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Elizabeth Warren has set this up as the core paradigm in her campaign. She posits that greed and corruption have overtaken the American government's purpose, e
by metamet 7y ago
Elizabeth Warren has set this up as the core paradigm in her campaign.
She posits that greed and corruption have overtaken the American government's purpose, especially in the last 25 years. Money, through lobbying and other forms of influence, now dictates who the government works for. It works for large corporations, pharmaceuticals and the oil industry (for example) rather than America's citizens and workers--specifically with access to healthcare, a living wage and a clean planet.
- MuffinFlavored 7y agoI read her plan to tax businesses with $100m in profit is easily sidestepped by spinning off child-subsidiaries of your businesses right around that $100m mark and report back "womp womp, no over $100m profits here".
- MichaelApproved 7y agoAnd that's easily countered by saying "total profits, including subsidiaries."
- tick_tock_tick 7y agoEven she wouldn't be stupid enough to try that.
- munk-a 7y agoIndeed, we should all cower in fear to avoid offending the lobbyists.
- hervature 7y agoAnd that's easily countered by having franchises and not subsidiaries
- enraged_camel 7y agoAnd that's easily countered by saying, "total profits, including subsidiaries and franchises." See, we can play this game all day. The fundamental point is this: just because people might break a law (directly or in spirit) is not an argument against having said law.
- arcticbull 7y agoI for one look forward to finding out which of the 595 Apple subsidiaries I'll be doing business with moving forward. I guess what I'm saying is that yes, it's possible that some companies will put in the legwork to restructure into a few subsidiaries, but this tax wouldn't have applied to them in the current regime anyways. The biggest ones, on the other hand, are unlikely to do the leg-work. Either way the plan can be adjusted, as my sibling says, to include the revenue from subsidiaries so let's not be defeatist :)
- luckylion 7y ago> I for one look forward to finding out which of the 595 Apple subsidiaries I'll be doing business with moving forward. None of them. You'll be doing business with Apple CustomerCare or whatever it's called, and they're going to pay license fees for some logo, software or what have you to those 595 companies. It's how Amazon & Co funnel their money out of Europe without hardly paying any taxes, too.
- eximius 7y agoI think you have it backwards. The biggest companies that are already avoiding taxes can justify the lawyer costs to do it again. Besides, they typically already have dozens of subsidiaries that are largely invisible to most employees and business partners. This is just adding more reasons to do so. (Source: have worked on subsidiary taxonomy of large companies before, not for tax purposes, and from the outside there is often little information, at face value, why these subsidiaries exist. Even if you asked them, it wouldn't be hard to come up with legal reasons.)
- arcticbull 7y agoYou know how your bank is required to report any transaction to FinCEN in excess of $10,000 on what's called a CTR, or currency transaction report? Some enterprising criminals decided to break up their deposits into two $5000 transactions to avoid this. So naturally, they made that a crime called structuring [1]. I don't see why it wouldn't be illegal to break up your company into a thousand subsidiaries to evade taxes. My point is, this is solve-able, but we have to make the first move. [1] https://en.wikipedia.org/wiki/Structuring https://en.wikipedia.org/wiki/Structuring
- rando444 7y agoIf businesses started creating child companies (for any reason) it would result in substantial job creation.. so this sounds like a win-win to me.
- kortilla 7y agoPresumably you’ve never heard of shell corporations. Child companies do not imply jobs.
- tempestn 7y agoCan you elaborate? It seems to me that if a single corporation just split their operations into multiple separate child corps, it wouldn't necessarily result in job creation. (Duplicated positions could just be contracted to a single company in the group, for instance.)
- inetknght 7y agoI don't see any guarantee here that splitting a business will create jobs. 1) Business A has 1B in profits with X number of employees, gets taxed. 2) Business B splits into 10 businesses with 100M in profits and X/10 number of employees per business unit, and doesn't get taxes.
- cronix 7y agoSounds like Business B is going to need 9 new buildings. Are they built already?
- Causality1 7y agoAlways strange to me they tax corporate profit instead of corporate revenue. "We spent all our money so we don't pay any taxes."
