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In the example provided, the business does not pay tax on the $100,000 given to the owner (as salary or other form of compensation) as that is an expense of the

In the example provided, the business does not pay tax on the $100,000 given to the owner (as salary or other form of compensation) as that is an expense of the business. The business only pays tax on the profits to the business (as an entity separate from the owner). There is nothing illogical with the phrase "unfair to corporations". A corporation is a person in the U.S. Is is it illogical to say, "unfair to people"? It can be said of a policy that it is unfair to corporations. Suppose the only entities that were taxed were corporate entities. In such a case one would reasonably say that the tax structure was unfair to corporations. Owners of a corporation are stock holders. They make a profit on their holding via dividends and selling the stock at a higher price than what they bought it for. I disagree that it is unfair to a stock holder to pay taxes on the dividends received or on the capital gains. I believe it is a sound principle - for the maintenance of consistency, which is what fairness really is about in this issue - that entities that make a profit pay tax on it.

yummyfajitas 16y ago
You are conflating salaries and dividends. The business doesn't pay tax on $100k salary (it's an expense) and the owner pays ordinary income tax on that. The same is true for pass-through corporations, which make up a large fraction of the profitable corporations that pay no taxes. The business does pay tax on profits and spends after tax dollars distributing dividends to shareholders. Similarly, after tax dollars contribute to a corporate valuation which enables owners to sell shares and take capital gains. A corporation is a person in the U.S. The term "person" has been overloaded and you are conflating different uses of the term. A corporation is a legal person, which means they can enter contracts, file lawsuits and be sued. This provides a common interface for counterparties, nothing more. A corporation is a set of assets, liabilities, a web of contracts governing the management of said assets/liabilities and a government guarantee of limited liability. I can't see how it makes sense to discuss whether something is unfair to my company. Similarly, it makes no sense discussing whether something is unfair to my cell phone and service contract. I disagree that it is unfair to a stock holder to pay taxes on the dividends received or on the capital gains. Me too. All I said is that it's unfair to tax profits to the tune of $20k, dividends to the tune of $15k, and then pretend the owner of the corporation is only paying $15k in taxes. If you want to discuss the taxes paid by the top 400 taxpayers in the US, include the corporate taxes paid by the companies they own.
- yequalsx 16y ago
  In my example the $100,000 was salary. When you wrote: "I said it was unfair to their owners. Consider your hypothetical business owner. Out of the $100k in profits, the business pays perhaps $20k. The business owner then pays another $15k. But then people trying to score political points complain that he is getting away with something, and paying only $15k on $80k (19%). I think that's unfair." I thought you were talking about salary. Sorry for the confusion. I can't think of an example where it makes sense to say, "that isn't fair to your cell phone". I can think of lots of examples where it makes sense to say, "that isn't fair to cell phone providers [companies]".

yummyfajitas 16y ago

You are conflating salaries and dividends. The business doesn't pay tax on $100k salary (it's an expense) and the owner pays ordinary income tax on that. The same is true for pass-through corporations, which make up a large fraction of the profitable corporations that pay no taxes. The business does pay tax on profits and spends after tax dollars distributing dividends to shareholders. Similarly, after tax dollars contribute to a corporate valuation which enables owners to sell shares and take capital gains. A corporation is a person in the U.S. The term "person" has been overloaded and you are conflating different uses of the term. A corporation is a legal person, which means they can enter contracts, file lawsuits and be sued. This provides a common interface for counterparties, nothing more. A corporation is a set of assets, liabilities, a web of contracts governing the management of said assets/liabilities and a government guarantee of limited liability. I can't see how it makes sense to discuss whether something is unfair to my company. Similarly, it makes no sense discussing whether something is unfair to my cell phone and service contract. I disagree that it is unfair to a stock holder to pay taxes on the dividends received or on the capital gains. Me too. All I said is that it's unfair to tax profits to the tune of $20k, dividends to the tune of $15k, and then pretend the owner of the corporation is only paying $15k in taxes. If you want to discuss the taxes paid by the top 400 taxpayers in the US, include the corporate taxes paid by the companies they own.

yequalsx 16y ago
In my example the $100,000 was salary. When you wrote: "I said it was unfair to their owners. Consider your hypothetical business owner. Out of the $100k in profits, the business pays perhaps $20k. The business owner then pays another $15k. But then people trying to score political points complain that he is getting away with something, and paying only $15k on $80k (19%). I think that's unfair." I thought you were talking about salary. Sorry for the confusion. I can't think of an example where it makes sense to say, "that isn't fair to your cell phone". I can think of lots of examples where it makes sense to say, "that isn't fair to cell phone providers [companies]".