Third Party & Independents Archives

July 08, 2007

TaxPayers Need Return on Investment

It is long past time that taxpayers adopt the concept that their taxes used to subsidize research and industries require a return on investment. This concept is new, and voters must make it their own, if Congress is to even acknowledge its existence. Make it a 2008 campaign issue and halt the practice of everyone receiving a return on their investment except the taxpayer.

ROI, or, return on investment, is a cornerstone of economics. It says that if an investor provides money to a new venture, or business proposition, start-up company, etc, that they are entitled to a share of the profits if that venture or business is successful. Taxpayers have been investing in new technologies and saving corporations with bailout money for decades. But, they have not seen their taxes lowered by returns on those investments paid back to the government. This great fleecing of the taxpayer must end.

Here is a classic example of how taxpayers are yet again going to be ripped off. HR6 just passed and it is a bill

To reduce our Nation's dependency on foreign oil by investing in clean, renewable, and alternative energy resources, promoting new emerging energy technologies, developing greater efficiency, and creating a Strategic Energy Efficiency and Renewables Reserve to invest in alternative energy, and for other purposes.

Note the word 'investing'. Now what this means is that U.S. taxpayers are going to put up money to fund basic research at our Universities and private research firms. Also, tax dollars will be given to oil companies, chemical companies, auto manufacturers, power companies to subsidize not only research but, the costs of implementation of the new found research results. What are these companies and corporations going to pay the taxpayers back if these new technologies produce net profits for decades to come? Zero, zip, nada!

The taxpayers are currently treated by Congress and the wealthy special interests as if every public dollar invested in any government underwritten research or technology was a complete failure, resulting in no investment return payment back to the taxpayers. If the shoe were on the other foot, these companies and corporations would be in revolt against the government for not receiving a return on their investments. This double standard must end.

U.S. taxpayers have footed part of the bill for everything from Velcro to Computers, from road sign paint, to herbicides and carbon particulate scrubbers. But not a single dime of 100's of billions of tax dollars has ever been returned to the tax payer for their investment in that companies or corporations profitable discoveries and innovations. In fact, tax payers who purchase the products not only paid to invent them, but, continue to pay profits to those companies through purchase of those inventions for years, even decades afterward.

And government spending continues to grow, and taxes or the national debt also continues to grow. Every time Congress agrees to bailout a Chrysler, or underwrite fusion energy research the taxpayer should be entitled to a very small percentage of royalty payable to the U.S. treasury for every profitable sale by that company or patent holder for as long as the bailed out company remains profitable or that patent holder is receiving profits from the taxpayer invested new technology.

Folks, by 2012 America will be close to a 10 Trillion dollar national debt. And entitlement spending, global climate change, further terrorist attacks, natural disasters will all continue drive that number up until America is bankrupt. Corporations are going multi-national. Which means many of the corporations who benefit from American tax dollars in this way, will send their returns overseas to build jobs, infrastructure and markets in foreign countries like China, India, and Indonesia. The time has come for tax payers to demand the same right any investor in any other venue already enjoy, a royalty or investment risk premium on their investment dollars sent to private corporations and companies which underwrite invention, new technologies, and profitable new product.

Make this an issue in 2008 and beyond, and help move America toward a future where deficits and mountains of national debt are not the wave of the future strangling our nation economically and financially.

Posted by David R. Remer at July 8, 2007 11:59 AM
Comments
Comment #225309

Good article David. I have to admit I never thought if it that way. But it does make sense.
If I invest in a company I expect to receive part of the profits. When the Government invest in companies, if it’s research or a bailout that’s my money and your money being invested.
I agree we should be getting a return on that money.

Posted by: Ron Brown at July 8, 2007 02:04 PM
Comment #225321

Excellent point David. I’ve always felt this way, unfortunately every time I tried to explain it to someone they looked at me like they just had a shot of novocaine in their face.
This is certtainly an issue that needs to be forcefully exposed.

Posted by: Ken at July 8, 2007 03:44 PM
Comment #225323

David, Yes Yes Yes, Add a decent price for natural resources into this idea while your at it. OBTW you must be a socialist or..or..or whatever if you are entertaining the thought of corporations having to pay for government research in our free market economy. Good for you.

Posted by: j2t2 at July 8, 2007 05:01 PM
Comment #225325

Cheaters David.
Thats the problem here, these corporations can fudge the numbers to show they aren’t making a profit on these products. How can we enforce collection of the real profits? I think the “wholesale” no tax deal needs to go away. Apply the use tax not only to individuals on what they purchase but to corporations as well. Some will scream about double taxation but I can’t see any other way to get them to pay their share. We also need to discourage the relocation of our industry to foriegn lands by applying tariffs to their goods that remove the advantage for moving in the first place. We should also add an environmental tariff, based on how a particular companies “greenness” is in line with our regulations or not. How can we allow our companies to move to other countries and exploit the environment there? If China et all will not enforce these environmental regulations, we should.

JT

BTW David I find the breadth of topics you are knowledgable about quite impressive.

Posted by: JayTea at July 8, 2007 05:06 PM
Comment #225326

It is pointless to talk about ROI regarding taxes, because all taxation is theft.

http://logicandreasonweb.blogspot.com/2007/05/taxation.html

Posted by: Eric Arthur at July 8, 2007 05:26 PM
Comment #225333

JayTea, it’s really not an issue. Corporations must declare their profits before they can pay dividends to their investors. The equity and bond investors will keep them honest about their profits, I assure you. Once they declare, a 1/10th percent share of the profits from the patented product developed by taxpayer research or subsidy should remand back to the Treasury. It’s not a tax. It is a ROI which corporations are quite familiar with.

