New book about capitalism; guess the author

Two days ago, I attended a lecture by the author of a new book full of good ideas.  The author is well-known, and articulates his book's theme with a charming sense of humor.  I enjoyed his presentation, and enjoyed meeting him afterwards. 

Read the following sample of ideas excerpted from his lecture and his book—then guess whether he has been pigeonholed as a "conservative" or a "liberal" by the media. 

• The corporate income tax should be eliminated.

• The biggest step toward solving the illegal immigration problem would be to eliminate all agriculture subsidies.

• Corporations are not evil—and that includes Wal-Mart.

• Our energy future will require "going nuclear" in a big way.

• We should be skeptical of any politician who blames a corporation for doing something that isn't illegal.

• Punitive fines that would cripple or destroy a company should not be allowed.

Is this well-known author a so-called conservative, or is he a so-called liberal?  What would the "liberal" mainstream media make of those ideas?  What would "conservative" talk-show hosts make of them? 

After you decide, click on the link below to see the answer.  Then buy the book; it is chock full of good, thought-provoking ideas. 

Which did you decide: liberal, or conservative? 

Here is the book: Supercapitalism.  The author is Robert Reich, the former Secretary of Labor in Bill Clinton's cabinet.  The ideas listed above are just a few of the points he makes, and it's important to see them in the context of the whole theme, so I recommend reading the book.  And check whether his book tour will be in your area soon; if so, go see him. 

Dr. Reich is a frequent guest on CNBC's Kudlow & Company (along with Steve Moore of the Wall Street Journal).  Reich and Moore are the "Dynamic Duo" on that show, and their exchanges are always educational and fun to watch.

Comments

[Boghie]

Thank you Steve...

I would not ever, absolutely ever, considered purchasing his book.

I will purchase it now.

[John Rogers]

I too have been having second thoughts about Reich. He has a blog, and there is a lot of good reading in it:

http://robertreich.blogspot.com/

[Jim]

Steve,

During his lecture did he describe/explain any of his thoughts on the personal income tax? I know that his blog post about raising the marginal tax rate on the wealthy to 50% and instituting an additional wealth tax generated some discussion in the economics blog world.

[Kevin]

That's odd, through the late 1990s he was the guy who was Always Wrong About Everything -- as constant as the Northern Star -- but admittedly I haven't heard a peep from him in years. Maybe he's found religion or had a stroke or something.

[Steve]

Jim,

I didn't hear him talk about the personal income tax; I'll have to look for that at his blog. However, his book explains the logic of abolishing the corporate income tax: it's "inequitable" because the corporate tax rate on the portion of the corporation's earnings owned by lower income stockholders is higher than those stockholders pay on their personal income taxes; and, conversely, is lower than the higher income stockholders pay on their personal income taxes. Abolishing the corporate tax and "treating all corporate income as the personal income of shareholders would rectify this anomaly." That's worthy of discussion; I'd like to see how losses would be handled, how mutual funds and index funds would handle the pass-through, and how it might affect investment and write-off decisions and incentives.

[Kevin]

Wow that strikes me as a terrible idea. He'd nail those "lower income" share holders with income tax on income they did not actually receive.

The burden of accurately allocating the appropriate share of a firm's income among shares and shareholders who day trade and own shares in the form of stocks, mutual funds, ETFs, index funds, derivatives(?)... every accountant in the free world would have to be reallocated to this task.

And treating corporate income as personal income is the very trigger for piercing the corporate veil for liability. Wow. OK that's the Robert Reich I know alright.

There's an argument for not taxing corporations and none of that is it.

[Steve]

Kevin,

From the book: "All corporate earnings would be treated as personal income. But shareholders would not feel the pinch. As their 'corporate' earnings accumulated throughout the year, the company would withhold taxes owed based on the shareholder's tax bracket... At the end of the year, shareholders would receive from the company the equivalent of a W-2 form..."; and "This integration of corporate and individual income already occurs in so-called S corporations..."

