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Intentionally trying to spur discussion/debate on this because I would like to learn some counter points. I personally don't believe in corporate taxes. I can'

Intentionally trying to spur discussion/debate on this because I would like to learn some counter points. I personally don't believe in corporate taxes. I can't imagine that any reasonably sized corporation would voluntarily forego effort to lower their tax burden considering the relatively low cost of a few accountants / accounting software. Because of that, I prefer a system where only individuals pay taxes. Now, skipping the fact that my suggestion requires most countries to rethink their individual/person tax code regarding income, property, etc and speaking in a largely hypothetical sense - would abandoning corporate taxes for personal taxes not be easier to ensure that money gets back to the government? As a person it's much harder for me to lower my "profits" in order to dodge taxes. But as a company I can make myself 'break even' or just below it pretty easily. I'd like to hear counter points to this because normally when I ask my friends the responses I get are more along the lines of "corporations are evil" more than "could it even work economically".

lkschubert8 8y ago
Why would a person voluntarily forego effort to lower their tax burden? People evade personal taxes all the time.
- smnrchrds 8y ago
  Lack of resources. If a tax reduction scheme costs 100 million dollars to set up, how many individuals would be able to use it? How many corporations?
  - lkschubert8 8y ago
    Couldn't this then lead to a net income gap around that point? Or people pooling resources to form tax evasion groups?
qroshan 8y ago
+1 to eliminate corporate taxes entirely. It's incredibly stupid to tax entities that creates jobs, products and services. Taxes only create unnecessary friction and strange side effects. +1 to only have taxes at the individual level. Also, make tax a quadratic function instead of step function. Step function always leads to stupid / shady behaviors around the step points. 1. People should be motivated to work and rewarded for that. 2. Corporations should be motivated to provide goods and services. 3. Luck should be normalized
- bduerst 8y ago
  Corporations benefit and profit from municipal services, same as people do. Should they be able to use those services for free? Kansas massively cut their corporate taxes in 2012, with the implicit promise that lowering taxes for "job creators" would pay for itself. The deficit for the state became so massive as their revenue dropped, that the state had to close education and other municipal services. [1] Kansas is now heralded as an example of how 'trickle down' economics of cutting taxes for 'makers' fails. [2] [1] https://www.forbes.com/sites/beltway/2017/06/07/the-great-kansas-tax-cut-experiment-crashes-and-burns/#2294eecd5508 https://www.forbes.com/sites/beltway/2017/06/07/the-great-ka... [2] https://www.washingtonpost.com/opinions/trickle-down-economics-is-a-nightmare-kansas-proved-it/2017/06/12/c2d7aae0-4fa6-11e7-91eb-9611861a988f_story.html?utm_term=.6f37e669ac9c https://www.washingtonpost.com/opinions/trickle-down-economi...
lordnacho 8y ago
Problem with that is people can then make companies and keep all their wealth in there until they need it. Which might mean nothing gets paid but a minimum.
- bitreality 8y ago
  That's exactly what it means. And if corporations can earn investment / passive income untaxed, then everyone would just keep their portfolios inside a corporation and draw salary for exactly what they need and nothing more.
- smitherfield 8y ago
  You can already do this, but it would only result in being taxed twice—first when you earn your wealth as ordinary income or capital gains, then again when you draw the salary or dividends from the company. No such thing as a self-licking ice cream cone (without committing tax fraud). ETA: Getting your employer to pay your company instead of you would be tax fraud.
  - lordnacho 8y ago
    > ETA: Getting your employer to pay your company instead of you would be tax fraud. Isn't that what people do if they are contracting?
    - smitherfield 8y ago
      Contractors pay income tax.
      - lordnacho 8y ago
        I think this might be a US specific thing.
        smitherfield 8y ago
        Dunno about other countries, but it seems unlikely it'd be different unless their tax authorities were born yesterday. Then again, by US standards most other countries make tax evasion a national sport, so I guess it's conceivable.
bitreality 8y ago
The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc. So as a person, any time you can utilize a corporation's resources without drawing income, you are cheating the system. This definitely already happens, but in your case it would go to another level.
- smitherfield 8y ago
  >The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc. This is illegal.
  - ardy42 8y ago
    >> The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc. > This is illegal. Citation, please.
  - bitreality 8y ago
    It's illegal if it's provably done for personal use. But when you have money, you can create a legitimate company with a legitimate reason to have a yacht. Perhaps the yacht is essential to your meetings with other high net worth individuals, to discuss important business. When your friends all have $10-100M, the lines between business and personal events are constantly blurred. Take a real life example. Look at Bill Perkins. He live streams poker from his boat. The boat is essential for setting the atmosphere for the live stream. Look at Tai Lopez. He purchases / rents luxury vehicles and residences to portray himself as successful, which is important to his brand. So where do you draw the line?
pm90 8y ago
The problem here is that individuals do not, for the most part, contribute very much in the way of direct tax receipts. The biggest direct tax receipts are from corporations, and for good reason: we decided that capitalism is the best way to organize our economy and private corporations would be the way people band together to engage in economic activity. Corporations, then, reflect the combined, amplified economic output of private citizens. Which is why they must be taxed; for the same reason you would want to tax individuals. That is the Why part. But you seem to be saying that because corporations will always find loopholes that we just give up. As long as the Government is nimble enough to discover these loopholes and close them, this becomes an un-economic endeavor. Which is why... Governments are good, and should be made as functional in these things as possible.
jadbox 8y ago
At the end of the day, it's a form of wealth distribution for the benefit of society (military, police, etc). If you cut corporate taxes, how do you compensate for that amass of wealth? Also remember that currently a company can "own" a bank account that people do tend to tap into for personal gain (although technically against the law). As a moderate, I'd only be open to removing business tax IF businesses are unable to own any profits. This basically just means the business tax gets effectively rolled into a form of personal income tax. I haven't thought about this before, so I'm not sure what the outcome could be. Alternatively, there's the Henry George system which seems to be getting some interest again. My main issue with this system is that so much "goods" are virtual now being software and information... even virtual land has real value today. I haven't seen a good explanation of how Henry George's system of taxing the 'finite' resources could be adopted to our (still vastly growing) digital age and digital assets.
Eridrus 8y ago
I'm fairly sympathetic to abolishing corporate taxes, since corporate taxes are a flat rate on all shareholders, and some of it even falls on workers, however... Corporate taxes provide an additional incentive to reinvest the profits of your business, rather than just sitting on them. They also allow national governments to extract tax revenue from foreign shareholders. And it's that second point that is really the biggest deal, since a unilateral lowering of corporate taxes and replacement with income taxes may increase the tax burden on your citizens. Ireland likes having a low tax rate because it has a comparatively low tax base and can incentivize these extremely large companies to pay taxes in Ireland, but as you can see, this harms the rest of the EU.
feanaro 8y ago
> I'd like to hear counter points to this because normally when I ask my friends the responses I get are more along the lines of "corporations are evil" more than "could it even work economically". Corporations are not inherently evil, but any sufficiently powerful entity is in a good position to abuse its power (governments included). Would it really be a good idea to skew the system to benefit corporations over individuals even more, with all the rampant power abuse going on already?

