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This is a terrible idea. For those of us (like me) who only really understand taxes in the context of individual earnings and income tax (and the ever annoying

by iamdave 10y ago

This is a terrible idea. For those of us (like me) who only really understand taxes in the context of individual earnings and income tax (and the ever annoying property taxes), can you explain why?

valuearb 10y ago
"Firms currently pay corporate taxes on their profits. Border-adjustment would change how those profits are calculated. Accountants could no longer deduct imports—say, goods brought in from China—as costs. And their exports would no longer count as revenues. For tax purposes, “profits” would be domestic sales minus domestic costs. Effectively, imports would be taxed, and exports would be subsidised. As a result, retailers, who stock their shelves with imported wares, are lobbying against the change. Exporters, such as the aerospace industry, broadly support it." It's a sneaky form of tariffs. Tariffs are a terrible idea. Free trade benefits all parties. Currently there is a large amount of corporate expenses around conforming to and gaming the corporate income tax code. Eliminating the corporate income tax is a massive simplification that not only makes investment more attractive, but it eliminates those costs that produce nothing, and the spending redistributed to actual productive activities that produce goods and services. Finally, eliminate corporate taxes benefits importers and exporters equally, it's not industrial planning to pick or favor winners and industries, it relies on market forces not political ones.
- doubleunplussed 10y ago
  Free trade benefits all parties except for the people who previously benefited from the redistribution of wealth/income that that the tariffs effectively caused. We've opened up free trade, and gotten rid of many hodge-podge, patchy tariffs, but we haven't replaced the wealth/income redistribution with anything else. The tax system is now less progressive than it was. Every tariff removed should have had the government income it represented replaced with an increase in some other broad-based tax to compensate. Otherwise you're not just making the system less patchy, you're actually just taxing less, and lower taxes generally means worse income and wealth inequality. So tariffs are a terrible idea, but I think no tariffs at all can be worse. I'd rather have a patchy inconsistent push against rising wealth inequality than none at all.

by iamdave 10y ago

This is a terrible idea. For those of us (like me) who only really understand taxes in the context of individual earnings and income tax (and the ever annoying property taxes), can you explain why?

valuearb 10y ago

"Firms currently pay corporate taxes on their profits. Border-adjustment would change how those profits are calculated. Accountants could no longer deduct imports—say, goods brought in from China—as costs. And their exports would no longer count as revenues. For tax purposes, “profits” would be domestic sales minus domestic costs. Effectively, imports would be taxed, and exports would be subsidised. As a result, retailers, who stock their shelves with imported wares, are lobbying against the change. Exporters, such as the aerospace industry, broadly support it." It's a sneaky form of tariffs. Tariffs are a terrible idea. Free trade benefits all parties. Currently there is a large amount of corporate expenses around conforming to and gaming the corporate income tax code. Eliminating the corporate income tax is a massive simplification that not only makes investment more attractive, but it eliminates those costs that produce nothing, and the spending redistributed to actual productive activities that produce goods and services. Finally, eliminate corporate taxes benefits importers and exporters equally, it's not industrial planning to pick or favor winners and industries, it relies on market forces not political ones.

doubleunplussed 10y ago
Free trade benefits all parties except for the people who previously benefited from the redistribution of wealth/income that that the tariffs effectively caused. We've opened up free trade, and gotten rid of many hodge-podge, patchy tariffs, but we haven't replaced the wealth/income redistribution with anything else. The tax system is now less progressive than it was. Every tariff removed should have had the government income it represented replaced with an increase in some other broad-based tax to compensate. Otherwise you're not just making the system less patchy, you're actually just taxing less, and lower taxes generally means worse income and wealth inequality. So tariffs are a terrible idea, but I think no tariffs at all can be worse. I'd rather have a patchy inconsistent push against rising wealth inequality than none at all.