7 ms·

I actually don't get why corporation should pay taxes. When the profit of the company is distributed, or paying the employees, the employees/shareholders will b

by chaoxu 6y ago

I actually don't get why corporation should pay taxes. When the profit of the company is distributed, or paying the employees, the employees/shareholders will be taxed on that money.

Black101 6y ago
So it would be fine if only corporations would pay taxes? Get rid of all income tax, sales tax, etc...
- deleted 6y ago
  [deleted]
cjpearson 6y ago
Corporate taxes allow governments some level over control over corporate policy by incentivizing certain behaviors through deductions/credits etc. Also, dropping the corporate tax rate to 0 would probably be politically impossible, even an identical amount was then taxed on the individuals who benefit.
- hntrader 6y ago
  On the other hand, corporate taxes advantage large multi-national corporations over smaller companies because they have the resources and capability to manoeuvre around the rules and pay a lower relative tax rate. A government should be able to achieve control through Pigovian taxation, regulations and fines. I'm not convinced that a blanket corporate tax (which does indeed facilitate targeted tax breaks) is necessary beyond the other tools that already exist.
- TheCoelacanth 6y ago
  Corporate taxes should be structured more like usage fees instead of being a tax on profits. Want to emit carbon? It costs $X/ton. You shouldn't get away with doing bad stuff for free just because you did it unprofitably.
- gruez 6y ago
  >Corporate taxes allow governments some level over control over corporate policy by incentivizing certain behaviors through deductions/credits etc. Money is fungible. From an accounting perspective $1 given via tax credits is identical to $1 check given by the government. That said, your point is still valid because the former is much more politically palatable than the latter.
ocdtrekkie 6y ago
Well, one problem is this just encourages companies to collect and never disburse funds to employers or shareholders. Companies in some cases are holding onto hundreds of billions in cash offshore. Your idea would make that money free to keep out of the economy and out of employee's hands.
- refurb 6y ago
  Why would a company just sit on funds like that? It makes no sense. Any cash a company has is usually in short term investments. The current offshore “hoarding” is actually due to the current tax code.
  - ocdtrekkie 6y ago
    Is the problem the current tax code, or the fact that companies know they can pay politicians to change the tax code in their future to favor them, and they just need to wait it out? If companies knew they were going to pay the tax one way or the other, there would be no point in hoarding overseas. We should penalize companies for the behavior until it makes more sense for them to repatriate it immediately.
- hntrader 6y ago
  What would be the incentive for this? The whole point is for stakeholders to eventually get paid in a taxable event; either shareholders through a capital gains taxable event or employees through an income taxable event. Some tech companies are hoarding cash but I don't believe this is due to incentives created by taxation, although I could be mistaken.
  - SavantIdiot 6y ago
    > What would be the incentive for this? Greed, son, greed. That is why 5 people in the US have more money than the bottom 100 million. They didn't work hard to become that rich, they stole it by not paying wages, health care, benefits, or sharing the wealth. Because they do not have to, nothing prevents them from keeping it and paying low wages in an economy where the ONLY jobs are working for them. (Look at the most recent jobs reports, delivery and couriers grew by double digits, most everything else fell: what do you do when there literally are no other jobs except delivering goods to people and peeing in bottles because you don't get a break?)
bradleyjg 6y ago
What about the benefits that flow to foreign shareholders? You can’t effectively tax their capital gains.
- scatters 6y ago
  Instead, companies are incentivized to hold cash offshore.
- Erlich_Bachman 6y ago
  Why not just tax any sale of a stock or a divident payout in the country of the company, - not the country of owner of said stock? These operations have to go through country of company anyway...
  - bradleyjg 6y ago
    They don’t. Suppose I incorporate a company in Grand Bahama “Shell” and fund it with $10,000. The company turns around and buys $10,000 worth of Apple stock. A year later, Apple has doubled and I sell my company Shell to my friend John. If John and I are both non-Americans then the US taxing authority will never hear about this transfer or be able to tax the capital gain.
    - Erlich_Bachman 6y ago
      To realize that gain you actually need to sell the Apple stock. It would be perfectly possible (as I am proposing) and viable to make that transaction be forced to go through US. You could still sell the "Shell" to someone without US knowing about it, but once you actually would want to do something with that gained money - you would need to sell the underlying stock and deal with IRS.
    - valuearb 6y ago
      So you and your friend John are foreigners investing foreign capital in the U.S. company Apple. Why do we want to use the tax system to discourage this?
- 6y ago
FpUser 6y ago
The easy ( yeah right ) fix would be single universal sales tax. You buy something - you pay. Does not matter corporation or person. No expense claims on that either. This will also eliminate need to count assets as the taxes has already been paid on those. Tax can be progressive with the possibility of rate going negative for low income people.
- imtringued 6y ago
  The easy fix would be to have a land value tax that pays for everything. You can trivially dodge sales taxes by not declaring them. There are legal ways and illegal ways to not declare them. Meanwhile with land value taxes, you either own the land and you pay, or you don't own the land and you don't pay. The only way you can dodge this is by not owning assets in the US and by not living in the US. Landlords pass the land value taxes onto renters (individuals and companies) who then end up paying their fair share of the US taxes.
- thehappypm 6y ago
  I used to think this was a good idea but it ends up really, really favoring big corporations. Startup A wants to get into a market and it buys Zoom licenses, GSuite, AWS servers, etc and pays a hefty tax bill. Microsoft wants to get into that market? They don't have to buy any of that stuff, they already own everything. No tax dollars, lower cost to the incumbent.
  - castlecrasher2 6y ago
    yeah, the vast majority of government taxes and regulations on paper sound like they'll hurt the big guys but really just hurt the small ones
  - FpUser 6y ago
    I am a startup among the other things. So far I feed myself and was for the last 20 years ( startup of course is not that old ). I host my own servers and also rent dedicated servers elsewhere. I have no need for GSuite and Zoom. I talk using Skype which is free. I use vertical scalability and my servers are C++ so this infrastructure serves thousands requests per second without breaking sweat from a single server. In the end my current app serves tens of thousands of clients with very little monthly costs. Microsoft and other do own their infrastructure but if they're not renting it to clients it wastes money as it has ongoing costs so not, them using their own infra is anything but free.
koshnaranek 6y ago
Netflix makes a lot of money in Europe. Most of that profit would move to the US... even more than it currently does.
- imtringued 6y ago
  From the perspective of the US this is an argument against corporate taxes. There is a global corporate tax race to the bottom and some European countries are taking advantage of that.
asdff 6y ago
That's if you faithfully operate your corporation. You can set yourself up a corporation and pay yourself from that a very small salary on paper, while enjoying the funds through other means. Trump can't be on the board of any charities in the State of New York anymore after similar misuse of funds with his Trump Foundation nonprofit.
randomopining 6y ago
Corporations benefit from the lawful society, the road system, the public-educated workforce, the clean water, the geopolitical ties of the US, etc... The government needs to collect money to pay for current and futures investments that created that environment... no? What's the most effective way?

