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To be honest this feels like the same thing that's been sold as a miracle cure my entire life. Cut taxes, and if that doesn't work cut them more, then try a tax

To be honest this feels like the same thing that's been sold as a miracle cure my entire life. Cut taxes, and if that doesn't work cut them more, then try a tax cut, and if you're still not getting what you hoped for then maybe a tax cut will work, and have you tried cutting taxes? We have decades of evidence that this doesn't work. I used to live in Kansas where the governor made a priority of his "March to Zero" on taxes, as a guaranteed sure-fire can't-fail way to make businesses happy and lead to more investment in business in the state, more businesses relocating there, more jobs, etc. And it was a complete and utter failure. It is now in the process of being repealed by people who were left with no choice other than to admit it failed. It is time for people who advocate this to understand that while it may sound great when deduced theoretically from first principles, it does not work in the real world.

philwelch 9y ago
I'm not suggesting any kind of supply-side Laffer Curve argument. My argument is that corporate taxes are less efficient than individual taxes, not that taxes should be lower overall. I would prefer to increase income and capital gains taxes on high-income, high-net-worth individuals to offset the loss in revenue from reduced or eliminated corporate taxes.
- ubernostrum 9y ago
  What you're missing is that the "March to Zero" plan included implementing the things you're talking about. It did not have the effects you claim it would have. Your theories of why your proposals would be good have been empirically discredited. One big example: the elimination of taxes on business income did not suddenly result in much more efficient taxation, scrupulous payment of what was owed, and a boom in investment and expansion of businesses. It resulted in everybody and their brother scrambling to reclassify their personal income as the right kind of business income, in order to pay less tax. Revenue fell off a cliff and the state's deficit projections soared.
  - philwelch 9y ago
    I'm claiming that corporations hold cash offshore to avoid paying federal corporate taxes. Kansas is categorically incapable of doing anything to solve that problem, so I don't see how your Kansas example is in any way relevant, unless there was an epidemic of Kansas businesses keeping stockpiles of cash in Nebraska for the purpose of avoiding state taxes.
  - deleted 9y ago
    [deleted]
valuearb 9y ago
State income taxes are completely different animal than Federal income taxes. The highest state corporate rates peak around 10%, the federal rate is 35%. And state taxes are deductible. So the difference between a state with a 10% rate and one with a 0% rate is a total corporate tax rate of 42.5% vs. 35%. And if the adjoining states to the 0% rate state have 5% corporate tax rates, the difference is only 38.5% to 35%. State rates are a small factor in corporate decisions, but not an overriding one like Apple's decision to leave hundreds of billions in Ireland, or to repatriate it and pay 42% to California and the US government, to pay the remainder to shareholders to pay 20% more taxes on.

philwelch 9y ago

I'm not suggesting any kind of supply-side Laffer Curve argument. My argument is that corporate taxes are less efficient than individual taxes, not that taxes should be lower overall. I would prefer to increase income and capital gains taxes on high-income, high-net-worth individuals to offset the loss in revenue from reduced or eliminated corporate taxes.

ubernostrum 9y ago
What you're missing is that the "March to Zero" plan included implementing the things you're talking about. It did not have the effects you claim it would have. Your theories of why your proposals would be good have been empirically discredited. One big example: the elimination of taxes on business income did not suddenly result in much more efficient taxation, scrupulous payment of what was owed, and a boom in investment and expansion of businesses. It resulted in everybody and their brother scrambling to reclassify their personal income as the right kind of business income, in order to pay less tax. Revenue fell off a cliff and the state's deficit projections soared.
- philwelch 9y ago
  I'm claiming that corporations hold cash offshore to avoid paying federal corporate taxes. Kansas is categorically incapable of doing anything to solve that problem, so I don't see how your Kansas example is in any way relevant, unless there was an epidemic of Kansas businesses keeping stockpiles of cash in Nebraska for the purpose of avoiding state taxes.
- deleted 9y ago
  [deleted]

valuearb 9y ago

State income taxes are completely different animal than Federal income taxes. The highest state corporate rates peak around 10%, the federal rate is 35%. And state taxes are deductible. So the difference between a state with a 10% rate and one with a 0% rate is a total corporate tax rate of 42.5% vs. 35%. And if the adjoining states to the 0% rate state have 5% corporate tax rates, the difference is only 38.5% to 35%. State rates are a small factor in corporate decisions, but not an overriding one like Apple's decision to leave hundreds of billions in Ireland, or to repatriate it and pay 42% to California and the US government, to pay the remainder to shareholders to pay 20% more taxes on.