Email from College Professor Regarding Unions and Corporate Tax Avoidance

Here is an Email from Ari Kalechstein, Ph.D., Adjunct Associate Professor, Baylor College of Medicine, Department of Psychiatry regarding unions and corporate income taxes.

Ari writes ...

Dear Mike:

I was recently forwarded a link to your site. From my perspective, the articles included in your site are well—written, primarily because they are data driven. Because I invest in a manner that is consistent with your approach, I have no doubt that adds to the appeal.

Having said that, I have two concerns with some of your recent blogs. One is related to an issue that you address; the other is never addressed, but ought to be (Note: You might have, but I’m not aware of it). With regard to the former, you have made the case that unions are “legalized mobs” (Note: I am not, and never have been, a member of a union). From my perspective, at present, unions have ceased to articulate rational arguments on behalf of their respective constituencies. The unions demand increased salaries and benefits despite the fact that are economy is in a state of decline. Like you, I find the approach of these unions to be frustrating and, to some extent, astonishing. Their approach is not unlike that of the CEOs of large financial institutions, who pay themselves large bonuses despite the fact that they would cease to exist without the benefit of taxpayer dollars.

Despite the approach adopted by these unions over the past several decades, it is important to note that unions played an integral role with respect to protecting the working man. Unions advocated for safe working conditions, reasonable pay, health benefits, etc., which, at least from my perspective, are entirely reasonable. There was a time when unions served to protect workers from employers who would have shamelessly exploited and endangered them for financial gain. Thus, rather than suggesting that unions ought to be eliminated, it might be more sensible to suggest that unions ought to re—evaluate their priorities and their overall mission.

To my knowledge, I have never seen you prepare a column on the issue of tax evasion by large corporations, such as General Electric or News Corporation. These two corporations paid no income tax in 2009. If they are doing this, I can only assume that other multinational corporations are doing the same thing. If you’re going to target the unions and the working man as symbols of economic depravity, it seems reasonable to me that you would apply the same standard to corporations.

I’d be curious to hear your thoughts about this.

Sincerely,

Ari

My Reply

Hello Ari

If it was up to me I would dramatically lower corporate income tax, perhaps abolish corporate income tax altogether.

I have commented on this before in my blog.

Current tax policy begs corporations to take both jobs and money and hold it overseas. Small corporations unable to do what larger corporations are stuck. If we want to have a corporate tax, it needs to be uniform, and if we want to defer taxes on it, that should only be on money held in the US not overseas.

We have it ass backwards, encouraging the flight of both money and jobs.

In regards to unions, I have few problems with private unions although in general unions destroy competitiveness vs. non-union shops over time. Toyota vs. GM is a classic example.

The recent happenings at Boeing is another good example Please see Inside the Self-Destructive Minds of a Group of Idiots and a followup post Defense Contractor Employee Chimes in on Boeing and the Need for C-17s as perfect examples of destructive union behavior.

One problem I do have with private unions is the PBGC (taxpayer guarantee) of union pensions. I have other issues but they are minor in comparison with public unions.

At least with private unions there is a counterbalancing force and negotiation on both sides. In regards to public unions, there is no one watching out for the public. They should be illegal.

As a historical note, some of the blame for this mess goes back to President Kennedy and his executive order authorizing collective bargaining for union employees.

In a further exchange of emails, Ari noted he was a new reader, not familiar with previous posts on these subjects.

I welcome the chance to elaborate on many positions.

Tuesday, October 13, 2009: Thoughts on the Economy: Problems and Solutions

Thursday, February 26, 2009: Dear Mr. President, With All Due Respect ....

Tuesday, January 20, 2009: Open Letter To Congress On Sharing The Pain

Monday, July 28, 2008: Open Letter To Obama

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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