4 ms·

Eliminating corporate income taxes would be the best way to start, given it would benefit society immensely.

jamesblonde 9y ago
How would it benefit society? Reduced state income that could be used to invest in infrastructure and people? Will the companies invest that money with society's interest at best better than the govt would? I don't think so. What do Apple do with their money? They horde it, waiting for a windfall to bring it back to the States and pay low/no corporate tax on the repatriated profits.
- improbable22 9y ago
  It would benefit society because we could all spend our outrage on things more productive than pushing on a rope. The profits were taxed as VAT or something on the way into Apple. They will be taxed again as income tax or something on their way out again. We are free to adjust these rates as we wish. But trying to tax intermediate steps which seem to be largely accounting fictions (like exactly which puzzle piece of the global empire actually made that profit) seems like a fool's errand.
- valuearb 9y ago
  You tax things you want less of, not more if. Taxing corporate profits is a tax on investment. Apples actual income tax rate is in excess of 60% if they repatriate. First, they have to pay corporate income taxes in all their foreign countries. Then, they owe 9% to state of California on what’s left. Then they owe 35% to the US treasury on what’s left. Then they pay the remainder as dividends, and shareholders owe up to 10% to their stars, and then 15-20% to the federal government. We could likely generate as much or more in tax revenues by eliminating the corporate income tax and treating individual dividend payments as regular income (taxed at 28-38% normally). This way reinvested profits aren’t taxed, leading to more investment, which leads to more profits and more dividends. And the return on investing for individuals increases, leading to more investment. More investment means more jobs, higher productivity and higher pay. And hundreds of thousands of corporate tax accountants can now actually be switched to work that benefits society.
  - jamesblonde 9y ago
    But you know that even if you eliminated corporate tax, companies would not pay out profits as dividends, if there was a loophole around it. And there are loads, of course. Share buybacks, for example.
    - tengbretson 9y ago
      From the perspective of an investor, there's really not all that much difference between a buyback and dividends.
    - valuearb 9y ago
      Yes, you'd have to also tax capital gains at ordinary rates to capture this. I think capital gains should only have inflation adjustments to their basis, they don't need their own special rates.
  - pwinnski 9y ago
    This is not accurate. Currently they are paying between 1 and 7% on income, as the Paradise Papers document. If they re-patriated every bit of income to the U.S., they would owe an additional 35%. That brings the tax rate to 36-42% (actually slightly less since the 35% would be on the 99-93% remaining), and that's that. What they then choose to do with the money after that, and what taxes individuals pay on their own investments, are not part of Apple's tax rate. Also, good luck getting dividends taxed as normal income rather than capital gains!
    - valuearb 9y ago
      Nope, Apple pays a world-wide rate of 24.6%. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple... And the real rate is actually higher because it doesn't count the deferred taxes they owe and will pay when they repatriate.
      - pwinnski 9y ago
rootw0rm 9y ago
Agreed.

How would it benefit society? Reduced state income that could be used to invest in infrastructure and people? Will the companies invest that money with society's interest at best better than the govt would? I don't think so. What do Apple do with their money? They horde it, waiting for a windfall to bring it back to the States and pay low/no corporate tax on the repatriated profits.

improbable22 9y ago
It would benefit society because we could all spend our outrage on things more productive than pushing on a rope. The profits were taxed as VAT or something on the way into Apple. They will be taxed again as income tax or something on their way out again. We are free to adjust these rates as we wish. But trying to tax intermediate steps which seem to be largely accounting fictions (like exactly which puzzle piece of the global empire actually made that profit) seems like a fool's errand.
valuearb 9y ago
You tax things you want less of, not more if. Taxing corporate profits is a tax on investment. Apples actual income tax rate is in excess of 60% if they repatriate. First, they have to pay corporate income taxes in all their foreign countries. Then, they owe 9% to state of California on what’s left. Then they owe 35% to the US treasury on what’s left. Then they pay the remainder as dividends, and shareholders owe up to 10% to their stars, and then 15-20% to the federal government. We could likely generate as much or more in tax revenues by eliminating the corporate income tax and treating individual dividend payments as regular income (taxed at 28-38% normally). This way reinvested profits aren’t taxed, leading to more investment, which leads to more profits and more dividends. And the return on investing for individuals increases, leading to more investment. More investment means more jobs, higher productivity and higher pay. And hundreds of thousands of corporate tax accountants can now actually be switched to work that benefits society.
- jamesblonde 9y ago
  But you know that even if you eliminated corporate tax, companies would not pay out profits as dividends, if there was a loophole around it. And there are loads, of course. Share buybacks, for example.
  - tengbretson 9y ago
    From the perspective of an investor, there's really not all that much difference between a buyback and dividends.
  - valuearb 9y ago
    Yes, you'd have to also tax capital gains at ordinary rates to capture this. I think capital gains should only have inflation adjustments to their basis, they don't need their own special rates.
- pwinnski 9y ago
  This is not accurate. Currently they are paying between 1 and 7% on income, as the Paradise Papers document. If they re-patriated every bit of income to the U.S., they would owe an additional 35%. That brings the tax rate to 36-42% (actually slightly less since the 35% would be on the 99-93% remaining), and that's that. What they then choose to do with the money after that, and what taxes individuals pay on their own investments, are not part of Apple's tax rate. Also, good luck getting dividends taxed as normal income rather than capital gains!
  - valuearb 9y ago
    Nope, Apple pays a world-wide rate of 24.6%. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple... And the real rate is actually higher because it doesn't count the deferred taxes they owe and will pay when they repatriate.
    - pwinnski 9y ago

rootw0rm 9y ago

Agreed.