by chaoxu 6y ago

I actually don't get why corporation should pay taxes. When the profit of the company is distributed, or paying the employees, the employees/shareholders will be taxed on that money.

Black101 6y ago

So it would be fine if only corporations would pay taxes? Get rid of all income tax, sales tax, etc...

deleted 6y ago
[deleted]

cjpearson 6y ago

Corporate taxes allow governments some level over control over corporate policy by incentivizing certain behaviors through deductions/credits etc. Also, dropping the corporate tax rate to 0 would probably be politically impossible, even an identical amount was then taxed on the individuals who benefit.

hntrader 6y ago
On the other hand, corporate taxes advantage large multi-national corporations over smaller companies because they have the resources and capability to manoeuvre around the rules and pay a lower relative tax rate. A government should be able to achieve control through Pigovian taxation, regulations and fines. I'm not convinced that a blanket corporate tax (which does indeed facilitate targeted tax breaks) is necessary beyond the other tools that already exist.
TheCoelacanth 6y ago
Corporate taxes should be structured more like usage fees instead of being a tax on profits. Want to emit carbon? It costs $X/ton. You shouldn't get away with doing bad stuff for free just because you did it unprofitably.
gruez 6y ago
>Corporate taxes allow governments some level over control over corporate policy by incentivizing certain behaviors through deductions/credits etc. Money is fungible. From an accounting perspective $1 given via tax credits is identical to $1 check given by the government. That said, your point is still valid because the former is much more politically palatable than the latter.

ocdtrekkie 6y ago

Well, one problem is this just encourages companies to collect and never disburse funds to employers or shareholders. Companies in some cases are holding onto hundreds of billions in cash offshore. Your idea would make that money free to keep out of the economy and out of employee's hands.

