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The irony is, the US has the highest corporate income tax of anywhere in the world. Maybe if we eliminated corporate income tax (like most economists suggest[1]

The irony is, the US has the highest corporate income tax of anywhere in the world. Maybe if we eliminated corporate income tax (like most economists suggest[1]), foreign companies would be inverting here instead of the other way around. [1]http://www.dailykos.com/story/2014/8/25/1324505/-Eliminate-corporate-tax-seriously http://www.dailykos.com/story/2014/8/25/1324505/-Eliminate-c...

rblatz 11y ago
But is that adventageous to us? Inversions are mostly a paperwork related change from what I understand. So it wouldn't add any significant number of jobs, it won't increase tax revenues, and it could possibly increase the burden on our courts.
- zavi 11y ago
  It will increase tax revenue.
  - tallanvor 11y ago
    How would eliminating corporate income taxes cause tax revenues to increase? Trickle-down economics is quite clearly debunked, even if some people refuse to look at the evidence.
mdorazio 11y ago
As rblatz also points out, this argument just doesn't hold water. The only thing stopping companies from investing in the US right now is lack of demand / lack of disposable income. States are handing out massive tax incentives to try and get companies to actually create jobs, investments in R&D and capital expenditures can largely be tax deducted anyway, and yet large companies are still overwhelmingly choosing to downsize, offshore, and hoard cash on their balance sheets instead. If they could easily make more money by investing, they would, tax rates be damned. 66% of a new dollar earned is infinitely more than not earning that dollar at all. On top of that, what do we get in exchange for foregoing all corporate tax income that we currently receive? I have yet to see a compelling argument showing how this won't just be another trickle-down economics ploy that actually accelerates wealth inequality. Yes, I know the proposal is to kill corporate taxes and also increase capital gains taxes, but how is that better than just leveling the playing field so that all US corporations are taxed equally? I'm genuinely curious if there's a strong economic argument here beyond "everyone else does it this way".
- adventured 11y ago
  > The only thing stopping companies from investing in the US right now is lack of demand / lack of disposable income That's clearly not a problem. The US has one of the highest median household disposable income levels, thanks in part to low (compared to most of the developed world) middle class income taxes. It's over 50% higher than Sweden, Finland, Japan and Britain. It's also about 25% higher than Norway. And those figures are calculated before the dollar hit its recent highs in 2015. Americans have no lack of disposable income.
  - mzs 11y ago
    Unfortunately US is consistently ranked something like 32 or 33 out of 36 for inequality across population for countries in the OECD index. Basically Mexico, Chile, and Brazil are outliers by an order of magnitude and US trades spots among Turkey and Russia year to year, then every other country does better. It's also notable that of your examples all are better with Norway, Sweden, and Finland particularly good. Furthermore the OECD household net-adjusted disposable income does not subtract expenditures it probably should, for example not all of the medical costs. I have been averaging $13000 for one child alone over the last two years in expenditures that the formula does not consider. The year before that there was even more for my wife. In a household of five it adds up and there seems to be one outlier needing more medical care than the rest.
  - mdorazio 11y ago
    Sorry for the late reply. Are you referring to this? http://www.oecdbetterlifeindex.org/topics/income/ http://www.oecdbetterlifeindex.org/topics/income/ If so, I wasn't able to find median info on disposable income there for the US, which I think is a very important distinction from average. If not, can you please share another source since I'm very curious to see how it shakes out across the developed world. Also, I think it's also important to note that my original post was perhaps incomplete referring to disposable income generally. What's more important is growth in disposable income year over year, and related, growth in actual expenditures. For the US, OECD puts disposable income growth at just 0.8% year over year in the US since 2008. A population might have tons of disposable income, but if all of it is already being spent, then that doesn't help companies very much with demand - zero growth equals a zero sum game. Compare the US growth rate with that of China, which is 10x more [1] and also where many big companies have focused their investments in recent years. [1] http://www.tradingeconomics.com/china/disposable-personal-income http://www.tradingeconomics.com/china/disposable-personal-in...
marincounty 11y ago
This is Robert Reich original idea, and quote. "It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America. Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices." It sounds like a good idea, but capital gains are already high. My aunt lives in a house she bought for $25,000 in the 70's. She is far from well off. It's a crime what she's going to pay on capital gains if she sells her house. Yea, I know about the ways around the tax, but they have downsides. I'd be for this, if capital gains were tied to income. Maybe tied to the average income over the last 10 years? Right now it's the same rate for a billionaire, and the old lady surviving on social security. My aunt is taking the same percentage tax hit on the sale of her investment as the billionaire?
- nicobn 11y ago
  If you're talking about your aunt's primary residence, there is a capital gain exclusion of $250,000 (or $500,000 for married couples). Additionally, improvement costs, all sorts of taxes, fees, etc. can be excluded from capital gains, on top of the base exclusion. Obviously, in a high COL area, the sale price might be greater than the exclusion but it's pretty hard to argue that someone making a greater than 1,000% profit on an asset should not pay capital gain taxes on the gain above 1,000%. See: https://www.irs.gov/publications/p551/ar02.html#d0e301 https://www.irs.gov/publications/p551/ar02.html#d0e301 Your initial point still stands though. Capital gain tax rates are the same for everyone.
- deleted 11y ago
  [deleted]
- whyenot 11y ago
jay-anderson 11y ago
I think I could get behind that if we had higher top marginal tax rates and increased capital gains taxes (like suggested in the cited article).