lkschubert8 8y ago

Why would a person voluntarily forego effort to lower their tax burden? People evade personal taxes all the time.

smnrchrds 8y ago
Lack of resources. If a tax reduction scheme costs 100 million dollars to set up, how many individuals would be able to use it? How many corporations?
- lkschubert8 8y ago
  Couldn't this then lead to a net income gap around that point? Or people pooling resources to form tax evasion groups?

qroshan 8y ago

+1 to eliminate corporate taxes entirely. It's incredibly stupid to tax entities that creates jobs, products and services. Taxes only create unnecessary friction and strange side effects. +1 to only have taxes at the individual level. Also, make tax a quadratic function instead of step function. Step function always leads to stupid / shady behaviors around the step points. 1. People should be motivated to work and rewarded for that. 2. Corporations should be motivated to provide goods and services. 3. Luck should be normalized

bduerst 8y ago
Corporations benefit and profit from municipal services, same as people do. Should they be able to use those services for free? Kansas massively cut their corporate taxes in 2012, with the implicit promise that lowering taxes for "job creators" would pay for itself. The deficit for the state became so massive as their revenue dropped, that the state had to close education and other municipal services. [1] Kansas is now heralded as an example of how 'trickle down' economics of cutting taxes for 'makers' fails. [2] [1] https://www.forbes.com/sites/beltway/2017/06/07/the-great-kansas-tax-cut-experiment-crashes-and-burns/#2294eecd5508 https://www.forbes.com/sites/beltway/2017/06/07/the-great-ka... [2] https://www.washingtonpost.com/opinions/trickle-down-economics-is-a-nightmare-kansas-proved-it/2017/06/12/c2d7aae0-4fa6-11e7-91eb-9611861a988f_story.html?utm_term=.6f37e669ac9c https://www.washingtonpost.com/opinions/trickle-down-economi...