refurb 6y ago
Why would a company just sit on funds like that? It makes no sense. Any cash a company has is usually in short term investments. The current offshore “hoarding” is actually due to the current tax code.
- ocdtrekkie 6y ago
  Is the problem the current tax code, or the fact that companies know they can pay politicians to change the tax code in their future to favor them, and they just need to wait it out? If companies knew they were going to pay the tax one way or the other, there would be no point in hoarding overseas. We should penalize companies for the behavior until it makes more sense for them to repatriate it immediately.
hntrader 6y ago
What would be the incentive for this? The whole point is for stakeholders to eventually get paid in a taxable event; either shareholders through a capital gains taxable event or employees through an income taxable event. Some tech companies are hoarding cash but I don't believe this is due to incentives created by taxation, although I could be mistaken.
- SavantIdiot 6y ago
  > What would be the incentive for this? Greed, son, greed. That is why 5 people in the US have more money than the bottom 100 million. They didn't work hard to become that rich, they stole it by not paying wages, health care, benefits, or sharing the wealth. Because they do not have to, nothing prevents them from keeping it and paying low wages in an economy where the ONLY jobs are working for them. (Look at the most recent jobs reports, delivery and couriers grew by double digits, most everything else fell: what do you do when there literally are no other jobs except delivering goods to people and peeing in bottles because you don't get a break?)

bradleyjg 6y ago

What about the benefits that flow to foreign shareholders? You can’t effectively tax their capital gains.

scatters 6y ago
Instead, companies are incentivized to hold cash offshore.
Erlich_Bachman 6y ago
Why not just tax any sale of a stock or a divident payout in the country of the company, - not the country of owner of said stock? These operations have to go through country of company anyway...
- bradleyjg 6y ago
  They don’t. Suppose I incorporate a company in Grand Bahama “Shell” and fund it with $10,000. The company turns around and buys $10,000 worth of Apple stock. A year later, Apple has doubled and I sell my company Shell to my friend John. If John and I are both non-Americans then the US taxing authority will never hear about this transfer or be able to tax the capital gain.
  - Erlich_Bachman 6y ago
    To realize that gain you actually need to sell the Apple stock. It would be perfectly possible (as I am proposing) and viable to make that transaction be forced to go through US. You could still sell the "Shell" to someone without US knowing about it, but once you actually would want to do something with that gained money - you would need to sell the underlying stock and deal with IRS.
  - valuearb 6y ago
    So you and your friend John are foreigners investing foreign capital in the U.S. company Apple. Why do we want to use the tax system to discourage this?
6y ago

FpUser 6y ago

The easy ( yeah right ) fix would be single universal sales tax. You buy something - you pay. Does not matter corporation or person. No expense claims on that either. This will also eliminate need to count assets as the taxes has already been paid on those. Tax can be progressive with the possibility of rate going negative for low income people.

imtringued 6y ago
The easy fix would be to have a land value tax that pays for everything. You can trivially dodge sales taxes by not declaring them. There are legal ways and illegal ways to not declare them. Meanwhile with land value taxes, you either own the land and you pay, or you don't own the land and you don't pay. The only way you can dodge this is by not owning assets in the US and by not living in the US. Landlords pass the land value taxes onto renters (individuals and companies) who then end up paying their fair share of the US taxes.
thehappypm 6y ago
I used to think this was a good idea but it ends up really, really favoring big corporations. Startup A wants to get into a market and it buys Zoom licenses, GSuite, AWS servers, etc and pays a hefty tax bill. Microsoft wants to get into that market? They don't have to buy any of that stuff, they already own everything. No tax dollars, lower cost to the incumbent.
- castlecrasher2 6y ago
  yeah, the vast majority of government taxes and regulations on paper sound like they'll hurt the big guys but really just hurt the small ones
- FpUser 6y ago
  I am a startup among the other things. So far I feed myself and was for the last 20 years ( startup of course is not that old ). I host my own servers and also rent dedicated servers elsewhere. I have no need for GSuite and Zoom. I talk using Skype which is free. I use vertical scalability and my servers are C++ so this infrastructure serves thousands requests per second without breaking sweat from a single server. In the end my current app serves tens of thousands of clients with very little monthly costs. Microsoft and other do own their infrastructure but if they're not renting it to clients it wastes money as it has ongoing costs so not, them using their own infra is anything but free.

koshnaranek 6y ago

Netflix makes a lot of money in Europe. Most of that profit would move to the US... even more than it currently does.

imtringued 6y ago
From the perspective of the US this is an argument against corporate taxes. There is a global corporate tax race to the bottom and some European countries are taking advantage of that.

asdff 6y ago

That's if you faithfully operate your corporation. You can set yourself up a corporation and pay yourself from that a very small salary on paper, while enjoying the funds through other means. Trump can't be on the board of any charities in the State of New York anymore after similar misuse of funds with his Trump Foundation nonprofit.

randomopining 6y ago

Corporations benefit from the lawful society, the road system, the public-educated workforce, the clean water, the geopolitical ties of the US, etc... The government needs to collect money to pay for current and futures investments that created that environment... no? What's the most effective way?