Crony Capitalism, a Brief Bit on Taxes, & a Better Way

Jim Geraghty notes that quite a few of the president's favorite "green jobs" companies aren't doing too well.

He touted Solyndra - bankrupt.  A company called Amonex - laying off 2/3 of its work force at a plant in Nevada.  EnerDel - bankrupt.  SunPower - struggling, likely going belly-up.  BrightSource - has had negative cash flow since its inception, would not be around at all were it not for government bail-out money, and likely won't be around much longer even with that money.  (You can follow his links for the supporting articles.)

There are other instances where Obama has funneled money to those politically connected in order to support questionable businesses.  Check out The Myth of the Robber Barons and you'll find that from the beginning of these kinds of federal subsidies to businesses that have political connections, they have fostered inefficiency, gouging of customers, poor quality, and lousy business practices that do not compete well.  Government subsidy of business is almost always money wasted.  It is no different now.  And it won't be any different when there's a Republican trying to subsidize Republican-connected businesses.  

It's time to stop all government subsidies of any business - and that includes agribusiness.  Cut the garbage out of the tax code, set a low, flat rate that taxes income only once.

What do you mean only once?  Well, you know that hulabaloo over Romney paying only about 15% in taxes?  That's on investment income.  That money was already taxed at the corporate level at 35%.  Say you own stock in Company A.  That company makes a profit and pays 35% in taxes (soak the evil corporations, right?).  They then distribute what's left of that profit to their shareholders as dividends - and they get to pay 15% of that in taxes.  So Company A made $2,000,000 in profit.  Uncle Sam takes $700,000 and the remaining $1,300,000 is distributed to shareholders who then pay another $195,000.  So of the total $2,000,000 profit, Uncle Sam takes $895,000 - 44.75%.  If you are unfortunate enough to make that profit in states like New York or California or Illinois, even more of it is confiscated by the state governments (who also tax both the corporation and the individual shareholder).

These governments then give that money back to the companies that donate money to their campaigns, hire their friends or family members, or use them as lobbyists once they're out of office.  Obama is not the only president to do this - he's just more brazen.  And the only reason he's more brazen is because he's confident the media will never call him on it.  He's a Democrat.  But if you think Republicans (Gingrich, when he was speaker was quite adept at this) don't do it, you're nuts.  So we need to stop it all together - earmarks, subsidies, tax credits, guaranteed loans, and all the rest of these money-laundering tools need to go.