Wednesday, July 3, 2013

Digging Down

Today's lesson in class was likely the most useful one we've had so far. Mr. Coleman introduced us to the subject of "aggregate supply and demand in world economies." Most of what we've learned up until now has been building up to said subject. I'm getting a definite grasp on why countries do what countries do. Incentives play a large part in any huge decision. It really helps me think about how the world works, and I feel almost ignorant for not knowing this information before. I would go into detail, but I'd probably end up making a 4-page long blog on government subsidies and investments. I'd rather talk about the other main topic we covered: "Overseas Tax Evasion."

I've always known that many American corporations use lobbying and other such methods to evade taxes, but I didn't know how drastic it really was. According to "60 Minutes" numerous corporations use loopholes to base their headquarters in places like Switzerland and Ireland where the tax rates are under 20%. Technically, because their "headquarters" are in the country, they are taxed by that country. However, their headquarters can consist of nothing more than a mailbox. The CEO's and board members aren't actually in the country, but legally their headquarters are.

In one Swiss city called Zug, there are more corporations than there are people. Now while I disagree with these corporation's choices, I'm not completely against them. "60 Minutes" did a wonderful job of showing the incentives of the corporations so as not to put them in an evil light. Their justification is that the tax rate in America is simply too high, and hurts their profits. This then hurts their workers, and causes unemployment. The tax rate in America is one of the highest in the world, but I still think if they want to get out of paying taxes, they should at least truly move their headquarters instead of using a tiny mailbox.

Anyway, tomorrow is the the 4th of July holiday, and many of the Brown cohorts are going on a beach trip. I can't believe I'm saying this, but I'd actually rather have class. I was too interested today to go on a break so soon.
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