What the government gave, it took away...then the lawyers got involved
An interesting story in StarTribune on Medtronic's adventures in Puerto Rico offers insight into what has become a trendy idea for raising government revenue: closing tax loopholes.
The story, by Bloomberg business news, basically shows how the government created tax breaks to encourage businesses to move some operations to Puerto Rico to help the impoverished country create jobs.
Many companies made hug investments and saved billions in taxes. But then a few years ago, the government decided it needed the money and removed the tax breaks.
Not wanting to lose billions in sales and million in taxes, the companies moved addresses of those business to tax havens like Grand Caymen and Switzerland.
Now they're all in tax court fighting what is sure to be a long battle.
The lesson here for the government is that if you're going to take away tax breaks that can cost companies millions, they're going to see if they can't stop you, or at the very least, involve the government in a very long and costly court battle.
It's not "consume, consumer, consume, it's "investment, investment, investment"
My friend Louis Johnston, economics professor at St. Ben's and St. John's, directs his Twitter followers to a chart by Wharton School economic Michael Mandel with this important point. We may be wanting to create jobs, but net private investment in the economy is still very low.
Here's Mandel's chart.
Mandel argues government investment is at a 40 year low and now is not the time to be halting it especially since private investment is down as well.
Interesting topic, and one that doesn't get much play in mainstream media.
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