by Pgl responded to the post below… “Corporations… make profits appear in low-tax countries; but there’s very little real production or employment behind those profits…. Tax-haven countries… show… ridiculously high levels of profits relative to wages… because the profits aren’t being earned where they’re being reported…. Ireland….” Krugman is referring to transfer pricing manipulation. One would have hoped tax reform would make enforcing the arm’s length standard more vigorous by beefing up the IRS team and making the tax code less complex. The 2017 tax act made the system a lot more complicated which has led the tax lawyer profession very happy as they know get to bill a lot more hours further gaming an overly complicated tax code. And of course the
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Dan Crawford considers the following as important: Taxes/regulation, US/Global Economics
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pgl responded to the post below…
“Corporations… make profits appear in low-tax countries; but there’s very little real production or employment behind those profits…. Tax-haven countries… show… ridiculously high levels of profits relative to wages… because the profits aren’t being earned where they’re being reported…. Ireland….”
Krugman is referring to transfer pricing manipulation. One would have hoped tax reform would make enforcing the arm’s length standard more vigorous by beefing up the IRS team and making the tax code less complex. The 2017 tax act made the system a lot more complicated which has led the tax lawyer profession very happy as they know get to bill a lot more hours further gaming an overly complicated tax code. And of course the Republicans in Congress are slashing IRS budget.
In other words, Republican leaders are not serious about any of this as all they want is more tax cuts for the rich.
Bradford DeLong writes at Grasping Reality with Both Hands:
There were “economists” last fall telling us that the Trumpublican tax cut was going to raise real wages in America substantially and soon: Robert J. Barro, Michael J. Boskin, John Cogan, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, John. B. Taylor; Larry Lindsey and Douglas Holtz-Eakin; James Miller, Charlie Calomiris, Jagdish Bhagwati; Kevin Hassett; Greg Mankiw; and the others. The people who last fall were telling us that the Trumpublican tax cut was going to raise wages by boosting growth by a number they decided was 0.4% per year—get us an extra 80 billion dollars of prosperity each year growing over time—all did so by pointing to the investment channel: (a) the tax cut would make investment more profitable, (b) we would then have about 800 billion a year of extra investment, (c) the added production made possible by that investment would be 80 billion a year, (d) and eventually wages would rise. (a) has happened. (b) was supposed to take effect quickly—this year. But (b) has broken down: business investment “should” be jumping from 13% to 17% of total production. It is not. So far it has jumped from 12.4% to 13.1%—one-sixth of the jump we were promised: (Dan here,,,follow the link to data)