WSJ on corporate tax crackdown

This article from the Wall Street Journal is largely benign, but annoys me at several points. Below, I’ll go through the points in order. Some of my complaints are cheap and somewhat rhetorical; hopefully, some are more substantive. In many cases, it is not the WSJ writers themselves that annoy me, but just the outside opinions and issues they report.

First, the opening line.

The Obama administration will roll out details Monday of what aides are calling a far-reaching crackdown on offshore tax avoidance, targeting many U.S.-based multinational corporations and wealthy individuals.

Yeah, why doesn’t he “target” the droves upon droves of poor people involved in offshore tax avoidance? This just strikes me as silly. Who else would he be targeting on this issue?

Mr. Obama riled Wall Street last week by crafting a bankruptcy deal for Chrysler LLC that favored the United Auto Workers union over a series of lenders.

This is basically true, although in a more tragic sense; for example, the Union itself is not as excited as other people think it should be. Note that few on the left are championing this deal as a victory.

White House officials said the latest proposals simply follow through on Mr. Obama’s frequent criticism that current U.S. tax rules encourage multinationals to move jobs overseas. … A senior Republican aide termed the proposals a “revenue grab,” predicting they could end up driving more corporate operations overseas.

These kinds of economic assertions annoy me, because they seem based on sanitized ideology with little reference to the real world. For some reason, economic statements are given a privileged status wherein they do not require evidence, even if they are being reported in a major news outlet. A similar rule often applies in international relations. In some kind of near-vacuum, it’s probably true that current U.S. tax rules are a cause of outsourcing, where the only difference between places to do business is ability to evade taxes. In a related vacuum, changing these tax rules might cause corporate operations to run away. Which vacuum do we live in? Neither. I’m no macroeconomist, but I suspect there are all sorts of reasons why corporations bounce around the planet, and that some reasons override others. For example, it could turn out that even without tax evasion options, you can still make more money doing certain things in the U.S. than in, say, Germany or Japan. Add to this hypothetical scenario something like “infinite complexity,” and we approach the nirvana of genuine information.

I am also annoyed by the Republican aide labeling Obama’s proposal a “revenue grab.” First of all, of course it’s a revenue grab, and the administration all but says as much, as reported more than once in this very article. But more importantly, the proposals are consistent with long-standing criticisms of the corporate tax system, and so the principle can’t be as ad hoc a revenue grab as critics claim.

“If rules are changed on tax deferral and we are taxed in the U.S. on non-U.S. profit, this significant additional U.S. tax cost would adversely impact our ability to invest and grow our business in the U.S….and to compete against our foreign competitors who are not subject to this U.S. tax,” said John Earnhardt, a Cisco Systems Inc. spokesman.

Apparently Mr. Earnhardt considers it worth mentioning that foreign competitors aren’t subject to all U.S. taxes. Did anyone not know this? There are taxes all over the place that apply to some people and not to others. Maybe Mr. Earnhardt thinks the United Nations should be the arbiter of a worldwide tax code, or that representation is irrelevant to taxation (to pick a recent hot topic, if an MNC has special lobbying privileges relevant to political policy in the U.S. but not in Japan, why shouldn’t it also have special burdens associated with this corporate citizenship?).

Lastly, here’s an interesting example of journalistic framing of a story. Near the end of the piece we read:

Still, the proposal is far less dramatic than what many companies had feared: a complete repeal of the deferral regime.

But notice that much earlier in the piece we read that “The sweep of the administration’s plan took some tax experts by surprise.” So: should we be surprised at the extent of the Obama proposal, or should we be surprised at its restraint? I don’t expect the WSJ to tell me how to feel, but again, I’m no macroeconomist, so somebody has to do it.