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I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get t

I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get taxed. There are lots of ways to reeive money hence lots of different taxes. It seems reasonable. If one form of income were not taxed then things would end up getting skewed in that direction.

travisp 11y ago
>I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get taxed. This is not true. While many countries do not do this, dividend payments are not tax deductible in the US. In fact, they are double-taxed (at both the corporate and individual level) which is one of the reasons/arguments for individual taxes on dividends being taxed lower than income tax rates.
- yequalsx 11y ago
  I believe the principle is that whenever you receive money you get taxed. There are some exceptions and money is taxed at different rates depending on the way you receive it. But for the most part the idea is that whenever you directly receive money there are tax implications. This seems reasonable to me. In the case of corporations and dividends to shareholders you are correct. I don't know of any other such examples.
yummyfajitas 11y ago
No, shareholders pay taxes on dividends. It's a more or less meaningless distinction - as a shareholder your business profits are taxed on the way in and again on the way out. If one form of income were not taxed then things would end up getting skewed in that direction. This is wrong. The problem is that different paths of money get taxed in different ways. If you buy stock, then sell it back during a stock buyback, you get taxed at one rate. If you receive dividends, you get a different rate. If instead of buying stock you loaned money, you'd be taxed at a third rate. Plus, to minimize taxes, people now need to minimize the # of times money moves rather than making the most productive investment. An additional cost of these various taxes result in the bizarre situation that you get more consumption if you consume today rather than in the future: http://www.themoneyillusion.com/?p=28842 http://www.themoneyillusion.com/?p=28842 Singapore (and Estonia) are doing it right, and the US is doing it wrong. The most economically efficient tax (besides properly calibrated pigouvian taxes) is a single tax on consumption by humans and the next best is a single tax on income by humans.
- yequalsx 11y ago
  With regard to shareholders and corporate and dividend taxes you are correct. My statements on this were wrong. The general principle I stated is the one employed in the U.S. Generally, when one receives money there are tax implications. There are some exceptions to this principle but this is the general idea. The different ways of receiving money have different tax rates and this causes a skewing of how "income" is begotten in the U.S. by the very wealthy. They prefer getting money via capital gains since the tax is less that route. I don't think one can reasonably argue that not taxing one form of income would lead to people preferring to get income via that tax free route. The objection I had to your original post is that the U.S. tax principle is bad. It is reasonable to tax all income streams. I don't know the optimal for each stream but given that taxes in the U.S. are low relative to the past 70 years suggests the rates aren't burdensome.
  - yummyfajitas 11y ago
    Yeah, I wasn't disputing that this is how the US does it. I was disputing that absent this, things would be skewed. The issue is not taxing personal income, the issue is taxing corporations. A nearly ideal situation would be to eliminate all corporate taxes and tax individuals at a fixed rate when corporate wealth is transferred to shareholders. The only better situation would be eliminating all income taxes and replacing them with consumption taxes. Unfortunately, this is a political non-starter - it would eliminate the ability of politicians to pretend they aren't indirectly taxing people when corporate taxes are raised.

travisp 11y ago

>I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get taxed. This is not true. While many countries do not do this, dividend payments are not tax deductible in the US. In fact, they are double-taxed (at both the corporate and individual level) which is one of the reasons/arguments for individual taxes on dividends being taxed lower than income tax rates.

yequalsx 11y ago
I believe the principle is that whenever you receive money you get taxed. There are some exceptions and money is taxed at different rates depending on the way you receive it. But for the most part the idea is that whenever you directly receive money there are tax implications. This seems reasonable to me. In the case of corporations and dividends to shareholders you are correct. I don't know of any other such examples.

yummyfajitas 11y ago

No, shareholders pay taxes on dividends. It's a more or less meaningless distinction - as a shareholder your business profits are taxed on the way in and again on the way out. If one form of income were not taxed then things would end up getting skewed in that direction. This is wrong. The problem is that different paths of money get taxed in different ways. If you buy stock, then sell it back during a stock buyback, you get taxed at one rate. If you receive dividends, you get a different rate. If instead of buying stock you loaned money, you'd be taxed at a third rate. Plus, to minimize taxes, people now need to minimize the # of times money moves rather than making the most productive investment. An additional cost of these various taxes result in the bizarre situation that you get more consumption if you consume today rather than in the future: http://www.themoneyillusion.com/?p=28842 http://www.themoneyillusion.com/?p=28842 Singapore (and Estonia) are doing it right, and the US is doing it wrong. The most economically efficient tax (besides properly calibrated pigouvian taxes) is a single tax on consumption by humans and the next best is a single tax on income by humans.

yequalsx 11y ago
With regard to shareholders and corporate and dividend taxes you are correct. My statements on this were wrong. The general principle I stated is the one employed in the U.S. Generally, when one receives money there are tax implications. There are some exceptions to this principle but this is the general idea. The different ways of receiving money have different tax rates and this causes a skewing of how "income" is begotten in the U.S. by the very wealthy. They prefer getting money via capital gains since the tax is less that route. I don't think one can reasonably argue that not taxing one form of income would lead to people preferring to get income via that tax free route. The objection I had to your original post is that the U.S. tax principle is bad. It is reasonable to tax all income streams. I don't know the optimal for each stream but given that taxes in the U.S. are low relative to the past 70 years suggests the rates aren't burdensome.
- yummyfajitas 11y ago
  Yeah, I wasn't disputing that this is how the US does it. I was disputing that absent this, things would be skewed. The issue is not taxing personal income, the issue is taxing corporations. A nearly ideal situation would be to eliminate all corporate taxes and tax individuals at a fixed rate when corporate wealth is transferred to shareholders. The only better situation would be eliminating all income taxes and replacing them with consumption taxes. Unfortunately, this is a political non-starter - it would eliminate the ability of politicians to pretend they aren't indirectly taxing people when corporate taxes are raised.