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Also, the US has one of the highest corporate tax rates in the world. If you can go to Ireland and pay something close to 10%, its a no brainier. The tax rate

by tmaly 11y ago

Also, the US has one of the highest corporate tax rates in the world. If you can go to Ireland and pay something close to 10%, its a no brainier. The tax rates are pretty crazy in the US if you think about it. A single person small business just getting started still has to pay 33% of their profit even if their profit is $1,000 for the entire year.

ams6110 11y ago
A single person small business is likely an LLC or S-Corp and taxed on the owner's individual form 1040.
calbear81 11y ago
I'm not a tax expert but this statement is true if you only look at the statutory corporate tax rate before deductions and tax credits are taken into account. Once those are done and you used a weighted average based on country size, then the US is not that much higher (http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth-about-corporate-tax-rates http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth...). I don't disagree that tax reform is necessary but taxes help pay for the infrastructure, safety, and public goods that we all tap into and take advantage of.
- prostoalex 11y ago
  > I don't disagree that tax reform is necessary but taxes help pay for the infrastructure, safety, and public goods that we all tap into and take advantage of. People say that, but with specifics to corporate taxation the tax revenues in question flow to US Treasury. US highways are funded by a combination of Highway Trust Fund, gasoline taxes and road tolls, public safety and other goods such as parks and libraries are funded by local property and business taxes. The way the funds flow is set up currently, increase or decrease in corporate taxation would not result in change of funding for the local services you mentioned. Federal government is not sending a bonus check to Cupertino, CA or Redmond, WA because they managed to squeeze a few extra billions off Apple or Microsoft.
  - calbear81 11y ago
    My examples should have been more national such as the military, our National Parks and all of the national institutions that provide public goods that we share in like the FDA, NASA, etc. Even then though, don't local and state projects often tap into federal matching grants such as for major infrastructure projects?
- tmaly 11y ago
  You should probably also count man hours needed to consider deductions, amortization schedules, tax credits etc. Doing corporate taxes is another layer of work that adds a burden to running a business. Simplified tax systems do not have these costs.
drzaiusapelord 11y ago
Corporate tax in the US is like your personal income tax. The rate is kinda bullshit because you get so many deductions and exclusions. The term you're looking for is "effective tax." For US corporations it was 12.6% according to the GAO in 2010: http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/ http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r...
- AnthonyMouse 11y ago
  Effective tax is calculated after corporations use all of the things generally described as "loopholes" to reduce their effective tax rate. Measures to close said loopholes would obviously increase it.
- snowwrestler 11y ago
  But that number takes into account the capital that companies park overseas to avoid the nominal rate. So it's not a good counterargument to the idea that companies park money overseas to avoid the nominal rate. Put another way, the low effective rate doesn't disprove that 35% is too high--it demonstrates the effect of having such a high nominal rate. It would be better to have a competitive nominal rate. Then companies would move their capital based on business, not tax, reasons. For example, the U.S. tax rate provides an incentive for overseas manufacturing. If Apple moves capital from Ireland to China to invest in a new Foxconn factory, they pay a lower tax rate than if they moved the same amount of capital from Ireland to Texas to invest in a new factory there. Even if all the business costs were same between China and Texas, China would win on the tax costs. It's an impediment to bringing more manufacturing jobs back to the U.S., and a one-time tax holiday will not solve it. The rate needs to be permanently lowered. Unfortunately the people most upset about the decline of U.S. manufacturing jobs tend to see the corporate tax rate as a tool of justice, and therefore reject lowering the rate on principle.
drjesusphd 11y ago
> A single person small business just getting started still has to pay 33% of their profit even if their profit is $1,000 for the entire year. That's simply not true; somebody is lying to you. A sole proprietorship's profit is passed as regular income to the proprietor.

by tmaly 11y ago

ams6110 11y ago

A single person small business is likely an LLC or S-Corp and taxed on the owner's individual form 1040.

calbear81 11y ago

I'm not a tax expert but this statement is true if you only look at the statutory corporate tax rate before deductions and tax credits are taken into account. Once those are done and you used a weighted average based on country size, then the US is not that much higher (http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth-about-corporate-tax-rates http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth...). I don't disagree that tax reform is necessary but taxes help pay for the infrastructure, safety, and public goods that we all tap into and take advantage of.

prostoalex 11y ago
> I don't disagree that tax reform is necessary but taxes help pay for the infrastructure, safety, and public goods that we all tap into and take advantage of. People say that, but with specifics to corporate taxation the tax revenues in question flow to US Treasury. US highways are funded by a combination of Highway Trust Fund, gasoline taxes and road tolls, public safety and other goods such as parks and libraries are funded by local property and business taxes. The way the funds flow is set up currently, increase or decrease in corporate taxation would not result in change of funding for the local services you mentioned. Federal government is not sending a bonus check to Cupertino, CA or Redmond, WA because they managed to squeeze a few extra billions off Apple or Microsoft.
- calbear81 11y ago
  My examples should have been more national such as the military, our National Parks and all of the national institutions that provide public goods that we share in like the FDA, NASA, etc. Even then though, don't local and state projects often tap into federal matching grants such as for major infrastructure projects?
tmaly 11y ago
You should probably also count man hours needed to consider deductions, amortization schedules, tax credits etc. Doing corporate taxes is another layer of work that adds a burden to running a business. Simplified tax systems do not have these costs.

drzaiusapelord 11y ago

Corporate tax in the US is like your personal income tax. The rate is kinda bullshit because you get so many deductions and exclusions. The term you're looking for is "effective tax." For US corporations it was 12.6% according to the GAO in 2010: http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/ http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r...

AnthonyMouse 11y ago
Effective tax is calculated after corporations use all of the things generally described as "loopholes" to reduce their effective tax rate. Measures to close said loopholes would obviously increase it.
snowwrestler 11y ago
But that number takes into account the capital that companies park overseas to avoid the nominal rate. So it's not a good counterargument to the idea that companies park money overseas to avoid the nominal rate. Put another way, the low effective rate doesn't disprove that 35% is too high--it demonstrates the effect of having such a high nominal rate. It would be better to have a competitive nominal rate. Then companies would move their capital based on business, not tax, reasons. For example, the U.S. tax rate provides an incentive for overseas manufacturing. If Apple moves capital from Ireland to China to invest in a new Foxconn factory, they pay a lower tax rate than if they moved the same amount of capital from Ireland to Texas to invest in a new factory there. Even if all the business costs were same between China and Texas, China would win on the tax costs. It's an impediment to bringing more manufacturing jobs back to the U.S., and a one-time tax holiday will not solve it. The rate needs to be permanently lowered. Unfortunately the people most upset about the decline of U.S. manufacturing jobs tend to see the corporate tax rate as a tool of justice, and therefore reject lowering the rate on principle.

drjesusphd 11y ago

> A single person small business just getting started still has to pay 33% of their profit even if their profit is $1,000 for the entire year. That's simply not true; somebody is lying to you. A sole proprietorship's profit is passed as regular income to the proprietor.