Sounds plausible to me, but I'd like to see a good discussion of the second-order effects before making up my mind.

[Kevin]

"the company would withhold taxes owed based on the shareholder's tax bracket."

Ahh. So he thinks corporations SHOULD pay tax in corporate income after all. Just not call it a "corporate tax" when the corporation pays tax on the corporation's income. Got it. And make the calculations really complicated.

See THIS is what always happens when someone drops Robert Reich into a conversation!

[realist]

What a bonehead idea! How would he handle overseas shareholders? What about retirement accounts? And what about a company that pays no dividends? Why should a low income taxpayer have to come up with cash just because he holds (and wants to keep) a stock that made money during the year.

If this ever got close to getting implemented, companies would re-register in other countries to avoid it. No wonder more and more firms now list on overseas exchanges.

[rg]

I think the tax a corporation pays is paid anyway by the customers of this corporation. Where else would they have the money from to pay this "corporation tax". This means "corporation tax" is actually a consumption tax.

What do you think?

rg

[Skydancer]

Reich's comments are nothing new under the sun. The only thing that is NEW about it is that it is coming from him.

Taxing corporate earnings among shareholders like S Corps has been bantered about by certain conservatives for the past couple of decades. The problem is that it wasn't well advertised, and I don't believe any Congressional bills were actually introduced, which would give some form of muscle to the concept. The fact that Reich actually embraces this actually amazes me - I didn't think he would have it in him to go above the partisan posturing. Oh, wait.... he's no longer our Labor Secretary, which explains why he isn't as political as a decade ago. Glad to see he's getting some non-partisan sense.

Anybody know how he feels about the Fair Tax? (See http://www.fairtax.org)

[Bob]

I guess Steve's point is that the book is written by what people would
believe is an avowed liberal. Point made. Based on the bullet points, though, this is nonsense.

- Instead of coming up with yet another goofy excuse for illegal immigration why not just do something ordinary like enforcing the law? What a concept!

- Let's see, I buy 1000 shares of Google on January 3, sell on Nov. 30th and I pay no taxes on their tax fee income.

- Can't do anything do destroy a company, eh? So, I guess that would give carte blanche to any miscreant(s) running said corporation to rape, pillage and steal as they saw fit because they are not personally liable. Okay, we ARE way to litigious these days but this is a bit too much of a counter, don't ya think?

[Andrew]

Bob-

The point about immigration was that without all our farm tariffs and subsidies (to the tune of billions a year), food producers in latin american countries would have a market for their goods (us). This would allow them to earn money at home, and stay there and prosper. Why would they risk coming here illegally when they actually had a shot in their own country?

As an added bonus, this would save the American People billions a year, and finally focus the world's most advanced farmers on producing more profitable crops than corn and wheat.

[Bob]

Andrew,

Good point. I hate that ADM gets a subsidy. In fact, get rid of all subsidies. Nevertheless, Mexico is a mess...a corrupt mess at that. Jeez, we have U.S. companies building plants right there and they can't get their act together. Isn't it about time we called them out?

BTW, illegal is illegal as far as I am concerned. If we need help make it on the up and up.

Folks, at some time we're going to have to stop the damn excuses. I'm really tired of it.

[Bob Beers]

Surrealistic to the point of weird.

Lauding a fellow who proposes cranking up taxes to eliminate the federal debt, all the while increasing government spending?

I'm a recent reader, trying to get my arms around this blog owner's advocacy for deficit spending. This doesn't make it any easier...

[Steve]

Bob B:
I was careful not to say I agree with everything he advocates. Nobody fits that bill. My point was that he does have a few ideas not only worth considering, but definitely not liberal-sounding. In fact, some sound libertarian—a pleasant surprise.

[joe]

Yes this is an open minded book - rather than ideological. I quite agree with his comments on corporate income tax - which honest experts tell us is actually paid by the ultimate consumers in raised prices to pay the taxes.

How did you feel about his comments and graphs on the growing income gap - in which his insights are just as penetrating?