- jacquesm 7y agoVAT is corporate revenue tax, but between businesses you can claim it back in the EU.
- DanBC 7y agoNo, VAT is a tax paid by consumers.
- leetcrew 7y agoare you making a claim about tax incidence or who literally pays the tax?
- DanBC 7y agoI'm saying who literally pays the tax. A business buying from another business can reclaim the VAT. The end usually consumer cannot. VAT is a consumption tax.
- jacquesm 7y agoThe tax is levied on the businesses who collect it on behalf of the government, it is a direct function of the amount of the invoice. So if you charge your customer less for your goods or services the tax paid goes down. VAT is short for 'Value Added Tax', in other words that which a business produces. But if your business provides no value then magically you still have to charge VAT, so clearly there is a relationship with turnover. By your logic you could reason that eventually all tax is paid by consumers because they pay the companies for the products and that includes corporate income tax and so on but whenever sales tax is low you will find that companies are more than happy to absorb the surplus as profits. VAT is the closest governments get to taxing businesses directly on their revenue streams.
- rockinghigh 7y agoPublic corporations in the US have to provided consolidated financial statements including all majority-owned subsidiaries.
- deleted 7y ago[deleted]
- cr0sh 7y agoOne would think there'd be a way to combat that ala structuring, like they do with reporting cash transfers of $10k and over. In other words, if you try to do multiple $9999.00 transfers in an attempt to "fly under the radar" - you will be caught out.
- rayiner 7y agoJimmy Carter told people the truth. (And he got promptly voted out, and so subsequent politicians have hidden the ball with the truth.) With respect to the environment, for example, he told people to put on a sweater. Because the truth is that almost all GHGs result from consumer-facing industries where consumers are the primary beneficiaries of pollution being artificially cheap. Concrete example, since you mention the oil industry: Exxon makes about 22.5 cents when you buy a gallon of gas at $3.00. Meanwhile, an analysis has found that gas should be taxed an extra $4.36-7.62 per gallon to fully reflect the environmental and other harms of driving: https://www.citylab.com/transportation/2015/01/the-real-reason-us-gas-is-so-cheap-is-americans-dont-pay-the-true-cost-of-driving/384200 https://www.citylab.com/transportation/2015/01/the-real-reas.... So when the government doesn't impose that tax, who benefits? Exxon benefits a little because it sells more gas and collects the $0.22 of profit on each gallon. But the consumer saves $4.36-7.62 by avoiding those taxes. Exxon's profits, about $20 billion last year, are a rounding error compared to the trillion+ dollars that consumers would pay in extra taxes to address the negative externalities of driving. Transportation, heating, agriculture, consumer products--these are the industries responsible for the fast majority of GHGs. And these are also highly competitive, commoditized industries where most cost savings get passed onto consumers. (Facebook makes more profit than Exxon, even though Exxon's revenues are more than five times as much.) That means the savings of making pollution cheap also accrues mostly to consumers. The industries where lack of competition allows corporations to command huge margins--banking, tech, advertising, etc.--are not the ones that are primarily responsible for GHGs. "Access to healthcare" is similar. Why do people in Sweden have universal healthcare while people in America do not? Is it corporations? No, Sweden's corporate tax rate is quite a bit lower than ours. (It's similar to the current federal rate, but in the U.S. most corporations also pay a state rate. In Delaware, for example, it's an additional 8.7%.) So who benefits by Americans not having universal healthcare? It's middle-class Americans who don't pay the high middle-class taxes that middle-class Europeans pay. Warren's focus on corporations is a total red herring, intended to make people falsely believe that you can have universal healthcare and a cleaner planet without decreasing your material quality of life. As Jimmy Carter told us, that's not in the cards. How do we know that? Because we can look at other countries who do better on these measures, and see what they do! France has much lower GHG emissions than the U.S. and universal healthcare. How do they do it? They live in houses that are half the size; they drive tiny fuel efficient cars, and have fewer of them per household; they deal with the challenges of nuclear power; their payroll taxes on the middle class are double ours; they take public transmit more often and therefore have significantly longer commutes. But their corporate taxes are even lower than ours!