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Why can't governments learn that taxing corporations is pointless? The same revenue is can be raised more simply through sales tax and personal income tax on s

Why can't governments learn that taxing corporations is pointless? The same revenue is can be raised more simply through sales tax and personal income tax on salaries and distributions.

throwaway6734 5y ago
Populism is a hell of a drug.
neilwilson 5y ago
The best tax is one that is imposed on an individual but paid at source by the corporation paying them. Individuals shouldn't see tax. That way the voters don't complain when you need to put it up. Sales tax is similarly a pain - particularly when you have differing rates. At which point we get into the famous is it a cake or a biscuit type cases to decide where the dividing line is.
- adolph 5y ago
  People not knowing their tax burden: feature or bug?
  - aNoob7000 5y ago
    I think paying your state and federal taxes in the United States should be seamless. Your employer should take the taxes out of your paycheck. At the end of the month/year, you should get a statement showing all the taxes you paid. I recently had to update my W4 form at work for tax withholding, and what a pain in the ass to read and decipher. Add to that, and I had to do the same thing for my state taxes. I want to point out that Congress has shot down the idea of making it easier to pay your taxes many times. I'm not sure if it is Intuit or some other entity, but paying your taxes should be easy. If you don't like the level of taxation, then work to reduce them, but paying them should be easy.
    - nly 5y ago
      Do most Americans have to do their own taxes? It boggles my mind that this is the case.
      - neilwilson 5y ago
        They do. The UK PAYE (Pay as You Earn) system has a 1% tax gap[1] compared to 12.9% on income tax and 7% on corporation tax. It's extraordinarily more efficient to tax at source. [1]The percentage tax gap is the tax gap pound value as a proportion of theoretical liability, where theoretical liability is defined as the tax gap plus the amount of tax actually received.
  - TimPC 5y ago
    The original purpose wasn’t to hide taxation but to effectively get more money via interest by the government getting paid sooner.
    - adolph 5y ago
      As I understand it in the US, the average taxpayer’s experience is that of annual taxes but the reality is that taxes are paid quarterly and settled on an annual basis. The self employed see this more clearly. Those in employer-employee relationships don’t see it since the employer sends the quarterly check to the various income taxing jurisdictions. Any interest made from the temporary storage of cash is probably more favorable to the employer than the government since the government spends cash faster than it arrives. The government does not escrow tax remittances in an interest generating account and then withdraw it all at year’s end.
      - TimPC 5y ago
        Historically individual taxes were annual while some business taxes were quarterly. In Canada, corporate income tax is annual but sales tax remittances are quarterly. The interest is favourable to government since it reduces the amount of debt it needs to carry for a time. Admittedly it’s small now but in the 80’s it was a very big deal. I admittedly have never ran payroll taxes for a business in the US so I don’t know how that in particular works. I do however know Milton Friedman came up with the idea of withholding while working for the government early in his career and he always claimed that it was motivated by interest.
- roenxi 5y ago
  To invert that: if people understood how much the services being provided to them cost they would not consume them. The goal of government shouldn't be to obscure the cost of government services. The cost should be justified.
  - AnIdiotOnTheNet 5y ago
    > To invert that: if people understood how much the services being provided to them cost they would not consume them. I don't think that's true. I think what is true, and what we've seen time and time again, is that people don't like the cost of services that others take advantage of that they don't need to.
  - neilwilson 5y ago