lordnacho 8y ago

Problem with that is people can then make companies and keep all their wealth in there until they need it. Which might mean nothing gets paid but a minimum.

bitreality 8y ago
That's exactly what it means. And if corporations can earn investment / passive income untaxed, then everyone would just keep their portfolios inside a corporation and draw salary for exactly what they need and nothing more.
smitherfield 8y ago
You can already do this, but it would only result in being taxed twice—first when you earn your wealth as ordinary income or capital gains, then again when you draw the salary or dividends from the company. No such thing as a self-licking ice cream cone (without committing tax fraud). ETA: Getting your employer to pay your company instead of you would be tax fraud.
- lordnacho 8y ago
  > ETA: Getting your employer to pay your company instead of you would be tax fraud. Isn't that what people do if they are contracting?
  - smitherfield 8y ago
    Contractors pay income tax.
    - lordnacho 8y ago
      I think this might be a US specific thing.
      - smitherfield 8y ago
        Dunno about other countries, but it seems unlikely it'd be different unless their tax authorities were born yesterday. Then again, by US standards most other countries make tax evasion a national sport, so I guess it's conceivable.

bitreality 8y ago

The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc. So as a person, any time you can utilize a corporation's resources without drawing income, you are cheating the system. This definitely already happens, but in your case it would go to another level.

smitherfield 8y ago
>The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc. This is illegal.
- ardy42 8y ago
  >> The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc. > This is illegal. Citation, please.
- bitreality 8y ago
  It's illegal if it's provably done for personal use. But when you have money, you can create a legitimate company with a legitimate reason to have a yacht. Perhaps the yacht is essential to your meetings with other high net worth individuals, to discuss important business. When your friends all have $10-100M, the lines between business and personal events are constantly blurred. Take a real life example. Look at Bill Perkins. He live streams poker from his boat. The boat is essential for setting the atmosphere for the live stream. Look at Tai Lopez. He purchases / rents luxury vehicles and residences to portray himself as successful, which is important to his brand. So where do you draw the line?

pm90 8y ago

The problem here is that individuals do not, for the most part, contribute very much in the way of direct tax receipts. The biggest direct tax receipts are from corporations, and for good reason: we decided that capitalism is the best way to organize our economy and private corporations would be the way people band together to engage in economic activity. Corporations, then, reflect the combined, amplified economic output of private citizens. Which is why they must be taxed; for the same reason you would want to tax individuals. That is the Why part. But you seem to be saying that because corporations will always find loopholes that we just give up. As long as the Government is nimble enough to discover these loopholes and close them, this becomes an un-economic endeavor. Which is why... Governments are good, and should be made as functional in these things as possible.

jadbox 8y ago

At the end of the day, it's a form of wealth distribution for the benefit of society (military, police, etc). If you cut corporate taxes, how do you compensate for that amass of wealth? Also remember that currently a company can "own" a bank account that people do tend to tap into for personal gain (although technically against the law). As a moderate, I'd only be open to removing business tax IF businesses are unable to own any profits. This basically just means the business tax gets effectively rolled into a form of personal income tax. I haven't thought about this before, so I'm not sure what the outcome could be. Alternatively, there's the Henry George system which seems to be getting some interest again. My main issue with this system is that so much "goods" are virtual now being software and information... even virtual land has real value today. I haven't seen a good explanation of how Henry George's system of taxing the 'finite' resources could be adopted to our (still vastly growing) digital age and digital assets.

Eridrus 8y ago

I'm fairly sympathetic to abolishing corporate taxes, since corporate taxes are a flat rate on all shareholders, and some of it even falls on workers, however... Corporate taxes provide an additional incentive to reinvest the profits of your business, rather than just sitting on them. They also allow national governments to extract tax revenue from foreign shareholders. And it's that second point that is really the biggest deal, since a unilateral lowering of corporate taxes and replacement with income taxes may increase the tax burden on your citizens. Ireland likes having a low tax rate because it has a comparatively low tax base and can incentivize these extremely large companies to pay taxes in Ireland, but as you can see, this harms the rest of the EU.

feanaro 8y ago

> I'd like to hear counter points to this because normally when I ask my friends the responses I get are more along the lines of "corporations are evil" more than "could it even work economically". Corporations are not inherently evil, but any sufficiently powerful entity is in a good position to abuse its power (governments included). Would it really be a good idea to skew the system to benefit corporations over individuals even more, with all the rampant power abuse going on already?