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I truly wish that the corporate tax rate was 0. Not 25, not 15, but 0%. Then all of this ridiculous nonsense around crony capitalists lobbying for special tax b

I truly wish that the corporate tax rate was 0. Not 25, not 15, but 0%. Then all of this ridiculous nonsense around crony capitalists lobbying for special tax breaks, “double Dutch Irish sandwiches”, and the insane discrepancies between big business and small business in regards to tax games would all go away. Just increase capital gains to match income tax and be done with all of this bullshit. Amazon pays an effective rate of 0% anyways.

andrepd 7y ago
What about closing the loopholes? They're known for decades, why not stamp down, with teeth, on this sort of thing?
- seibelj 7y ago
  There will always be loopholes. Any corporate tax rate above 0% will have carve outs for any number of industries that are favored for any number of reasons. If it was 0, huge swaths of busy-work jobs in law and tax industries would go away. They provide no value to society.
  - andrepd 7y ago
    But in a capitalist system, that which could be good is a problem. Now you have swathes of people who become unemployed. You now probably have to support them with welfare (and without corporate tax revenue to boot :)).
bpodgursky 7y ago
This is a 100% reasonable policy, but it's a really hard sell for people who don't understand how business income actually works, and how the money would be captured by far more functional taxes as dividend income or cap gains. I don't think your comment is going to do well on HN. Maybe leave INCREASE CAPITAL GAINS in all caps. Or, CAPTURE THE SAME MONEY AS DIVIDEND INCOME OR CAPITAL GAINS. Perhaps: IT IS THE SAME MONEY CAPTURED LESS CONFUSINGLY AND LESS PRONE TO CHEATING
- seibelj 7y ago
  Many of my comments do poorly on HN, but I’ll keep writing them because alternative opinions to the hive mind are valuable. I may even convince a few people!
  - greglindahl 7y ago
    You might want to try leaving better comments? The one at the top doesn't really make any sense. If you left one that did convince people, it would probably get upvoted.
    - seibelj 7y ago
      Given all the other comments it sounds like many people agree with me. What part didn’t you understand?
      - greglindahl 7y ago
        "Many of my comments do poorly on HN" -- silbelj
        seibelj 7y ago
        What particularly about the top comment is nonsensical to you? If English is not your first language I can try to simplify the prose to 5th grade English.
        greglindahl 7y ago
        Your insult is a good example of why you might be downvoted.
  - Sabinus 7y ago
    I liked the comment thread you started. Thanks for bringing your ideas here and defending them in a reasonable and rational manner.
coral-snake 7y ago
How would you avoid companies-as-expense accounts? If I form "Coral-Snake & Co.", wouldn't I be able to pay 0% taxes by just directing all income/expenses into that shell? (Granted, I don't understand basically anything about tax law, so maybe this is already a well-defined problem with a well-defined solution.)
- seibelj 7y ago
  This is already doable with a multitude of ways. If I have profits, and I direct them to a business, then argue plausibly that my life expenses (lunches, travel, cars, computers) are for my business, I can write off all those expenses against my profits. Business owners do this all the time.
  - coral-snake 7y ago
    Wouldn't a 0% corporate tax make it even more incentivized than it is today? As a novice, this feels like an approach that punishes the well-off, who may not expend the resources to structure all assets/liabilities this way, at the expense of the super-well-off who will simply pay multiple other people to re-organize their own financials.
  - hcknwscommenter 7y ago
    Business owners that do that had better be very careful and keep plenty of documentation. There are legal "tests" (read requirements) that must be met for those lunches, travel, cars, computers, etc. to be considered an expense. In many cases, any "non-business" use/benefit/enjoyment renders the entire expense not a business expense. Yes, it is not so rare for small business owners to play loose with the rules. And then they get audited and end up paying a lot in back taxes.
- asdfasgasdgasdg 7y ago
  By making it illegal. People already do that and when they get caught they sometimes go to jail or otherwise pay severe penalties. Also a company with no profits already pays no taxes so to the extent you wanted to roll the dice this way you could do it just as well under current law.
BurningFrog 7y ago
You can make a good argument* that taxing corporations is weird anyway, since they're abstract legal concepts. Taxing the income real people get paid from the corporation would be the logical, and much simpler system. * You can of course also make a decent argument against this :)
- jdkee 7y ago
  Corporations have similar legal rights to corporeal persons. Freedom of speech, access to the legal system, etc. As a result of having similar rights, they should be taxed as corporeal persons. It is not rocket science to conclude that corporations in the U.S. should be taxed at the same effective tax rate as real persons.