    That puts the cart before the horse. People voted for them, so they are provided - and the people required to run them removed from the private sector. To invert that, what exactly are you planning on doing with the people currently in the public service, which the people voted for, that is so much more important than providing the services the people voted for? It is for the private sector to justify its use of resources, not the public sector. The public sector has a democratic mandate.
- throwaway0a5e 5y ago
  >Individuals shouldn't see tax. That way the voters don't complain when you need to put it up. If taxation is such an inherent good then why does it need to be hidden from people? If the rate is justifiable the government shouldn't need to hide it. When you consider a democratic society where the government at least indirectly serves the will of the people the idea of the government needing to pull a fast one on the people or obfuscate its actions lest the people tell them to stop becomes even more absurd.
  - johnday 5y ago
    > If taxation is such an inherent good then why does it need to be hidden from people? Because the externalities are not always visible, and people do not have enough free bandwidth to spend the time understanding them.
    - willcipriano 5y ago
      Call me old fashioned, but I believe it is the role of the person being paid to justify the expense. If you get hand wavy and tell me its too complicated I'm just going to presume you are stealing from me.
      - johnday 5y ago
        The Government is not "being paid" tax dollars[^0], it is (in principle, at least) spending and redistributing wealth in ways which benefit all citizens. UKGov releases these reports, for example https://www.gov.uk/government/collections/national-statistics-release https://www.gov.uk/government/collections/national-statistic... - good luck condensing these down to the point where they can fit in any taxpayer's head, and this is just the surface level outgoings. > If you get hand wavy and tell me its too complicated [...] Unfortunately, it really is too complicated. A doctorate in economics might get you a decent way towards understanding the good that taxation provides, but given that economists still have differences of opinion, maybe not a complete understanding. [^0]: Well it is, but only a tiny proportion.
- dkirill 5y ago
  I strongly disagree with that idea. Voters must know exactly how much they are paying for something for them to care about efficiency of government spendings. What you are proposing is how things currently work in Russia and trust me you don't want that
zapdrive 5y ago
Try saying this on leftist websites like reddit. They believe taxing corporations is the solution to all world problems.
- I_am_tiberius 5y ago
  I guess this is related to the age of the Reddit's users.
tasogare 5y ago
> Why can't governments learn that taxing corporations is pointless? Pure ideological point of view with no grounding in reality. It's totally possible to tax corporations. In fact, some state like Japan and South Korean get more money from enterprises than individuals, the reverse of Europe and US (until recently consumption tax was 5% in Japan, now is 8%, still far less than EU's typical 20%). The solution you propose doesn't even work well, since it's one more incentive for (mega-)corps to not raise salaries, as keeping salary low means also low taxes.
- adolph 5y ago
  A political challenge to taxing larger entities is that those entities have increased incentive to avoid tax. This has distortionary effects elsewhere in that it is logical for such an entity to pay fractional X toward a politician’s personal interest instead of the full X to the government.
- TimPC 5y ago
  Most economists support a 0% corporate tax rate and higher taxes on dividends and capital gains. This closes most loopholes and doesn’t tax money that corporations reinvest in growing the economy.
one2three4 5y ago
I can assure you that on the personal income tax front and much more so at the indirect tax of cost of living the Irish govt is doing just fine thank you.
breakfastduck 5y ago
The revenue is only the same because we dont actually collect corporation tax because we let people avoid it. To act like there's no additional benefit on taxing literally billions in revenue is absolutely nonsensical.
- roenxi 5y ago
  Say you redirect $100 million away from Microsoft's research into artificial intelligence and redirect it to a government project promoting artificial intelligence research + junkets for government employees. It is certainly plausible that a tax will provide no additional benefit. Microsoft is one of the great value creators of the late 20th/early 21st century. it is not immediately obvious why redirecting money away from the company is a good idea.