rblatz 11y ago

But is that adventageous to us? Inversions are mostly a paperwork related change from what I understand. So it wouldn't add any significant number of jobs, it won't increase tax revenues, and it could possibly increase the burden on our courts.

zavi 11y ago
It will increase tax revenue.
- tallanvor 11y ago
  How would eliminating corporate income taxes cause tax revenues to increase? Trickle-down economics is quite clearly debunked, even if some people refuse to look at the evidence.

mdorazio 11y ago

As rblatz also points out, this argument just doesn't hold water. The only thing stopping companies from investing in the US right now is lack of demand / lack of disposable income. States are handing out massive tax incentives to try and get companies to actually create jobs, investments in R&D and capital expenditures can largely be tax deducted anyway, and yet large companies are still overwhelmingly choosing to downsize, offshore, and hoard cash on their balance sheets instead. If they could easily make more money by investing, they would, tax rates be damned. 66% of a new dollar earned is infinitely more than not earning that dollar at all. On top of that, what do we get in exchange for foregoing all corporate tax income that we currently receive? I have yet to see a compelling argument showing how this won't just be another trickle-down economics ploy that actually accelerates wealth inequality. Yes, I know the proposal is to kill corporate taxes and also increase capital gains taxes, but how is that better than just leveling the playing field so that all US corporations are taxed equally? I'm genuinely curious if there's a strong economic argument here beyond "everyone else does it this way".

adventured 11y ago
> The only thing stopping companies from investing in the US right now is lack of demand / lack of disposable income That's clearly not a problem. The US has one of the highest median household disposable income levels, thanks in part to low (compared to most of the developed world) middle class income taxes. It's over 50% higher than Sweden, Finland, Japan and Britain. It's also about 25% higher than Norway. And those figures are calculated before the dollar hit its recent highs in 2015. Americans have no lack of disposable income.
- mzs 11y ago
  Unfortunately US is consistently ranked something like 32 or 33 out of 36 for inequality across population for countries in the OECD index. Basically Mexico, Chile, and Brazil are outliers by an order of magnitude and US trades spots among Turkey and Russia year to year, then every other country does better. It's also notable that of your examples all are better with Norway, Sweden, and Finland particularly good. Furthermore the OECD household net-adjusted disposable income does not subtract expenditures it probably should, for example not all of the medical costs. I have been averaging $13000 for one child alone over the last two years in expenditures that the formula does not consider. The year before that there was even more for my wife. In a household of five it adds up and there seems to be one outlier needing more medical care than the rest.
- mdorazio 11y ago
  Sorry for the late reply. Are you referring to this? http://www.oecdbetterlifeindex.org/topics/income/ http://www.oecdbetterlifeindex.org/topics/income/ If so, I wasn't able to find median info on disposable income there for the US, which I think is a very important distinction from average. If not, can you please share another source since I'm very curious to see how it shakes out across the developed world. Also, I think it's also important to note that my original post was perhaps incomplete referring to disposable income generally. What's more important is growth in disposable income year over year, and related, growth in actual expenditures. For the US, OECD puts disposable income growth at just 0.8% year over year in the US since 2008. A population might have tons of disposable income, but if all of it is already being spent, then that doesn't help companies very much with demand - zero growth equals a zero sum game. Compare the US growth rate with that of China, which is 10x more [1] and also where many big companies have focused their investments in recent years. [1] http://www.tradingeconomics.com/china/disposable-personal-income http://www.tradingeconomics.com/china/disposable-personal-in...

marincounty 11y ago

This is Robert Reich original idea, and quote. "It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America. Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices." It sounds like a good idea, but capital gains are already high. My aunt lives in a house she bought for $25,000 in the 70's. She is far from well off. It's a crime what she's going to pay on capital gains if she sells her house. Yea, I know about the ways around the tax, but they have downsides. I'd be for this, if capital gains were tied to income. Maybe tied to the average income over the last 10 years? Right now it's the same rate for a billionaire, and the old lady surviving on social security. My aunt is taking the same percentage tax hit on the sale of her investment as the billionaire?

nicobn 11y ago
If you're talking about your aunt's primary residence, there is a capital gain exclusion of $250,000 (or $500,000 for married couples). Additionally, improvement costs, all sorts of taxes, fees, etc. can be excluded from capital gains, on top of the base exclusion. Obviously, in a high COL area, the sale price might be greater than the exclusion but it's pretty hard to argue that someone making a greater than 1,000% profit on an asset should not pay capital gain taxes on the gain above 1,000%. See: https://www.irs.gov/publications/p551/ar02.html#d0e301 https://www.irs.gov/publications/p551/ar02.html#d0e301 Your initial point still stands though. Capital gain tax rates are the same for everyone.
deleted 11y ago
[deleted]
whyenot 11y ago

jay-anderson 11y ago

I think I could get behind that if we had higher top marginal tax rates and increased capital gains taxes (like suggested in the cited article).