  - dodobirdlord 7y ago
    Corporations are just bundles of stuff that people own. They have legal personhood as a convenient legal fiction because it would be obnoxious if all of the owners had to get together to sign things, and they have rights because people don't lose any of their individual rights just because they happened to form a corporation together. But at the end of the day, bundles of stuff. Economists seem to be broadly in agreement that tax systems would work better if corporations didn't pay income tax.
    - dnautics 7y ago
      What about the inverse. What if individuals didn't pay an income tax but corporations did, kind of as a "user fee" for the privilege of having limited liability.
      - dodobirdlord 7y ago
        Mostly because corporations are pretty different from people. They can own each other, buy and sell each other, split in two or be combined, etc. And they they can deduct business expenses in ways that people can’t deduct living expenses, because we rationally recognize that corporations mostly have lower profit margins than the tax bill would be on total revenue (and some always will at any tax level).
devmunchies 7y ago
Just capture it all as sales tax when the money is coming and and income tax when it being distributed to employees. get rid of corporate tax for ANY business, small or large.
- greglindahl 7y ago
  Unfortunately, that policy creates a perpetual motion machine.
TaylorAlexander 7y ago
Wouldn’t business still lobby for tax reductions in other areas? I feel like your argument that setting the corporate tax rate to zero would eliminate the incentive to influence the government ignores the many other reasons to do so.
- seibelj 7y ago
  They would lobby for regulations but this would eliminate a huge amount of economy-warping tax carve outs and prevent a lot of crony capitalist donations to politicians.
m_eiman 7y ago
There should also be no speed limits, since some people drive too fast anyway. And murder should also be legal, since some people murder anyway. Let’s just remove all laws, since they’ve all been broken at some time.
- manigandham 7y ago
  That's nonsensical and not even close to what was being said. Taxes are not a moral issue nor do they have a victim. The proposal isn't to eliminate them entirely, only to remove corporate income tax and make it up in other changes for a net win for the economy, and it's perfectly reasonable to discuss.
- seibelj 7y ago
  Your argument is totally irrelevant to corporate tax rates. I’m not advocating for legalizing murder, stop being ridiculous.
- kinleyd 7y ago
  The key difference is there is no large industry of lobbyists working for reckless driving and murder. If there was, I daresay some rethinking would be in order, even in these cases.
awb 7y ago
I think most people advocating for 0 income tax (corporate or personal) advocate replacing that tax with an increased sales tax instead. That way you don't have to mess with income reporting, deductions, loopholes, etc. Just pay a % of each transaction directly to the government. Credit card companies and banks could even automate this so it's completely transparent.
- dodobirdlord 7y ago
  Most people (that I know of at least) advocating for 0 corporate income tax would like to see it paired with eliminating the special tax rate for capital gains and rolling capital gains income into earned income.
manigandham 7y ago
As a business owner, I fully support this. There are plenty of other taxable outflows like payroll and sales. Having 0% corp income tax would also encourage spending and growth without trying to write down everything as COGS. Also LLCs operate this way already with pass-through taxes which is why they're used so often in real-estate. It allows for limiting liability and splitting ownership and management without adding a whole new tax basis.
- webpaymentsguy 7y ago
  I'm wary of incentivizing corporations as a personal wealth vehicle, but I still agree with you. Payroll, sales, capital gains, and value added taxes are a great place to shift or grow tax revenues should we ever reduce the corporate tax rate.
  - dodobirdlord 7y ago
    The point of capital gains taxes having a separate rate lower than income tax is mostly to account for the fact that corporations pay income tax, so income received from corporations has already been taxed once. One of the perks of abolishing corporate income tax is that it naturally should be paired with abolishing the distinction between capital gains and earned income, a double-whammy of tax code simplification.
pjc50 7y ago
That allows the unlimited concentration of wealth which can then be used for political purposes.
AndrewDucker 7y ago
How do you then deal with "Business A pays no corporation tax in country X, moves the money back to country Y, where there are low capital gains taxes, and gives it to the shareholders there." - which means that country X gets no taxes at all, despite that being where the business happens.