  - pydry 5y ago
    It's interesting that you said redirect $100 million away from Microsoft's research (cost) rather than Microsoft's shareholders pockets. Were you deliberately or accidentally confusing the two?
    - roenxi 5y ago
      A reasonable point. But then the money is being taxed, because money is taxed when it is returned to shareholders. It certainly isn't obvious that raising taxes is a net win. Experience to date is that a 100% tax rate is very bad, so logically there is a fair limit somewhere between 0% and 100% - ie, a specific fair rate that is not the word "more". Certainly Ireland would like a slice of those billions of dollars - but if they try to take a big slice, Microsoft won't route the billions through Ireland. So it is a somewhat moot point in that specific case.
    - TimPC 5y ago
      If you just want to redirect money from shareholders reduce corporate tax rates to 0% and tax dividends and capital gains more. Since they aren’t doing that they are admitting they want to tax money that corporations would re-invest.
cycomanic 5y ago
Well this creates the incentive that corporations try to minimise their employees, or try to shift employment to low tax/low cost countries. Now that very well be desirable for corporations and people who derive income primarily from capital, but it is not desirable for society. The whole idea behind corporate tax is that they should be taxes on the profits they make, where they make them.
- injb 5y ago
  >>Well this creates the incentive that corporations try to minimise their employees, or try to shift employment to low tax/low cost countries. Now that very well be desirable for corporations and people who derive income primarily from capital, but it is not desirable for society You mean not desirable for society in high tax/high cost countries I presume? What about society in low tax/low cost countries? It seems to be working out pretty well for Ireland[1]. That's why they resist immense pressure form the EU and maintain a low corporate tax rate. [1] which is a high cost/low corporate tax country
  - cycomanic 5y ago
    Well except that Ireland receives significant subsidies from the EU. So essentially this is a case of having the high tax/cost countries pay for your infrastructure so you can be a low cost country.
rexreed 5y ago
Even the Land Value Tax as a single tax is gaining some momentum. An idea well over a hundred years old: https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
crocal 5y ago
Taxing mega corporations is essential. I would add that you need to tax them to oblivion after shareholder’s expectations are reasonably satisfied. If you don’t, you essentially create rogue institutions with deep pockets that will attempt to take political control of the nation for their selfish interests. Adam Smith had interesting things to say about that.
- danuker 5y ago
  > will attempt to take political control of the nation for their selfish interests Kind of like the current lobbying going on all over the world?
  - crocal 5y ago
    Well, yes and no. In my opinion, lobbying in itself is not evil if it remains within reasonable limits. One of the limiting factor is to avoid giving the said lobbies unlimited funding. That is one of the reason for taxing corporations.
- tonyedgecombe 5y ago
  >Taxing mega corporations is essential. It's not in this case because the corporation didn't pay any tax.
- fallingknife 5y ago
  Why is a corporation with political power worse than a government? You will probably say that I have more control over government because of democracy. But in practice I have a stronger control mechanism over corporations, who I can choose to pay for services. When there is a problem with my Amazon package, I get quick responsive customer service. If you have a problem with government, good luck!
  - medvezhenok 5y ago
    You have control over corporations insofar as there is actually a competitive marketplace (which is enforced by anti-trust, which is the purview of the government). If corporations capture the market/government and become monopolies/oligopolies and you have no choices (i.e. Comcast in some regions), you will have no more recourse.
yosamino 5y ago
