive corporate tax avoidance – avoidance that politicians have done little to prevent.
New York Times Editorial Board: A Stronger Bill to Limit Surveillance
The Senate is about to begin debate on a bill that could, at long last, put an end to the indiscriminate bulk collection of Americans’ telephone records and bring needed transparency to the abusive spying programs that have tarnished the nation’s reputation.
The bill, to be introduced on Tuesday by Senator Patrick Leahy of Vermont, chairman of the Judiciary Committee, is a significant improvement over the halfhearted measure passed by the House in May. That legislation was notable for putting even Republicans on the record in opposition to the broad domestic spying efforts of the intelligence agencies, but its final version was watered down at the insistence of the White House.
Mr. Leahy said at the time that he wanted to write a stronger bill, and, after negotiating with the White House, he has. Both bills would stop the flow of telephone data into the computers of the National Security Agency, keeping the information with the phone companies, where it belongs. But the Senate bill takes a major step in limiting how much of that data the N.S.A. can request.
Despite obscene profits from monopoly power, government officials ignore evidence and squash challenges
The profit margins that federal regulators set for utilities should be decreasing, given the long downward drift of interest rates and the shrinking cost of capital.
Bizarrely, the opposite is happening: Utilities are raking in stunning profits at the expense of consumers.
Now the first in a raft of cases asserting that the Federal Energy Regulatory Commission (FERC) is letting utilities gouge customers by setting egregiously high rates of return may finally get a hearing.
Since utilities are legal monopolies with no market to discipline their pricing, only the vigilance of regulators stops them from causing irreparable economic harm by stifling growth, draining wealth from customers and distorting investment. Court rulings say FERC commissioners must “guard the consumer against excessive rates.”
The legal standard for setting utility rates is known as “just and reasonable.” Profits and prices are supposed to be balanced so both investors and customers get fair treatment.
FERC commissioners, however, disregard the just and reasonable standard, routinely ignore evidence and act more as agents of utilities than fair-minded regulators.
Robert Reich: The Increasing Irrelevance of Corporate Nationality
“You shouldn’t get to call yourself an American company only when you want a handout from the American taxpayers,” President Obama said Thursday.
He was referring to American corporations now busily acquiring foreign companies in order to become non-American, thereby reducing their U.S. tax bill.
But the president might as well have been talking about all large American multinationals.
Only about a fifth of IBM’s worldwide employees are American, for example, and only 40 percent of GE’s. Most of Caterpillar’s recent hires and investments have been made outside the U.S.
In fact, since 2000, almost every big American multinational corporation has created more jobs outside the United States than inside. If you add in their foreign sub-contractors, the foreign total is even higher.
Philip Pilkington: Fed’s targeting of asset bubbles leads to contradictions
Yellen’s comments on overvalued markets welcome, but finding the right solution is tricky
On July 15 the head of the U.S. Federal Reserve, Janet Yellen, announced during a Senate hearing about the current economic outlook that certain asset markets were overvalued. The charges mark a potential revolution in how central banks across the world will conduct their affairs. In her testimony, Yellen noted that valuations for low-rated “junk bonds” or corporate debt “appear stretched,” while “issuance has been brisk.” Similarly, in its full monetary policy report released the same day, the Fed said stocks for some social media and biotech industries appear significantly overvalued.
Much of this was not surprising. For months, commentators had said these trends of high valuation in risky and overvalued markets are unsustainable. But such confirmation from the most powerful banker in the world dramatically alters how central banks see themselves. Following the 2008 financial crisis, many central banks turned their focus to managing the financial market in a far more concerted manner than they did previously. For example, the banks intervened in the market to prop up asset prices by increasing the monetary base in the banking system and thus lowering interest rates, but it seems that they will now try to stop these prices from rising to levels they consider dangerous.
Peter Shrag: Unscrambling the California omelet
Why breaking the state into six is a terrible idea
There are many arguments in support of Silicon Valley venture capitalist Tim Draper’s view that California is too big, too diverse and too unwieldy to work efficiently as a state. With 38 million residents and growing; 13 TV markets; some 7,000 government entities, including cities, counties, water and mosquito abatement districts, school districts; and an ethnically and economically polyglot population, most residents feel closer to their local governments than to the distant politicians in Sacramento.
Draper’s remedy: an initiative for the 2016 ballot to divide California into six states to bring government closer to the people. One, the proposed new coastal state of Silicon Valley, which would include San Francisco and the high-tech suburbs to the south (where Draper lives), would have the highest per capita income in the nation, above Connecticut. Its neighbor to the east, the state of Central California (a region sometimes called California’s Appalachia), would be the poorest, poorer than Mississippi. That might be welcome to the rich taxpayers along the coast, but it would create monstrous problems for the have-nots. [..]
But this is a nutty idea, nuttier even than Draper’s costly school voucher initiative in 2000, which got trounced by a vote of 70-30. So perhaps this move is a very costly provocation to bring out some great new wave of disaffected rednecks with pitchforks, or to generate yet another great anti-establishment political upheaval like the tax revolt of 1978 or the recall of Gov. Gray Davis in 2003.