Special tax breaks for investment in O-zone is another source of distortion… and of gaming.

Sir, Gillian Tett writes that Steven Mnuchin the US Treasury secretary [told] luminaries such as Lloyd Blankfein, John Paulson, Howard Marks and Bill Ackman [to] put money into “development” projects in exchange for massive tax breaks.” “Populism is the true legacy of the crisis” August 31.

For a starter, given the presence of Goldman Sachs “luminaire” Lloyd Blankfein there I wish Mnuchin had also mentioned imposing special confiscatory taxes on any profits derived from financing regimes that notoriously violate human rights... namely giving odious credits.

As to tax breaks for investment in special opportunity zones O-zone, my objection would be the same like what I have against the risk weighted capital requirements for banks. It distorts the allocation of credit/investment to the real economy and it can be gamed.

@PerKurowski

Gillian Tett writes of Apple’s $200bn of cash, as if that money was all stashed away in Tim Cook’s mattress

Sir, Gillian Tett writes that Apple could “repatriate some of the $200bn of cash that it stores overseas”, “It is hard to lure companies’ cash back home” September 9.

And Tett indicates three ideas about what could be done with all that money.

“One, for example, is that tax breaks will only be given to companies that raise employment and investment. Another is that the Federal government should use tax revenues for infrastructure spending. A third, is that companies should store some of their repatriated corporate cash in government-issued infrastructure bonds.”

But that cash is not stashed away in Tim Cook’s mattress, it is invested somewhere somehow, and for the government to lay its hands on a part of it, some assets would need to be sold.

For instance what if all that cash is already invested in US Treasury yielding basically nothing? What if it is invested in shares?

And why should “tax breaks will only be given to companies that raise employment and investment”? It might not be the role of those companies to channel funds to those who could produce jobs. Apple, is not a bank!

Frankly, the strategic plan of our current economic thinkers is as lousy as can be.

It states: With high risk weights, limit the fair access to bank credit of SMEs and entrepreneurs, those who could create the jobs for the future; and with low risk weights increase the possibilities of government bureaucrats building bridges to nowhere.

Is that what you want Sir. If you do, I would then have to ask you: Do you have children and grandchildren? “No?” Ok, that explains it all.

@PerKurowski ©