8 ms·

IMO the corporate tax rate should be zero, and then everyone would be on the same playing field. Right now the only companies that pay taxes are small ones with

• tim333 7y ago
  Zero corporate tax would lead to a lot of avoidance and drops in government revenue. Say you are a consultant earning 100k a year who owns a house. You could just pay the 100k to your company and borrow against the house for living costs and pay zero tax for the time being.
  • rb808 7y ago
    Right but eventually they money has to get from the company to the consultant - either dividends or wages. Either way it'll be taxed.
    • beefield 7y ago
      Yep. Eventually. Meanwhile Buffett's tax rate on his (and his companies) income is within the distance of epsilon from zero. Can you estimate when Buffett is going to need the bulk of the money from his compankes to buy a new house? How long heis going to have approximately zero tax rate, that is? My personal estimate is with a very good approximation 'never'.
      • s1artibartfast 7y ago
        As long as berkshire hathaway is paying capital gains on every investment, why would you care if the money stays invested in the company?
      • mrep 7y ago
        Buffet pays capital gains taxes and most economists who argue for dropping the corporate income tax only recommend so with an increase in income/cap gains taxes or even merging them.
    • tim333 7y ago
      Yeah maybe eventually. Though people try to find loopholes eg. move abroad, transfer the money offshore, lend the money to the consultant from the company rather than paying him or her, send the money to a company owned by an opaque offshore trust and so on. Big industries spring up to facilitate the avoidance that lobby politicians to allow the loopholes and so on. It can get kind of messy.
      • jhall1468 7y ago
        Literally everything you mentioned isn't a loophole, it's tax fraud. Tax loopholes are what they do within a single jurisdiction to avoid taxes. What you're suggesting is transferring money from one jurisdiction to another, which can't be done tax-free.
        • tim333 7y ago
          On example under UK law is if you work abroad for a year and deemed non UK tax resident then you could receive income tax free during that period. The K2 scheme that Jimmy Carr took part in got a lot of coverage https://en.wikipedia.org/wiki/K2_(tax_scheme) https://en.wikipedia.org/wiki/K2_(tax_scheme)
    • leakybit 7y ago
      Only if they needed the cash, or else the corporation would be a vehicle to store wealth.
  • tonyedgecombe 7y ago
    You could do this now, leave your profits in the corporation and borrow against the balance. I don't think it would work though, compound interest accumulating on the loan would soon eat the gains.
    • nybble41 7y ago
      So don't let the interest accumulate. Taxes on the income needed to cover the interest wouldn't be all that high compared to taxes on the full amount of the loan. Or the loan can just be interest-free, but then you pay tax on the foregone interest as if it were income.
  • AnthonyMouse 7y ago
    > Zero corporate tax would lead to a lot of avoidance and drops in government revenue. Say you are a consultant earning 100k a year who owns a house. You could just pay the 100k to your company and borrow against the house for living costs and pay zero tax for the time being. The issue is that you can already do this by using a corporation incorporated in a jurisdiction with no (or lower) corporate income tax -- which is what international companies and billionaires do and it gives them an unfair advantage, so we should level the playing field. Meanwhile notice what you're really doing -- you pay no income tax only because you have no income. But that only works as long as you never want to spend the money. Which works great for Apple, because they don't have anything to spend the money on anyway, but they're already doing that. The consultant making $100K is going to have to choose between spending the money (and so paying the tax on it) or taking a vow of poverty, because you have no equity to borrow against if it wasn't already at some point taxable income, and once you've spent that you still want to eat.
    • spacehome 7y ago
      > Which works great for Apple, because they don't have anything to spend the money on anyway Not true. Apple spends boatloads of money on dividends and share repurchases. Apple doesn't pay taxes on that, but shareholders do.
  • prepend 7y ago
    As an employee, you would pay taxes on the benefit of getting a free house from your company. How will you pay back the loan without income? Company you will pay you income that is taxed. Eventually the company sells the house and pays taxes. It might defer taxes, but won’t avoid them.
• criley2 7y ago
  The 'double-taxed' argument is so lame. Money circulates in a system and gets taxed basically infinitely. Worker gets paid and pays income taxes and retirement taxes. Worker spends their pay, and has to pay sales taxes. Business gets revenue from that purchase, and has to pays taxes. Business gives it to employee as salary. Taxes. Employee spends it. Taxes. Taxes. Taxes. There is no such thing as 'double-taxation'. It boggles my mind that people try to defend tax evasion by insisting that a dollar can only be taxed once... and then never again as it is used?