andrepd 7y ago

What about closing the loopholes? They're known for decades, why not stamp down, with teeth, on this sort of thing?

seibelj 7y ago
There will always be loopholes. Any corporate tax rate above 0% will have carve outs for any number of industries that are favored for any number of reasons. If it was 0, huge swaths of busy-work jobs in law and tax industries would go away. They provide no value to society.
- andrepd 7y ago
  But in a capitalist system, that which could be good is a problem. Now you have swathes of people who become unemployed. You now probably have to support them with welfare (and without corporate tax revenue to boot :)).

bpodgursky 7y ago

This is a 100% reasonable policy, but it's a really hard sell for people who don't understand how business income actually works, and how the money would be captured by far more functional taxes as dividend income or cap gains. I don't think your comment is going to do well on HN. Maybe leave INCREASE CAPITAL GAINS in all caps. Or, CAPTURE THE SAME MONEY AS DIVIDEND INCOME OR CAPITAL GAINS. Perhaps: IT IS THE SAME MONEY CAPTURED LESS CONFUSINGLY AND LESS PRONE TO CHEATING

seibelj 7y ago
Many of my comments do poorly on HN, but I’ll keep writing them because alternative opinions to the hive mind are valuable. I may even convince a few people!
- greglindahl 7y ago
  You might want to try leaving better comments? The one at the top doesn't really make any sense. If you left one that did convince people, it would probably get upvoted.
  - seibelj 7y ago
    Given all the other comments it sounds like many people agree with me. What part didn’t you understand?
    - greglindahl 7y ago
      "Many of my comments do poorly on HN" -- silbelj
      - seibelj 7y ago
        What particularly about the top comment is nonsensical to you? If English is not your first language I can try to simplify the prose to 5th grade English.
        greglindahl 7y ago
        Your insult is a good example of why you might be downvoted.
- Sabinus 7y ago
  I liked the comment thread you started. Thanks for bringing your ideas here and defending them in a reasonable and rational manner.

coral-snake 7y ago

How would you avoid companies-as-expense accounts? If I form "Coral-Snake & Co.", wouldn't I be able to pay 0% taxes by just directing all income/expenses into that shell? (Granted, I don't understand basically anything about tax law, so maybe this is already a well-defined problem with a well-defined solution.)

seibelj 7y ago
This is already doable with a multitude of ways. If I have profits, and I direct them to a business, then argue plausibly that my life expenses (lunches, travel, cars, computers) are for my business, I can write off all those expenses against my profits. Business owners do this all the time.
- coral-snake 7y ago
  Wouldn't a 0% corporate tax make it even more incentivized than it is today? As a novice, this feels like an approach that punishes the well-off, who may not expend the resources to structure all assets/liabilities this way, at the expense of the super-well-off who will simply pay multiple other people to re-organize their own financials.
- hcknwscommenter 7y ago
  Business owners that do that had better be very careful and keep plenty of documentation. There are legal "tests" (read requirements) that must be met for those lunches, travel, cars, computers, etc. to be considered an expense. In many cases, any "non-business" use/benefit/enjoyment renders the entire expense not a business expense. Yes, it is not so rare for small business owners to play loose with the rules. And then they get audited and end up paying a lot in back taxes.
asdfasgasdgasdg 7y ago
By making it illegal. People already do that and when they get caught they sometimes go to jail or otherwise pay severe penalties. Also a company with no profits already pays no taxes so to the extent you wanted to roll the dice this way you could do it just as well under current law.

