U.S. Competitiveness Hurt by Tax Code

The AICPA reports

on a Wall Street Journal article

“A survey of Harvard Business School alumni found that the U.S. economy is helped by strong capital markets, universities and entrepreneurial zeal, but hampered by a weak K-12 education system, a complicated tax code and a dysfunctional political system. According to the poll, 41% of respondents expect lower benefits and wages for American workers and only 27% forecast an improved environment for most Americans.”

For those or you who thought that the ability to think is educated out of HBS grads, apparently you’re not entirely correct. 

The problem with lists like this is that often good ideas are listed right next to horrible ideas. In this case the horrible ideas are only two, but if they gather steam, they could hurt the American economy more than these perceived problems are hurting it right now.

The first error is really not so bad as all that. It’s just patting themselves on the back by including the university system as an economic plus. Although this is widely debatable, in my opinion it’s at least in doubt. The University system and its partnership with the government is pumping out way to many unqualified, unemployed graduates with advanced degrees and burdening all students with two decades of student debt repayment. This is as much havoc with the stagnant housing market as the blow up in 2008.

The second error is way more dangerous due to it’s popularity with a large portion of our knee jerk voters … “a complicated tax system is hurting our economy.”  Much to your surprise I suppose, that’s obviously false. It hooks the wrong cause to the wrong effect. It isn’t the complication that is hurting the economy, it’s the high tax rates and high taxes. The citizens surrendering their U.S. citizenships and all the corporations inverting to foreign corporations are not doing that because of a complicated tax system. They’re doing it to escape the high U.S. taxes.  And, as I pointed out before, at least in the case of the corporations, they would not be diligent if they didn’t pursue inversion.

This is evidence of weak thinking on the part of HBS, which is apparently endemic to the institution.

Or sophistry. This is my new favorite word. … Sophistry is a rhetorical art form which relies upon ingenuity, fallacies and specious effectiveness rather than soundness of argument. It’s probably disingenuous to blame the inaccuracies in this article on HBS. But, after all, they are a convenient scapegoat.

The last thing we want is tax reform. Pro tax increase people love to hide behind tax complication as a reason for tax reform so they can raise taxes. I fervently hope every thinking person realizes the U.S. government is drooling about making tax reform popular so they can use it as a cover to hike taxes. They’ll reform taxes all right, just like they reformed the medical system, and we’ll see the results in our tax bill and our take home pay. Besides, who’s stupid enough to think that a simple tax code would work with our complex economy? If we did simplify it, Congress would start tinkering with it and five years later it would be just as complicated as it ever was. But we’d be stuck with the higher rates. 

Which is why the government drools when it reads articles like this in the popular press.

To locate the bullshit, always follow the money.

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