Of course, that would mean some corporations would reject federal dollars for their research. But, in the end, it would all wash out, because if the nation needs the research, and the government is willing to partially underwrite it, competitive companies will step in take up the research. And that would continue to be good for entrepreneurial activity as well as research and development and reduce pressures on taxes for all.

Posted by: David R. Remer at July 8, 2007 07:23 PM
Comment #225334

j2t2, I just learned a couple weeks ago, the federal government is getting 1.85 per month per cow grazing and fouling federal national forest land, including a great camping spot I found in the Jemez mountains near Santa Fe.

$1.85 per head/month is way too for public land grazing and fouling. It could be doubled and still be way below the cost of commercial livestock feed. You raise a great point about increasing the return for consumed and extracted public resources.

Posted by: David R. Remer at July 8, 2007 07:27 PM
Comment #225345

Anyone got any data on overall return on federal research dollars? How do you measure an investment that’s changed the very way we live our lives?

I do know that microprocessors, modern medical technologies, modern agricultural methods, the internet, and tons of other technologies and applications got kickstarted through government research and information dessimination. I do know that Japan’s technological edge in automobiles came about through government/industry research. What would be our economic output now without government research?

Our modern understanding of the very nature of the universe owes much to government investment.

Posted by: Gerrold at July 8, 2007 09:06 PM
Comment #225348

Here’s something from a few years ago about the value of medical research, albeit both private and public.

At any rate, government research in general is in the public domain. Anyone can take advantage of it. Let me ask this: if NASA had patented the microminiturized technologies it developed that are now at the heart of our consumer computers, then it would, presumably, be receiving royalities. Why wouldn’t that mean we’d pay more for computers? How would we have come out ahead? Of course, the incredibly rapid development and proliferation of computers we’ve seen in the last several decades have transformed our economy, have partially enabled our incredible economic output. How exactly would we have benefitted by forcing consumers — ourselves, that is — from covering the cost of royalties on products developed from our tax dollars?

Posted by: Gerrold at July 8, 2007 09:24 PM
Comment #225354

David why not just end corporate welfare instead?

“Corporations are picking our pockets. Here’s how to stop them”

Everyone should read:
Cutting Corporate Welfare by Ralph Nader

Posted by: Richard Rhodes at July 8, 2007 10:45 PM
Comment #225406

Gerrold, the government has needs for R&D and innovation in technologies to deal with social and national needs. However, the government by definition is a non-profit organization dedicated to the purposes outlined in the Constitution and laws emanating from it. I.E., the government is not entitled to compete with private enterprise. That would give unfair advantage.

Hence, the need for government to invest in those innovations and technologies through contracts with private enterprise. But, there is no prohibition that I am aware of, that would prevent the Government from contracting for a ROI for its investment dollars to recover taxpayer dollars invested.

Posted by: David R. Remer at July 9, 2007 01:02 PM
Comment #225407

Richard, see my response to Gerrold above to answer your question.

Posted by: David R. Remer at July 9, 2007 01:03 PM
Comment #225546

david, In addition to the R&D and natural resources we should also take a look at charging those that ship across the oceans, and use our military for defense of their interests for our military presence worldwide. We spend more that all others combined on the military, lets get a fair price for defending other countries and multinationals. As a people the multinationals have sold us out yet they reap the rewards of the American taxpayers largesse with free military support. This form of corporate welfare could help ease taxes on working Americans.

Posted by: j2t2 at July 9, 2007 11:10 PM
Comment #225547

David R.,

I’m not opposed to the idea in principle. My concern is that such a step might limit research, especially basic research. The advantages that accure from finding stuff out are so enormous that anything that potentially threatens that process tends to make me wary. Considering that federal research accounts for such a miniscule fraction of the GDP, I just hate the idea that R&D could be made into some sort of scapegoat.

Posted by: Gerrold at July 9, 2007 11:12 PM
Comment #225593

Gerrold, I look at it as a boon to research. With Uncle Sam backing basic research it allows for longer term goals and some things that may not pan out financially yet be of benefit. And who knows a few things take off globally and the US taxpayers holding the papers on it why shouldnt they get a return on their investment. Extra dollars spent on higher prices here for the rights/liscense will be made up for by foreign dinero heading this way paying for the same liscense/rights.

Posted by: j2t2 at July 10, 2007 02:25 AM
Comment #225652

j2t2,

Maybe. If it didn’t limit research, I’d have no problem with it. The question is, how can we test the idea without de facto making it policy? I guess I’m making the “if it ain’t broke …” argument.

Posted by: Gerrold at July 10, 2007 01:28 PM
Comment #225659

j2t2, charging for our military’s maintenance of international stability in the end doesn’t work. Other nation’s quickly recognize that only one country in a sensitive area to American commerce needs to refuse payment, to kick start the American policy of reinstating international protection at our cost. America is not going to allow international instability to take place jeopardizing our economy just because foreign nations refuse to pay.

Posted by: David R. Remer at July 10, 2007 02:16 PM
Comment #225663

Gerrold, I don’t have a crystal ball, so, I can’t give a guarantee that shrinkage in basic research would not take place as a consequence of taxpayers receiving a return on investment for research dollars that generate proprietary patents.

But, to assuage your concern, I can offer this. Throughout the history of this country there has never been a time in which there were far more demands for every kind of tax dollar, than there were dollars to hand out. In other words, if some companies refused to take on research funded by government dollars, other entrepreneurial companies would step up to take their place. There is amply historical evidence to convince me that would be the case.

Hence, I don’t see basic research drying up as a result, or even shrinking. In fact, the potential exists that the returns could actually be reinvested in ever wider research on the people’s behalf, if the people were to watch that legislation like a hawk and sqwauck as needed as it is drafted, debated, and voted on.

Posted by: David R. Remer at July 10, 2007 02:29 PM
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