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According to Planet Money, dropping the corporate income tax to 0% is one of the most popular policies among economists. https://www.npr.org/sections/money/201

• _delirium 6y ago
  > If companies reinvest the money into their businesses, that's good. This is a bit of a side issue, but if a company really does reinvest the money into its business, in most cases that reinvestment will be spent on things that are deductible as a business expense, so that portion of revenue won't be profit and not subject to corporate income tax. That's one reason Amazon pays close to zero corporate income tax: they book very little in profit, since they reinvest most of the their revenue into qualifying business expenses to expand the business.
  • zdragnar 6y ago
    Which is intentional- Amazon grew as a company, and we want companies to grow. Growing companies hire more people, and pay the people they hire more.
  • game_the0ry 6y ago
    That's a good point. You think most of corporate america would notice Amazon and try to do similar, instead they buy back stock. Buying back stock is a less risky short term strategy to improve stock performance. Maybe tax stock buy backs?
• mc32 6y ago
  Didn’t we have lots of people complaining that the Trump admin was giving away tax money by lowering the Corp tax rate down to 23%? I can only imagine the wild heckling of any present of future admin if they were so bold as to lower it to 0%. Krugman would probably have a fit.
• nodamage 6y ago
  In this scenario how would you prevent individuals from routing their income through corporations in order to avoid paying personal income tax?
  • 0xDEEPFAC 6y ago
    Isn't that what rich people do anyways? Foundations and corporate shells to hide their wealth?
    • nodamage 6y ago
      Not really. Or at least, not nearly to the extent possible if you were to zero the corporate tax rate.
  • ipaddr 6y ago
    You can get away with free meals, travel, education, housing, clothes, pocket money and entertainment now. These become expensives and are not taxed anyways. So no change on that front. This makes profit tax-free. Profit is usually split with the shareholders or invested back. Shareholders are taxed if a capital gains event occurs. Why tax profits on money that will be invested back into the company?
    • nodamage 6y ago
      Let's say hypothetically John Smith makes $500k/year as a software consultant. Instead of being paid directly he starts John Smith Inc. and routes his income through his corporation. He withdraws $100k/year in dividends to pay his living expenses which is paid under capital gains rates, the other $400k/year is invested in the stock market and grows tax-free forever inside the tax-sheltered corporation. The vast majority of John Smith's income will never be taxed as he only needs to withdraw enough in dividends every year to cover his living expenses.
      • tomp 6y ago
        What exactly is the problem here? How is this meaningfully different from investing your own post-tax $500k into the market and growing it forever? If you dislike this situation, what you need is wealth tax, not profit tax. As the value of John Smith Inc. grows over time, John Smith the person will have to pay increasing amount of wealth taxes...
• jl2718 6y ago
  I like these, but I think consumption tax is way too complicated to collect fairly. The simplest tax is literally no tax at all, just prudent spending on bond issuance. It works if the deflationary effect of greater productivity outpaces the monetary inflation. It fails when the money is wasted.
  • notahacker 6y ago
    "Wasted" is doing a lot of work in that last sentence. Unfunded spending on primary education and healthcare is going to generate more current period monetary inflation than near term output, never mind transfer payments to the unemployed, but it's a helluva stretch to argue that this makes those areas of spending a waste of money
    • jl2718 6y ago
      There is almost certainly a basic level of prudent healthcare spending which is current-period deflationary simply because healthy people are more productive (q.e.d. 2020), although the moral triage may not be palatable. Basic education is also deflationary because any expectation of increased productivity encourages current investment. The only caveat is if public spending on education reduces private saving for education, which would add inflationary pressure in the current period. I would also posit that the specific case of primary or trade education spending on the lower economic tier is immediately deflationary for many other reasons. Maybe unemployment insurance or even basic income is also deflationary, or maybe it’s not, but if it isn’t, then maybe it’s not such a great idea. I don’t think this rubric rules out any category of spending, but it certainly does limit spending to the point of negative returns. I would hope also that this methodology may de-politicize government spending by achieving a baseline result that is hard to argue against: zero taxes, high productivity, and no inflation. Any cuts would be foolish, and any additional tax or spending is forced charity. Re: “helluva stretch to argue...” I see this pattern a lot in politics. Merely stating that something is hard to argue against, is not at all a convincing argument for that thing. It is simply an intimidation tactic, or an attempt to shift the burden of proof to the contrapositive. All contrapositives are hard to argue for, even if the positive is hard to argue for. For instance, prove to me why it is a bad idea to invade France. I have absolutely no reason at all to invade France, and now I’ve given you the chance to fail at your argument and thereby start a ridiculous war. The “hard to argue” pattern is even more convincing because it’s objectively true despite having no rational power to convince on its own. It’s hard to argue that we will never have to invade France. It’s much harder to argue that we will ever have to invade France, but somehow the former statement is interpreted as support for the latter.
• dkjaudyeqooe 6y ago
  So if I make billions via my genius SaaS company in the US, with 95% gross profit margin, get a nice apartment in Monaco and pay exactly 0% tax anywhere, ever on said billions, that's good? Did these economists think this idea through?
  • ceejayoz 6y ago
    The US happily imposes taxes on its citizens even if they are outside of its borders, and that apartment and all your other company perks would be considered taxable income. You can renounce your citizenship, but you'll be subject to exit tax on the way out. Yes, they've thought this through.
    • dkjaudyeqooe 6y ago
      I was never a US citizen, I never even set foot in the country. I can do the same with every other country (except one small African country) because they tax according to residency. I'm only a resident of Monaco.
      • deleted 6y ago
        [deleted]
  • zdragnar 6y ago
    If you make billions, you pay individual taxes (including on stock granted to you, and again for any capital gains if you hold them over a year). If the company makes billions, it spends it on things like salary and growth investment (buying goods and services), or dividends or buying out shareholders (all of which is taxed along the way). If you move to Monaco but stay a US citizen, you still owe US taxes on income. If you move and renounce your citizenship, you have to pay a significant sum of money based on your wealth (including stocks and ownership in companies). Your scenario has nothing to do with the corporate tax rate.
    • dkjaudyeqooe 6y ago
      Why are you assuming US citizenship? My SaaS, and sucking billions out of the US economy, doesn't require it. I couldn't pull off 0% taxes without using corporate entities that are untaxed, all countries (at least try to) tax all income produced within their jurisdictions.
• samlevine 6y ago
  Famously capitalist Sweden has a lower tax on corporate income than the US. It's a good policy, and you should be for it even if you want to soak the rich.