BurningFrog 7y ago

You can make a good argument* that taxing corporations is weird anyway, since they're abstract legal concepts. Taxing the income real people get paid from the corporation would be the logical, and much simpler system. * You can of course also make a decent argument against this :)

jdkee 7y ago
Corporations have similar legal rights to corporeal persons. Freedom of speech, access to the legal system, etc. As a result of having similar rights, they should be taxed as corporeal persons. It is not rocket science to conclude that corporations in the U.S. should be taxed at the same effective tax rate as real persons.
- dodobirdlord 7y ago
  Corporations are just bundles of stuff that people own. They have legal personhood as a convenient legal fiction because it would be obnoxious if all of the owners had to get together to sign things, and they have rights because people don't lose any of their individual rights just because they happened to form a corporation together. But at the end of the day, bundles of stuff. Economists seem to be broadly in agreement that tax systems would work better if corporations didn't pay income tax.
  - dnautics 7y ago
    What about the inverse. What if individuals didn't pay an income tax but corporations did, kind of as a "user fee" for the privilege of having limited liability.
    - dodobirdlord 7y ago
      Mostly because corporations are pretty different from people. They can own each other, buy and sell each other, split in two or be combined, etc. And they they can deduct business expenses in ways that people can’t deduct living expenses, because we rationally recognize that corporations mostly have lower profit margins than the tax bill would be on total revenue (and some always will at any tax level).

devmunchies 7y ago

Just capture it all as sales tax when the money is coming and and income tax when it being distributed to employees. get rid of corporate tax for ANY business, small or large.

greglindahl 7y ago
Unfortunately, that policy creates a perpetual motion machine.

TaylorAlexander 7y ago

Wouldn’t business still lobby for tax reductions in other areas? I feel like your argument that setting the corporate tax rate to zero would eliminate the incentive to influence the government ignores the many other reasons to do so.

seibelj 7y ago
They would lobby for regulations but this would eliminate a huge amount of economy-warping tax carve outs and prevent a lot of crony capitalist donations to politicians.

m_eiman 7y ago

There should also be no speed limits, since some people drive too fast anyway. And murder should also be legal, since some people murder anyway. Let’s just remove all laws, since they’ve all been broken at some time.

manigandham 7y ago
That's nonsensical and not even close to what was being said. Taxes are not a moral issue nor do they have a victim. The proposal isn't to eliminate them entirely, only to remove corporate income tax and make it up in other changes for a net win for the economy, and it's perfectly reasonable to discuss.
seibelj 7y ago
Your argument is totally irrelevant to corporate tax rates. I’m not advocating for legalizing murder, stop being ridiculous.
kinleyd 7y ago
The key difference is there is no large industry of lobbyists working for reckless driving and murder. If there was, I daresay some rethinking would be in order, even in these cases.

awb 7y ago

I think most people advocating for 0 income tax (corporate or personal) advocate replacing that tax with an increased sales tax instead. That way you don't have to mess with income reporting, deductions, loopholes, etc. Just pay a % of each transaction directly to the government. Credit card companies and banks could even automate this so it's completely transparent.

dodobirdlord 7y ago
Most people (that I know of at least) advocating for 0 corporate income tax would like to see it paired with eliminating the special tax rate for capital gains and rolling capital gains income into earned income.

manigandham 7y ago

As a business owner, I fully support this. There are plenty of other taxable outflows like payroll and sales. Having 0% corp income tax would also encourage spending and growth without trying to write down everything as COGS. Also LLCs operate this way already with pass-through taxes which is why they're used so often in real-estate. It allows for limiting liability and splitting ownership and management without adding a whole new tax basis.

webpaymentsguy 7y ago
I'm wary of incentivizing corporations as a personal wealth vehicle, but I still agree with you. Payroll, sales, capital gains, and value added taxes are a great place to shift or grow tax revenues should we ever reduce the corporate tax rate.
- dodobirdlord 7y ago
  The point of capital gains taxes having a separate rate lower than income tax is mostly to account for the fact that corporations pay income tax, so income received from corporations has already been taxed once. One of the perks of abolishing corporate income tax is that it naturally should be paired with abolishing the distinction between capital gains and earned income, a double-whammy of tax code simplification.

pjc50 7y ago

That allows the unlimited concentration of wealth which can then be used for political purposes.

AndrewDucker 7y ago

How do you then deal with "Business A pays no corporation tax in country X, moves the money back to country Y, where there are low capital gains taxes, and gives it to the shareholders there." - which means that country X gets no taxes at all, despite that being where the business happens.