I am sure the topic is complex, but from the article: > The company, Microsoft Round Island One, posted profits last year equal to nearly three-quarters of Ireland’s entire gross domestic product (GDP) – despite having zero employees. That, to me, sounds like maybe the plan to collect personal income tax on salaries might not be so straight forward.
- rwmj 5y ago
  I think the argument is that it would be collected on the sales and expenses of the companies that "feed into" this employeeless entity. Those other companies probably aren't located in Ireland or Bermuda, but around the world, resulting (in theory) in a more even distribution of tax receipts.
lukasm 5y ago
> taxing corporations is pointless the argument for taxing profits: - incentivise investments - companies are less likely to hide expenses like salaries - It's more fair for high cost business (car company vs google) Personally, I'd tax all corporation 3% of their revenue. You could lover it by to 2% by what is your operating profit ratio to revenue. You can lower it to 1% by a list of 20-30 deductibles e.g. you install solar panels. BUT the minimum you have to pay is 1%. If your company cannot pay 1% of the revenue you don't have a viable business. Average corporation spends more on accounting and consulting.
- dkyc 5y ago
  FYI, this setup would be extremely beneficial to gigantic companies and likely would lead to immense consolidation, since effectively you would tax 1% on every supplier transaction down the chain, whereas the vertically integrated gigacompany would only pay 1% once.
  - lukasm 5y ago
    nope this tax scheme would only apply to certain corporations e.g. Revenue 0-20mln EUR, you keep the existing tax scheme Revenue 20-100mln - you can choose the tax scheme Revenue 100mln+ - you have to tax revenue Thresholds are up for debate. Also, companies already pay around 0-5% of their revenue in income tax. Gigantic companies pay close to 0.
    - dkyc 5y ago
      This doesn't change the fundamental fact that a tax on every transaction disincentives B2B transactions and therefore directly incentivizes large, vertically integrated companies. You can try to work against it by arbitrary progressive taxation thresholds, but this doesn't change the underlying mathematics. Also, there's a reason why progressive taxation isn't widely implemented for corporations, because it's very easy to circumvent by splitting up and increasing the number of legal entities. A sensible way around that is taxing the _ultimate beneficiary_ rather than the company itself (i.e. the owners as natural persons), which is what GP suggests with "sales tax and personal income tax on salaries and distributions".
tgv 5y ago
Sales tax disproportionally affects the poorer. That's undesirable, to say the least. Restructuring taxes will take a lot more work, and then end up with hundreds, if not thousands of extra taxes, each of which will be "avoidable" if you have enough lawyers, simply because the system won't be able to keep up.
nivenkos 5y ago
That punishes working people just for working! How are you meant to afford a house and stuff with taxes like that? We need wealth tax - go after the shareholders and landowners, who don't directly create value and dodge a lot of tax.
- fallingknife 5y ago
  You buy $10K of DOGE at $0.0001 in 12-1-2020 and it goes to $0.10 on 12-31. You now have $10MM in wealth, and will, owe $500K to the government. DOGE goes back down to $0.0001 on 1-1. Now you owe $500K of taxes and have $10K of assets. "But you should just sell 5% on 12-31 and you will have enough to pay taxes" you say. Yeah, you and everyone else who needs to pay wealth tax. Know what it looks like when everybody sells at the same time? 2008 or 1929. Wealth tax is dumb.
  - nly 5y ago
    Capital gains taxes are accrued on disposal. Until you sell you owe nothing
    - fallingknife 5y ago
      Yes, and that makes sense because it is income. A wealth tax doesn't do that or else it wouldn't really be a wealth tax.
  - nivenkos 5y ago
    That isn't what a wealth tax is, or how they are implemented. Mainly land value tax, inheritance tax and property tax would be a good start. And we already have capital gains tax to cover the sale of appreciating assets as you describe (note it is only at sale).
    - fallingknife 5y ago
      The first is a more limited type of property tax, which we already have. We also have inheritance tax. The vast majority of wealth is held in capital assets like stocks and bonds (or DOGE), so if you don't tax that, then you aren't really taxing wealth, and taxing these assets is a nightmare.

