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Most economists around the world support eliminating the corporate tax and raising capital gains to compensate. In addition to vastly reducing the amount of acc
by TimPC 5y ago
Most economists around the world support eliminating the corporate tax and raising capital gains to compensate. In addition to vastly reducing the amount of accounting needed it would make structures like this pointless. Perhaps governments should get on this as a priority. It seems like early movers would attract a lot of investment.
- dalbasal 5y agoIt's extremely easy to speculate about this stuff academically. Economists tend to delight in theory-adjacent discussions. These have very little bearing on the real world. TRW, in this case, is a cascading infinity of corporate law, tax law, accounting practices, jurisdictions, lobbyists, parliaments and special interests. None of these exist in economist's models, unless they're modeling public choice theory or somesuch. Capital gains is just as gameable as corporate income, in practice... and more politically explosive. IMO, if there is an actual interest in taxing wealth, just tax wealth. Assume 5%-8% return on wealth, and tax total wealth on this basis.
- TimPC 5y agoTaxing wealth is a terrible idea because it requires government to get balance sheets from the masses. If you miscalibrate earnings minus inflation it’s also punitive. Lastly for many families most of their wealth is their home which isn’t exactly liquid even if it grows in value. Wealth taxes would force many to sell their houses.
- dalbasal 5y agoThe masses don't have wealth, especially if you exclude personal dwellings. In any case, you need "balance sheets" to have CGT, which in theory we do.
- TimPC 5y agoCapital gains taxes are based on difference between buy and sell price of specific assets and require only those two data points. That’s very different from accurately pricing an asset yearly.
- dalbasal 5y agoTechnically, or originally perhaps, capital gains are paid based on gains. There are a lot of clauses and loopholes that allow for tax on gains to be deferred until they are realised.
- TimPC 5y agoCapital gains is far less gameable because there isn’t a mechanism to move your capital gains to a different tax region as an individual. Corporations may be able to game capital gains slightly when they hold shares in other corporations but that is very minor compared to corporate tax games that go on now.
- dalbasal 5y agoIt is, but it's also more politically explosive. The upshot is that CGT loopholes are extremely prevalent. Both succeed/fail in the same way, marking to market. Apple Inc, the publicly traded entity, is able to deny its income for tax purposes (they say they paid this money to an irish subsidiary), while claiming it on behalf of their shareholders. The CGT version of this is unrealised gains.
- mxcrossr 5y agoMy pessimistic fear is that when countries can no longer compete in tax rates, they’ll compete on subsidies. You can go much lower than zero!
- G3rn0ti 5y agoExactly. Corporations as individuals respond to incentives. The cause of this situation is exactly the presence of high corporate taxes in many countries which multinationals can game.