  • literallycancer 7y ago
    People always look at it differently once it's their money being taken away. Anyone who thinks running a business is easy or more profitable than it should be should try to run one.
    • criley2 7y ago
      If running a business wasn't profitable no one would do it. Simple as that. Running a for-profit is not altruistic. It's not a service. You're not serving your community. It doesn't make you inherently good. People run businesses to make money. Full stop. Some nonsense comparison like "harder than it should be" doesn't mean anything, it's an opinion-based weasel phrase with no definition. Considering how dramatically wealth and income inequality has exploded over the past 2 generations in America, the only priciplied, data-based perspective is that corporations and the astronomically tiny number of people who control them have gotten fabulously more wealthy at the direct expense of workers who are working longer hours, more productively, doing more jobs, for less real money and wealth. You can spin it however you want, but corporations and the capitalist class are more wealthy now that at any time in our history except the Gilded Era, and the working class is poorer now that they have been in many generations, and tax policy is really the only tool the people have to try and right this listing ship before another Wealth Destruction Event, another Great Reset.
      • seibelj 7y ago
        I cannot disagree with this analysis any harder. It is so fully incorrect my eyes are bleeding. Although the entire paragraph was riddled with falsehoods and misconceptions, I will just say that the biggest investors and gainers from corporate success are pension funds and sovereign wealth that benefit average people through their retirements.
• rtkwe 7y ago
  "Corporations are dodging taxes lets just throw in the towel and not attempt to do that at all." Also capital gains aren't double taxing corporate profits the benefits are going to two completely different groups of people.
  • marcoperaza 7y ago
    Who does corporate income benefit if not shareholders and employees? The corporation can deduct the wages it pays employees, which is why they’re fully taxed at the individual earned-income level—this is the personal income tax. In theory, the corporate tax takes a cut of profits (i.e. what is due to the shareholders), so the capital gains tax is lower to make up for it. The problem is that the corporate tax is too easy to legally avoid for large sophisticated corporations, an almost impossible problem to solve within the international system. The solution is to just abolish it and tax capital gains at the same rate as earned-income.
• nwellnhof 7y ago
  I agree that corporate taxes aren't strictly required. They are useful though, if you think about international capital markets. Without corporate taxes, foreign investors could extract all profits from a company, without paying any income tax in its country of residence. You are right about double taxation, but you can think of corporate tax as a part of income tax that is guaranteed to benefit the country where the company is registered.
  • kevin_thibedeau 7y ago
    I don't want my fire engines used to protect someone's property who isn't paying to support them.
    • s1artibartfast 7y ago
      I'm not sure if you are being sarcastic or not, but somebody owns that property and is paying income or capital gains on any realized profit.
      • ghaff 7y ago
        And is probably paying property taxes which are the specific tax paying for the fire engine in a lot of US jurisdictions.
  • s1artibartfast 7y ago
    >Without corporate taxes, foreign investors could extract all profits from a company, without paying any income tax in its country of residence. Howso? You still have income tax and capital gains tax.
    • buboard 7y ago
      which is zero if you re resident in some interesting countries.
• SirLotsaLocks 7y ago
  corporations benifit from state funded systems, so they should give back to the state. The state funds the streets they drive on, the internet they use computers first created by the government, they use are defended by copyright LAW that the government made to protect companies from copycats, they use money regulated by the government, they use employees that were educated (mostly) by the governemnt, smaller companies benifit from antitrust laws set by the government, corporations benifit from a standardized mail system run by the government, they use a regulated traffic system run by the government, they benifit from a police department run by the government, and so so much more. all these things are run by the government and funded by taxes. it's only fair that they pay their taxes and we need to crack down on tax evasion.
  • smush 7y ago
    > we need to crack down on tax evasion Corporations, small businesses, private citizens all benefit from state funded systems. That's part of the point of having a state in the first place. It could be seen as hyperbolic to conflate paying the minimum legal amounts with tax evasion. Corporations pay payroll taxes, VAT in relevant countries, capital gains, etc. as required by law. Whether our laws have large wiggle-room is another matter, but they are not evading taxes. People go to jail for tax evasion.