Why can't governments learn that taxing corporations is pointless? The same revenue is can be raised more simply through sales tax and personal income tax on salaries and distributions.

throwaway6734 5y ago

Populism is a hell of a drug.

neilwilson 5y ago

The best tax is one that is imposed on an individual but paid at source by the corporation paying them. Individuals shouldn't see tax. That way the voters don't complain when you need to put it up. Sales tax is similarly a pain - particularly when you have differing rates. At which point we get into the famous is it a cake or a biscuit type cases to decide where the dividing line is.

adolph 5y ago
People not knowing their tax burden: feature or bug?
- aNoob7000 5y ago
  I think paying your state and federal taxes in the United States should be seamless. Your employer should take the taxes out of your paycheck. At the end of the month/year, you should get a statement showing all the taxes you paid. I recently had to update my W4 form at work for tax withholding, and what a pain in the ass to read and decipher. Add to that, and I had to do the same thing for my state taxes. I want to point out that Congress has shot down the idea of making it easier to pay your taxes many times. I'm not sure if it is Intuit or some other entity, but paying your taxes should be easy. If you don't like the level of taxation, then work to reduce them, but paying them should be easy.
  - nly 5y ago
    Do most Americans have to do their own taxes? It boggles my mind that this is the case.
    - neilwilson 5y ago
      They do. The UK PAYE (Pay as You Earn) system has a 1% tax gap[1] compared to 12.9% on income tax and 7% on corporation tax. It's extraordinarily more efficient to tax at source. [1]The percentage tax gap is the tax gap pound value as a proportion of theoretical liability, where theoretical liability is defined as the tax gap plus the amount of tax actually received.
- TimPC 5y ago
  The original purpose wasn’t to hide taxation but to effectively get more money via interest by the government getting paid sooner.
  - adolph 5y ago
    As I understand it in the US, the average taxpayer’s experience is that of annual taxes but the reality is that taxes are paid quarterly and settled on an annual basis. The self employed see this more clearly. Those in employer-employee relationships don’t see it since the employer sends the quarterly check to the various income taxing jurisdictions. Any interest made from the temporary storage of cash is probably more favorable to the employer than the government since the government spends cash faster than it arrives. The government does not escrow tax remittances in an interest generating account and then withdraw it all at year’s end.
    - TimPC 5y ago
      Historically individual taxes were annual while some business taxes were quarterly. In Canada, corporate income tax is annual but sales tax remittances are quarterly. The interest is favourable to government since it reduces the amount of debt it needs to carry for a time. Admittedly it’s small now but in the 80’s it was a very big deal. I admittedly have never ran payroll taxes for a business in the US so I don’t know how that in particular works. I do however know Milton Friedman came up with the idea of withholding while working for the government early in his career and he always claimed that it was motivated by interest.
roenxi 5y ago
To invert that: if people understood how much the services being provided to them cost they would not consume them. The goal of government shouldn't be to obscure the cost of government services. The cost should be justified.
- AnIdiotOnTheNet 5y ago
  > To invert that: if people understood how much the services being provided to them cost they would not consume them. I don't think that's true. I think what is true, and what we've seen time and time again, is that people don't like the cost of services that others take advantage of that they don't need to.
- neilwilson 5y ago
  That puts the cart before the horse. People voted for them, so they are provided - and the people required to run them removed from the private sector. To invert that, what exactly are you planning on doing with the people currently in the public service, which the people voted for, that is so much more important than providing the services the people voted for? It is for the private sector to justify its use of resources, not the public sector. The public sector has a democratic mandate.
throwaway0a5e 5y ago
>Individuals shouldn't see tax. That way the voters don't complain when you need to put it up. If taxation is such an inherent good then why does it need to be hidden from people? If the rate is justifiable the government shouldn't need to hide it. When you consider a democratic society where the government at least indirectly serves the will of the people the idea of the government needing to pull a fast one on the people or obfuscate its actions lest the people tell them to stop becomes even more absurd.
- johnday 5y ago
  > If taxation is such an inherent good then why does it need to be hidden from people? Because the externalities are not always visible, and people do not have enough free bandwidth to spend the time understanding them.
  - willcipriano 5y ago
    Call me old fashioned, but I believe it is the role of the person being paid to justify the expense. If you get hand wavy and tell me its too complicated I'm just going to presume you are stealing from me.
    - johnday 5y ago
      The Government is not "being paid" tax dollars[^0], it is (in principle, at least) spending and redistributing wealth in ways which benefit all citizens. UKGov releases these reports, for example https://www.gov.uk/government/collections/national-statistics-release https://www.gov.uk/government/collections/national-statistic... - good luck condensing these down to the point where they can fit in any taxpayer's head, and this is just the surface level outgoings. > If you get hand wavy and tell me its too complicated [...] Unfortunately, it really is too complicated. A doctorate in economics might get you a decent way towards understanding the good that taxation provides, but given that economists still have differences of opinion, maybe not a complete understanding. [^0]: Well it is, but only a tiny proportion.
dkirill 5y ago
I strongly disagree with that idea. Voters must know exactly how much they are paying for something for them to care about efficiency of government spendings. What you are proposing is how things currently work in Russia and trust me you don't want that

zapdrive 5y ago

Try saying this on leftist websites like reddit. They believe taxing corporations is the solution to all world problems.

I_am_tiberius 5y ago
I guess this is related to the age of the Reddit's users.

tasogare 5y ago

> Why can't governments learn that taxing corporations is pointless? Pure ideological point of view with no grounding in reality. It's totally possible to tax corporations. In fact, some state like Japan and South Korean get more money from enterprises than individuals, the reverse of Europe and US (until recently consumption tax was 5% in Japan, now is 8%, still far less than EU's typical 20%). The solution you propose doesn't even work well, since it's one more incentive for (mega-)corps to not raise salaries, as keeping salary low means also low taxes.

adolph 5y ago
A political challenge to taxing larger entities is that those entities have increased incentive to avoid tax. This has distortionary effects elsewhere in that it is logical for such an entity to pay fractional X toward a politician’s personal interest instead of the full X to the government.
TimPC 5y ago
Most economists support a 0% corporate tax rate and higher taxes on dividends and capital gains. This closes most loopholes and doesn’t tax money that corporations reinvest in growing the economy.

