The Perpetual Notion Machine

Back in the days before a Geek was a guy who sat in front of a computer sacrificing his eyesight to get rich organizing dots on a screen, a geek was a guy with big glasses and hair that looked like a neglected weed patch gone wild ( a look young males now spend hours trying to achieve).  Geeks in those days spent their days trying to invent a perpetual motion machine - trying to find out a way to attach springs, levers, weights and their momma's kitchen faucet into a machine that would be so frictionless that once it was set in motion it would run forever.

I believe a lot of those old Geeks must have gone into Government, because Government has become the closest contraption mankind has ever gotten to perpetual motion.   Nothing ever ends.

Take Corporate Income Taxation for example.  Lately Congress has been holding lots of hearings and giving lots of interviews and releasing press releases after just "discovering" that US tax laws allow Corporations to use accounting tricks to book income in other countries so they don't have to pay income taxes. 

If we hop in our time machine and go hopping back through the decades we would discover that Congress regularly fairly regularly "discovers" that US tax laws allow Corporations to avoid paying income taxes.   I don't know how far back one would have to go to find the first point in time that Government "discovered" the tax law allowed Corporations to avoid income tax, but I would imagine it would be a couple years after the first income tax was enacted.

Some might think it odd that the organization that creates the income tax law seems to be schizophrenically oblivious then outraged by how the law works in practice.

There is a real problem behind this of course.  Every government in the world wants to tax corporations and is looking for an excuse to do so, because Corporations are both really wealthy and they are...well....not people (at least to everyone but the US Supreme Court).  Cold, impersonal legal machines constructed to generate money.  As the global market expanded every country wanted to tax a corporations income as soon as the corporation set foot on their shores.

So iinternational agreements long ago provided that corporations are only taxed on the income they make in the particular country.  This is sort of intuitively fair since, if a corporation is being taxed by another country for the income generated in that other country, it would not be fair for any other country to tax the same income.  Of course the international agreements were not put in place because of fairness, the formulas were arrived at after decades of haggling to avoid marketplace anarchy that would undermine the global economy.

But since then Corporations have learned to shift income away from high tax countries to countries that have little or no tax who use the low taxes to attract a corporate presence.  The long ago international agreement has been turned from something that was intended to not make corporations have to pay twice into a tool to allow them to avoid paying taxes even once on big chunks of their income.

Congress is looking into the problem due to the fiscal difficulties we are experiencing.  They will hold hearings for months - maybe years - and probably not much will happen in the end.

It seems to me there is a really simple and elegant solution to the problem through a simple change in the fundamental explanation for what is being taxed.  Tax the right to access to your countries market, and measure it by the income from sales of your product within the country.  Sort of a product specific sales tax.  Not that the lawyers wouldn't find their way around any tax scheme, but at least we could pretend the problem was solved for a few more years.