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In the ideal world, corporate tax rates and taxes on investment income are zero. Google et al should be paying taxes on its earnings when it spends it on compen
by ThrustVectoring 8y ago
In the ideal world, corporate tax rates and taxes on investment income are zero. Google et al should be paying taxes on its earnings when it spends it on compensating employees, buying equipment for their offices, renting office space, etc.
- mattmanser 8y agoWithout any explanation of why this is ideal, this just comes across as a way of rewarding the rich 'land holders' and forcing the tax burden on the poor. What the logic behind this 'ideal'?
- ThrustVectoring 8y agoInvestment is, broadly speaking, how individuals use current production to fund future consumption. Investment taxes are a tax on future consumption over and above taxes on current consumption, creating a distortionary effect.
- leetcrew 8y agoi don't intend to argue GP's point for them, but it is important to be aware of the difference between paying a tax and actually bearing the burden of that tax. if (hypothetically) you increase some tax by 5% and all the companies raise their prices by 5%, you might end up with a situation where the companies "pay" the tax, but it entirely comes from the pockets of consumers. this is called tax incidence, and you can read more about it here: https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence the corporate tax is actually very controversial among economists. it seems like a straightforward case of "making the big corps pay", but there is very little consensus as to who ultimately foots the bill for this type of tax.
- ThrustVectoring 8y agoAgreed. This is one of the reasons why a land-value tax is so good, in my opinion. Pretty much all of the burden of the tax is placed on landlords - if they could raise rents, they'd have already done so, so the tax pretty much entirely comes from the unearned value generated by holding the right to use a piece of land.
- leetcrew 8y agoLVT is very appealing from the theoretical perspective. i would very much like to see it play out at scale somewhere. unfortunately, while it is fairly easy to add new taxes, you rarely see a new tax substituted for an old one.
- lovich 8y agoWhy should corporate taxes be zero but employee compensation should be taxed?
- ThrustVectoring 8y agoWe want corporations to use current funds to generate future positive cash flows. Stuffing a corporation full of money to get their preferential tax treatment is pretty much pointless when it gets taxed anyways when it gets used.