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There is an argument to be made for not having corporate tax. Corporations are just collections of people, owners and employees. As long as the income goes fr

by brc 10y ago

There is an argument to be made for not having corporate tax. Corporations are just collections of people, owners and employees. As long as the income goes from the corporation to those people, it will be taxed as individual income. Now I grant you that individuals will use techniques to try and avoid having that income attributed to themselves, so you'd need to tighten that up. But a corporation paying tax, then paying employees and owners, who then pay tax, is double taxation. Indeed some countries have taxation credits that flow through to owners when they are paid dividends, eliminating that double taxation. Flat taxes sure woud put a lot of tax planners out in the street. Hat wouldn't necessarily be a bad thing overall.

jtbigwoo 10y ago
>> There is an argument to be made for not having corporate tax. Corporations are just collections of people, owners and employees. Forming a corporation allows me to gain benefits that would be difficult or impossible to obtain as an ordinary person. (e.g. limited liability, special tax treatment) It's not unreasonable that a corporation's owners pay additional taxes.
- tptacek 10y ago
  Both limited liability and special tax treatment (an ironic benefit in this case) are available to corporate forms that are not subject to the corporate tax at all, so this is a hollow justification.
rayiner 10y ago
There is also an argument against shifting tax burden from corporations onto shareholders. In a way, it's easier to hold corporations accountable than individuals. Corporations may go to great lengths to legally avoid taxes, but few corporate officers will put their asses on the line and commit illegal tax evasion just to save their shareholders money. Also, corporate taxation isn't "double taxation" any more than it's double taxation for me to pay my nanny with post-tax income, which is then taxed again.
Pyxl101 10y ago
I have also heard that this is a reason why childcare is so expensive relative to a primary caregiver staying at home. I'm trying to remember the details - it was something like: - When you purchase child care, you pay sales tax - The childcare company pays payroll tax on salary paid to its employees. - The childcare employees pay income tax on their salary - The corporation also pays corporate tax - Company owner pays income tax on any income they take, and/or capital gains tax Every dollar you spend purchasing childcare from others is taxed multiple times before it reaches actual stakeholders who deliver the service. Since each of the actors involved seeks a certain after-tax benefit (e.g. company owner needs profit for the venture to be worthwhile; childcare worker needs sufficient salary), this means that all of the taxes must be part of the price for childcare that's charged to customers. Thus childcare is expensive relative to staying home and providing it yourself, in large part due to the multiple layers of taxation. Someone who is familiar with the details better than I could estimate what percentage of each dollar spent on childcare goes to the government as tax - when I was reading about this, I think the number I saw was around 60-75%. When you think of it in these terms, feels extreme how much of the economic value of these transactions is taxed and captured by the government, and therefore driving up the costs for everyone.
- brc 10y ago
  This applies to many things, including deciding to mow your own lawn instead of outsourcing it. Most people think that their time is worth x, and the yard-guy costs y, and if x>y, they should outsource the mowing. It's not as simple as that, as most people cannot earn X on demand - their total hours are capped by law or arrangement. Additionally, people mistakenly use their gross over net pay to calculate it, and then discount the time needed to arrange, inspect and pay. The ideal childcare arrangement is bartered, such as an agreement between two families to cover childcare with each other. This takes into consideration attachment of the child to the caregivers. However, it is more efficient economically to have as many children under a single caregiver, as that frees other adults to create value for society (work with me and imagine every job adds value). Taxation on that arrangement is just the government capturing some of the value created by it becoming more efficient. I don't necessarily have a problem with that, but the childcare company paying tax, paying payroll tax and then the individual employees paying income tax and the owners paying income tax is taxing the activity too many times.

by brc 10y ago

jtbigwoo 10y ago

>> There is an argument to be made for not having corporate tax. Corporations are just collections of people, owners and employees. Forming a corporation allows me to gain benefits that would be difficult or impossible to obtain as an ordinary person. (e.g. limited liability, special tax treatment) It's not unreasonable that a corporation's owners pay additional taxes.

tptacek 10y ago
Both limited liability and special tax treatment (an ironic benefit in this case) are available to corporate forms that are not subject to the corporate tax at all, so this is a hollow justification.

rayiner 10y ago

There is also an argument against shifting tax burden from corporations onto shareholders. In a way, it's easier to hold corporations accountable than individuals. Corporations may go to great lengths to legally avoid taxes, but few corporate officers will put their asses on the line and commit illegal tax evasion just to save their shareholders money. Also, corporate taxation isn't "double taxation" any more than it's double taxation for me to pay my nanny with post-tax income, which is then taxed again.

Pyxl101 10y ago

I have also heard that this is a reason why childcare is so expensive relative to a primary caregiver staying at home. I'm trying to remember the details - it was something like: - When you purchase child care, you pay sales tax - The childcare company pays payroll tax on salary paid to its employees. - The childcare employees pay income tax on their salary - The corporation also pays corporate tax - Company owner pays income tax on any income they take, and/or capital gains tax Every dollar you spend purchasing childcare from others is taxed multiple times before it reaches actual stakeholders who deliver the service. Since each of the actors involved seeks a certain after-tax benefit (e.g. company owner needs profit for the venture to be worthwhile; childcare worker needs sufficient salary), this means that all of the taxes must be part of the price for childcare that's charged to customers. Thus childcare is expensive relative to staying home and providing it yourself, in large part due to the multiple layers of taxation. Someone who is familiar with the details better than I could estimate what percentage of each dollar spent on childcare goes to the government as tax - when I was reading about this, I think the number I saw was around 60-75%. When you think of it in these terms, feels extreme how much of the economic value of these transactions is taxed and captured by the government, and therefore driving up the costs for everyone.

brc 10y ago
This applies to many things, including deciding to mow your own lawn instead of outsourcing it. Most people think that their time is worth x, and the yard-guy costs y, and if x>y, they should outsource the mowing. It's not as simple as that, as most people cannot earn X on demand - their total hours are capped by law or arrangement. Additionally, people mistakenly use their gross over net pay to calculate it, and then discount the time needed to arrange, inspect and pay. The ideal childcare arrangement is bartered, such as an agreement between two families to cover childcare with each other. This takes into consideration attachment of the child to the caregivers. However, it is more efficient economically to have as many children under a single caregiver, as that frees other adults to create value for society (work with me and imagine every job adds value). Taxation on that arrangement is just the government capturing some of the value created by it becoming more efficient. I don't necessarily have a problem with that, but the childcare company paying tax, paying payroll tax and then the individual employees paying income tax and the owners paying income tax is taxing the activity too many times.