one2three4 5y ago

I can assure you that on the personal income tax front and much more so at the indirect tax of cost of living the Irish govt is doing just fine thank you.

breakfastduck 5y ago

The revenue is only the same because we dont actually collect corporation tax because we let people avoid it. To act like there's no additional benefit on taxing literally billions in revenue is absolutely nonsensical.

roenxi 5y ago
Say you redirect $100 million away from Microsoft's research into artificial intelligence and redirect it to a government project promoting artificial intelligence research + junkets for government employees. It is certainly plausible that a tax will provide no additional benefit. Microsoft is one of the great value creators of the late 20th/early 21st century. it is not immediately obvious why redirecting money away from the company is a good idea.
- pydry 5y ago
  It's interesting that you said redirect $100 million away from Microsoft's research (cost) rather than Microsoft's shareholders pockets. Were you deliberately or accidentally confusing the two?
  - roenxi 5y ago
    A reasonable point. But then the money is being taxed, because money is taxed when it is returned to shareholders. It certainly isn't obvious that raising taxes is a net win. Experience to date is that a 100% tax rate is very bad, so logically there is a fair limit somewhere between 0% and 100% - ie, a specific fair rate that is not the word "more". Certainly Ireland would like a slice of those billions of dollars - but if they try to take a big slice, Microsoft won't route the billions through Ireland. So it is a somewhat moot point in that specific case.
  - TimPC 5y ago
    If you just want to redirect money from shareholders reduce corporate tax rates to 0% and tax dividends and capital gains more. Since they aren’t doing that they are admitting they want to tax money that corporations would re-invest.

cycomanic 5y ago

Well this creates the incentive that corporations try to minimise their employees, or try to shift employment to low tax/low cost countries. Now that very well be desirable for corporations and people who derive income primarily from capital, but it is not desirable for society. The whole idea behind corporate tax is that they should be taxes on the profits they make, where they make them.

injb 5y ago
>>Well this creates the incentive that corporations try to minimise their employees, or try to shift employment to low tax/low cost countries. Now that very well be desirable for corporations and people who derive income primarily from capital, but it is not desirable for society You mean not desirable for society in high tax/high cost countries I presume? What about society in low tax/low cost countries? It seems to be working out pretty well for Ireland[1]. That's why they resist immense pressure form the EU and maintain a low corporate tax rate. [1] which is a high cost/low corporate tax country
- cycomanic 5y ago
  Well except that Ireland receives significant subsidies from the EU. So essentially this is a case of having the high tax/cost countries pay for your infrastructure so you can be a low cost country.

rexreed 5y ago

Even the Land Value Tax as a single tax is gaining some momentum. An idea well over a hundred years old: https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism

crocal 5y ago

Taxing mega corporations is essential. I would add that you need to tax them to oblivion after shareholder’s expectations are reasonably satisfied. If you don’t, you essentially create rogue institutions with deep pockets that will attempt to take political control of the nation for their selfish interests. Adam Smith had interesting things to say about that.

danuker 5y ago
> will attempt to take political control of the nation for their selfish interests Kind of like the current lobbying going on all over the world?
- crocal 5y ago
  Well, yes and no. In my opinion, lobbying in itself is not evil if it remains within reasonable limits. One of the limiting factor is to avoid giving the said lobbies unlimited funding. That is one of the reason for taxing corporations.
tonyedgecombe 5y ago
>Taxing mega corporations is essential. It's not in this case because the corporation didn't pay any tax.
fallingknife 5y ago
Why is a corporation with political power worse than a government? You will probably say that I have more control over government because of democracy. But in practice I have a stronger control mechanism over corporations, who I can choose to pay for services. When there is a problem with my Amazon package, I get quick responsive customer service. If you have a problem with government, good luck!
- medvezhenok 5y ago
  You have control over corporations insofar as there is actually a competitive marketplace (which is enforced by anti-trust, which is the purview of the government). If corporations capture the market/government and become monopolies/oligopolies and you have no choices (i.e. Comcast in some regions), you will have no more recourse.