    • iudqnolq 7y ago
      They go to jail, unless they're rich (and haven't committed non-white-collar crimes). For example: https://www.cbc.ca/news/business/canada-revenue-kpmg-secret-amnesty-1.3479594 https://www.cbc.ca/news/business/canada-revenue-kpmg-secret-...
    • 8bitsrule 7y ago
      >as required by law Until they lobby/'donate' for laws (and enforcement) to be relaxed. Which continues to very very effective. So effective that campaign-finance-reform is still outside of all public discussion.
• buboard 7y ago
  corporations can always find loopholes to siphon money to shareholders , that's the core issue. Corporations shouldn't exist - ultimately profits and liabilities should be shared personally by each individual investor.
• tonyedgecombe 7y ago
  This seems like the obvious solution, make up the difference by taxing dividends and capital gains as if they were income. I'm pretty sure this is where we will end up anyway, there seems to be a race to the bottom. It's much harder to move your family offshore to avoid tax than it is to move your profits offshore.
  • gamblor956 7y ago
    This is how capital gains and dividends used to be taxed... The capital gains preference is a relatively recent development in the tax world.
    • AnthonyMouse 7y ago
      Capital gains is weird because there are several different ways to justify the lower rate, but then how it's calculated should differ. For example, if you bought a lump of silver thirty years ago and sell it today, the nominal price is higher, but that's basically just a result of inflation. Shouldn't we be taxing the real gain and not the inflation? But in that case maybe instead of a lower capital gains rate we should only adjust the gains for inflation and then apply the normal rate. Then you have the double taxation argument, but in that case you should either just get rid of the double taxation or dividends should be treated the same way. And there are several others, but what they all amount to is that the lower rate is a bad hack and we would be better off in each case to account for the thing that needs adjusting directly instead.
• pjc50 7y ago
  Giant concentrations of not reinvested money are destabilising. Especially if companies are also allowed to run political campaigns. Arguably retained profits taxation should be higher than shareholder payout taxation to encourage either reinvestment or return to shareholders. (Note that large categories of shareholders are in pensions or other tax-sheltered vehicles that don't pay capital gains!)
• ddalex 7y ago
  Agreed with the need to have a uniform corporate tax, but not 0 - it must be higher than personal tax, otherwise you just create a new loophole. I'd say either 20% or profit or 2% of turnover, whichever is higher. Before dividends and stock buybacks. The corporations need to sustain the social infrastructure that made them possible in the first place.
  • sokoloff 7y ago
    The problem with “it needs to be uniform and higher than 0” is that another sovereign country would have great incentive to set their tax rate at a fraction of yours. Income would then flow towards being recognized in that country. You might call them a “defector”. Others might say “well, they’re sovereign and what does that mean if not determining how to set their national tax policies?”
    • pasabagi 7y ago
      Is a company that doesn't pay taxes actually useful? I would have thought it would out-compete companies that actually do pay taxes, so it would reduce revenue (presumably) without increasing job numbers.
      • sokoloff 7y ago
        It seems extremely strange to me to think that the primary purpose of a company would be to pay income taxes to a country (as seems to be implied by the question of whether they’re useful if they don’t). A company that doesn’t pay income taxes can still provide useful services to consumers, provide employment and purpose for workers, and those workers will pay income tax and employer will pay payroll taxes.
        • pasabagi 7y ago
          I guess I'm thinking that the primary purpose of a company is to make money - and the primary way in which this leads to social utility is through taxes. Obviously, some companies provide useful and socially beneficial services, but many (most?) do not, or even provide socially destructive services (e.g. tobacco industry). Even in the case where they do provide social utility through their products, it strikes me that a company that doesn't pay income taxes is essentially taking away customers from one that does, and so, all of the usefulness is kind of amortized. I guess the limitation here is that companies are not all fungible - if TSMC didn't want to pay taxes, you couldn't just replace them with another semiconductor company - they do sometimes bring unique utility to the table. But on balance, I think TSMC is a unusual case, and even there, the expertise and utility is almost entirely in the skilled workers and machinery, which would survive the company's dissolution (be picked up by competitors, etc).
• deleted 7y ago
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• spacehome 7y ago
  A man after my own heart. I've long been saying that corporate tax rates should be zero, but all dividend and capital gains rates should be taxed at regular earned income rates. What we have now is this weird system where income earned through investments is taxed twice (first corporate, then dividend or cap gain) but each at a lower rate. Just normalize everything.