Beware CEOs Bearing Confusing Baseball Metaphors

A blog about business and economics.
July 9 2013 11:06 AM

Beware CEOs Bearing Confusing Baseball Metaphors

130709_baseball

Screenshot from usahomecourt.org

CEOs of large American companies would like their companies to pay less in corporate income taxes. That's sensible enough. I'd like to pay less taxes, and if I were a CEO (or even a lowly CFO or COO or pretty much anything with a "C" in front of it) I'd like to pay less taxes too. But the problem with proposals to reduce taxes on someone is that someone's ox has to get gored in response.

And a proposal for who to gore is exactly what you don't see at USAHomecourt.org, aka the home page of the Campaign for Home Court Advantage, aka A Bunch of CEOs Who Want Their Taxes Cut And Don't Realize That Baseball Isn't Played On A "Court". 

Advertisement

Now on the merits they have two big ideas. One is that the United States should switch to what's called a "territorial" tax system where it claims no right to tax the foreign-earned profits of corporations that are domiciled in the United States. The other is that the statutory rate should be reduced to a top combined state and federal rate of 25 percent. In combination, this would be a pretty big tax cut. And believe me, I sympathize. I am not a fan of the corporate income tax and I'd be all for scrapping it in favor of higher taxes on dividends and high-income individuals. But the second half of that proposition where we scrap it in favor of higher taxes on dividends and high-income individuals is an important part. More broadly, when you hear of proposals for "tax reform" that will lower rates and close loopholes the part where you close the loopholes is an important part.

That stuff's important because unless you know what the offsets are, you can't evaluate the proposal. In the House Republicans' most recent budget plan, tax cuts are rendered affordable by taking food and medicine away from poor children. That's rather different from a proposal where tax cuts are rendered affordable via higher taxes on dividend income. Different oxes. Urging Minnesotans to "hit a grand slam" or a strained metaphor about how cutting taxes on "foreign earnings will encourage American companies to bring their earnings home, invest more in the American economy and bring more American workers off the bench and back into the game" does not answer any of the important questions here. We actually tried a "holiday" on repatriating foreign earnings in the not-too-distant past, so we actually know what will happen, namely firms will use the money to pay dividends and do share buybacks. And of course that's what they'll do. Large profitable American companies such as Apple and Boeing are not cash-constrained in their ability to finance investments, they're constrained by the finite supply of profitable ideas about things to invest in.

But, again, using a territorial system isn't a crazy idea. Lots of countries do it. But the difficulty with making the switch has nothing to do with tortured sports metaphors and everything to do with the practical difficulty of paying for it. Business leaders who want a tax cut should show their cards. If they get their wish, who pays?

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

IOS 8 Comes Out Today. Do Not Put It on Your iPhone 4S.

Why Greenland’s “Dark Snow” Should Worry You

Three Talented Actresses in Three Terrible New Shows

The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.

Jurisprudence

Happy Constitution Day!

Too bad it’s almost certainly unconstitutional.

The Ungodly Horror of Having a Bug Crawl Into Your Ear and Scratch Away at Your Eardrum

My Father Was James Brown. I Watched Him Beat My Mother. Then I Married Someone Like Him.

  News & Politics
Weigel
Sept. 17 2014 2:57 PM ISIS Helps Snuff Out Conservative Opposition to Government Funding Bill
  Business
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
  Life
Outward
Sept. 17 2014 1:59 PM Ask a Homo: Secret Ally Codes 
  Double X
The XX Factor
Sept. 17 2014 1:26 PM Hey CBS, Rihanna Is Exactly Who I Want to See on My TV Before NFL Games
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Brow Beat
Sept. 17 2014 1:01 PM A Rare, Very Unusual Interview With Michael Jackson, Animated
  Technology
Future Tense
Sept. 17 2014 12:35 PM IOS 8 Comes Out Today. Do Not Put It on Your iPhone 4S.
  Health & Science
Bad Astronomy
Sept. 17 2014 11:18 AM A Bridge Across the Sky
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.