8 ms·
I posted this in another thread recently, but I think it’s worth repeating here: We’re really better off eliminating the corporate tax altogether. It’s a prett
by marcoperaza 9y ago
I posted this in another thread recently, but I think it’s worth repeating here:
We’re really better off eliminating the corporate tax altogether. It’s a pretty small portion of tax revenue and the only reason it exists is to be a plank for politicians who want to tax the "greedy corporations." All corporate income is either paid as dividends, paid as salaries, or reinvested. When it is paid as dividends, it is taxed as capital gains. When it is paid as salaries, it is taxed as income. When it is reinvested, it is either lost, or eventually becomes income and capital gains. There is no need to have another layer of taxation that just makes a giant accounting mess and creates all sorts of ridiculous incentives to use tax shelters.
- elango 9y agoIndividuals also create corporates to spend money, i can create a single owner entity and spend money like i am from my personal bank account
- marcoperaza 9y agoPeople do it, but it’s not legal. The corporate funds are for the corporation’s purposes. If you need the money for personal purposes, you’re supposed to take a distribution or pay yourself a salary. If you get caught doing otherwise, you’ll owe the IRS all of the back taxes and some hefty penalties.
- AstralStorm 9y agoWhat if you pay yourself a salary in Caimans? Here is the problem.
- hkmurakami 9y agoexpensing items that aren't actually for your business activities is tax fraud.
- AstralStorm 9y agoWhich you cannot prosecute easily thanks to some of the loopholes mentioned in the post itself.
- discoursism 9y agoI have recently had a question about this. When a foreigner owns a fraction of a corporation, what taxes do they pay to the US government on their dividends and appreciation? It occurred to me that if the answer is, "none," That would represent a material, difficult-to-otherwise-arrange advantage of the corporate tax: levying taxes on foreigners. (I don't mean advantage here in the moral sense -- just in the practical one.)
- marcoperaza 9y agoThat’s a really good point. According to https://www.investopedia.com/ask/answers/06/nonusresidenttax.asp https://www.investopedia.com/ask/answers/06/nonusresidenttax... , non-resident aliens are taxed on dividends from American companies, but not for capital gains. Would we be changing any important incentives by leaving untaxed that portion of corporate income responsible for foreigners’ appreciation? Otherwise, it doesn’t seem like a very significant source of revenue.
- AstralStorm 9y agoYou say in excess of 100 million USD is not a significant source of revenue. I hope this is due to ignorance. It is more than the budget of some rich countries. Taxation on foreign individuals is a thing done all the time with duties.
- deleted 9y ago[deleted]
- marcoperaza 9y agoAbsolute amounts are not very useful for making tax policy. If it represents a tiny portion of federal receipts, and doesn’t serve to prevent some end-run around other parts of the tax law or other perverse incentives, there seems to be a weak case for maintaining a tax policy that causes all sorts of other undesirable outcomes.
- deleted 9y ago[deleted]