The problem is that regulators, behind our backs, empowered an AAArisktocracy to have special access to bank credit.

If we tax and redistribute all wealth, what shall we do the morning after the party? That question, which could be asked to Piketty, is similar in nature to the question we could make to John Plender, “The corporate aristocracy holding out against fiscal revolution” March 3.

Mr. Plender After getting rid of all that corporate cash by paying dividends, by paying taxes or by building private bridges to nowhere, then what?

Also, all that cash is not just forgotten cash lying under a mattress. Plender himself even mentions that “the corporate sector… in several big economies… now acts as a net lender to governments” which means, that the government already uses those funds, perhaps even paying negative interest rates on these.

Current regulations do not allow bank credit to flow in a fair way to those “smaller companies, which innovate and create jobs”, only because they are perceived as “risky”. That is why the liquidity coming from QEs is trapped, and blows bubbles around already existing assets. But Plender, like many others, just does not want to see this…I wonder why?

What “corporate aristocracy”, what we have is an AAArisktocracy that has been appointed by regulators as those who really merit bank credit.

PS. I have for many years argued that when corporations pay taxes, they dilute the citizens’ tax representation. And that is why when Plender writes that in the US corporate taxes were down to 1.6 percent by 2013, my first impulse would be, bring it down to zero now and save yourselves a lot of expensive economic and political distortions.

PS. Also, as a shareholder, in these times of possible extreme volatility, I do not like to hold shares in any company that has not hoarded ample reserves of cash… to fend off threats or to capitalize on opportunities

How the improvement of public finances is achieved, must be made a part of that “moral challenge”.

Sir, Martin Wolf correctly holds that “Improving public finances is a moral challenge”, since “Morality requires a balance between meeting legitimate demands upon the state and the cost of taxation. October 31.

Absolutely, but let us never forget that, in order to make the state more accountable to its citizens, avoiding forging a separate power, the how that fiscal balance is met, is also an issue of morality, not only a question of numbers balancing.

A government which receives its revenues mostly from citizens, by means of personal income and property tax will probably feel, one way or another, to be held much more accountable for its action, than a government which receives its income mostly from corporate taxes, sales taxes, and, in some extreme cases, like that of my poor Venezuela, from revenues like oil that governments believes to be rightfully theirs.

As a former Executive Director of the World Bank, I often toy with the idea of having WB evaluating how much governments around the world are revenue-wise accountable to its citizens, but, since the shareholders of the WB are governments and not citizens, perhaps that would just be too much to ask of it. Nonetheless, someone, on behalf us citizens, should be doing just that.

That way perhaps concepts like allowing governments to pay off their debts through inflation (financial repression) would be more understood as something immoral than as something financially savvy.

PS. And of course, while on this issue of morality, and though very few are concerned with it, let me remind you that for regulators to regulate banks without distorting the access to bank credit, favoring some and discriminating against others, should be a moral challenge too.

Corporations are not part of the community... and should not be allowed to dilute citizens´ tax representation

Sir, Michael Skapinker holds that “Business has lost its place in the community” August 14, and frankly I wonder if business ever had a place in the community. I mean, when a corporation does good things for the community, that is not really out of a sense for the community but because it is building up its image… a sort of clever advertising expense.

No, communities should be about people, and in this respect the tax on corporations should be 0%, because corporations should never have the possibility to dilute the tax representation of the citizens. In other words it is for the owners of the corporations to have a sense of community.

And with respect to Skapinker´s comments on bankers and their manipulations I agree…slap them hard on their fingers. But, Skapinker should not ignore that the manipulation of how bank credit is allocated in the real economy, performed by regulators with their risk-weighted capital requirements for banks, has been and is much more harmful for the society than any of the other bank manipulations currently spoken of… and in this respect Mark Carney´s behavior, as the current chairman of the Financial Stability Board, is “highly reprehensible” too.

http://perkurowski.blogspot.com/2012/03/my-tax-paradise.html