yosamino 5y ago

I am sure the topic is complex, but from the article: > The company, Microsoft Round Island One, posted profits last year equal to nearly three-quarters of Ireland’s entire gross domestic product (GDP) – despite having zero employees. That, to me, sounds like maybe the plan to collect personal income tax on salaries might not be so straight forward.

rwmj 5y ago
I think the argument is that it would be collected on the sales and expenses of the companies that "feed into" this employeeless entity. Those other companies probably aren't located in Ireland or Bermuda, but around the world, resulting (in theory) in a more even distribution of tax receipts.

lukasm 5y ago

> taxing corporations is pointless the argument for taxing profits: - incentivise investments - companies are less likely to hide expenses like salaries - It's more fair for high cost business (car company vs google) Personally, I'd tax all corporation 3% of their revenue. You could lover it by to 2% by what is your operating profit ratio to revenue. You can lower it to 1% by a list of 20-30 deductibles e.g. you install solar panels. BUT the minimum you have to pay is 1%. If your company cannot pay 1% of the revenue you don't have a viable business. Average corporation spends more on accounting and consulting.

dkyc 5y ago
FYI, this setup would be extremely beneficial to gigantic companies and likely would lead to immense consolidation, since effectively you would tax 1% on every supplier transaction down the chain, whereas the vertically integrated gigacompany would only pay 1% once.
- lukasm 5y ago
  nope this tax scheme would only apply to certain corporations e.g. Revenue 0-20mln EUR, you keep the existing tax scheme Revenue 20-100mln - you can choose the tax scheme Revenue 100mln+ - you have to tax revenue Thresholds are up for debate. Also, companies already pay around 0-5% of their revenue in income tax. Gigantic companies pay close to 0.
  - dkyc 5y ago
    This doesn't change the fundamental fact that a tax on every transaction disincentives B2B transactions and therefore directly incentivizes large, vertically integrated companies. You can try to work against it by arbitrary progressive taxation thresholds, but this doesn't change the underlying mathematics. Also, there's a reason why progressive taxation isn't widely implemented for corporations, because it's very easy to circumvent by splitting up and increasing the number of legal entities. A sensible way around that is taxing the _ultimate beneficiary_ rather than the company itself (i.e. the owners as natural persons), which is what GP suggests with "sales tax and personal income tax on salaries and distributions".

tgv 5y ago

Sales tax disproportionally affects the poorer. That's undesirable, to say the least. Restructuring taxes will take a lot more work, and then end up with hundreds, if not thousands of extra taxes, each of which will be "avoidable" if you have enough lawyers, simply because the system won't be able to keep up.

nivenkos 5y ago

That punishes working people just for working! How are you meant to afford a house and stuff with taxes like that? We need wealth tax - go after the shareholders and landowners, who don't directly create value and dodge a lot of tax.

fallingknife 5y ago
You buy $10K of DOGE at $0.0001 in 12-1-2020 and it goes to $0.10 on 12-31. You now have $10MM in wealth, and will, owe $500K to the government. DOGE goes back down to $0.0001 on 1-1. Now you owe $500K of taxes and have $10K of assets. "But you should just sell 5% on 12-31 and you will have enough to pay taxes" you say. Yeah, you and everyone else who needs to pay wealth tax. Know what it looks like when everybody sells at the same time? 2008 or 1929. Wealth tax is dumb.
- nly 5y ago
  Capital gains taxes are accrued on disposal. Until you sell you owe nothing
  - fallingknife 5y ago
    Yes, and that makes sense because it is income. A wealth tax doesn't do that or else it wouldn't really be a wealth tax.
- nivenkos 5y ago
  That isn't what a wealth tax is, or how they are implemented. Mainly land value tax, inheritance tax and property tax would be a good start. And we already have capital gains tax to cover the sale of appreciating assets as you describe (note it is only at sale).
  - fallingknife 5y ago
    The first is a more limited type of property tax, which we already have. We also have inheritance tax. The vast majority of wealth is held in capital assets like stocks and bonds (or DOGE), so if you don't tax that, then you aren't really taxing wealth, and taxing these assets is a nightmare.