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Gee, it's almost like taxing corporate profits twice has caused massive distortions everywhere: biggest stock price bubble, tax residency shopping, etc Tax the

by coryrc 5y ago

Gee, it's almost like taxing corporate profits twice has caused massive distortions everywhere: biggest stock price bubble, tax residency shopping, etc Tax the wealthy. Don't let them take "charitable" deductions or use tax-exempt IRAs. 100% inheritance tax above $4 million.

derefr 5y ago
That’s what taxing corporate income (or more targeted, corporate assets) attempts to do: tax the wealthy. Because by-and-large, wealthy people don’t accomplish the things they want to do by drawing an income and then spending it; but rather by setting up corporate vehicles that have their goal as the corporate mission statement, and then getting other corporations to fund its treasury (as negotiated compensation in deals) rather than funding them personally. Think about it like this: when I want to buy a house, I buy a house. When a billionaire wants to buy a house, they create a property management company (as a subsidiary of their existing business interests) that buys and rents out the house, negotiate for their existing business interests to fund it, and then they rent the house from that PMC. Excess liquid assets sitting in a large corporation’s treasury, are essentially sitting in the wallets of its directors. They’re left there only because the tax implications are better if they’re moved toward their purpose-build vehicles at the last moment possible.
- asteroidbelt 5y ago
  > That’s what taxing corporate income does: tax the wealthy. No it doesn't. It equally affects both large shareholders and small shareholders. E. g. pension funds will get lower gains, and regular dudes 401k (or whatever they are called in your country) will get smaller yields. I don't have numbers, but I suspect the richest people get only small percent of large corporations income.
- coryrc 5y ago
  "then they rent the house from that PMC." They'll pay tax on that realized income. And if they build up all that wealth in stock value, then if we don't tax it while they are alive we'll take it when they die, so we'd take away the incentive to hoard all the wealth with those schemes. "That’s what taxing corporate income (or more targeted, corporate assets)" Incorrect. Targeting corporate assets hurts heavy industry. Targeting income hurts low-margin business like grocery. And we already have a tax on corporate profits: capital gains tax on dividends and stock appreciation! It mostly affects people who are doing well and less so people and companies doing poorly. It automatically compensates for market changes (sector doing great paid more, a whole sector slumping pays less).
  - derefr 5y ago
    > They'll pay tax on that realized income. And if they build up all that wealth in stock value, then if we don't tax it while they are alive we'll take it when they die, so we'd take away the incentive to hoard all the wealth with those schemes. I don't think you quite understood the scheme here: they never own the PMC. They don't gain the appreciation value of the house or anything like that. It's not an investment to them. They just got someone else to set up the PMC and buy the house, for the positive side-benefits that come from having arranged to assume (at least partial) directorship over that PMC. Maybe it's easier to picture it at larger scale, with an explicit example: say you're a famous property developer who has built a bunch of hotels with your name on them. In one sense, those are businesses for their own sake. But in another sense, those are your vacation homes. You can stay in them, for free, any time you like, which the hotel will likely book as a business expense (hosting one of its directors for an official evaluation of operations on behalf of shareholders.) That business expense will also extend to any perks the hotel offers its ultra-premium clients (often a class only set up in the first place as a way to justify giving directors these perks) — e.g. hotel-employed drivers assigned to pick the billionaire up from the airport, and then attached to them to fetch whatever they need as long as they're there. If you build a bunch of hotels that provide you a free place to stay anywhere you go, then you don't need vacation homes. You never need to buy them, rent them, own them in any sense. They're never realized as income, any more than a "company car" or "company-supplied laptop" that you need to give back when you quit is income. By itself, this would be ridiculous; it'd be like starting a car rental agency just to have a "company car." But, because these are also profitable businesses for their own sake, you can get investors (incl. your own investment businesses) to put money into them, such that you never need to put any of your own (post-tax) money into them. You don't actually even need to personally be a shareholder in the hotel chain, "only" a director of it, to reap these benefits! And, if you're also a person with a lot of connections — someone with a rolodex of reliable CEOs and executives to staff these businesses with — then you never need to worry about actually building or running the business, either. This is how billionaires — or at least, capitalist billionaires — get away with never realizing much income (or even having very many estate-tax-able assets as part of their net worth!) at all. They just cause corporations to invest money in other corporations, never actually touching any of the money or the resulting assets themselves, but rather ending up in arrangements where business expenses of the invested-in corporations are being spent directly on their own happiness, mostly by having temporary use of the business's assets whenever they like, as some non-transactional, pure-expense part of the business's operation. The vast majority of their assets are soft power — social influence — realized/"invested" by putting people into power in roles in businesses, where those people in power in those roles can then give them perks in return. (And, if they ever need real liquid assets for some reason, then they just make arrangements with other billionaires to 1. start non-profits; 2. get some underemployed accomplices [e.g. relatives] employed at their non-profits in high-paying [but not to the point of being individually highly taxed] roles; and 3. get corporations that owe each billionaire favors, to direct charitable donations to one-another's nonprofits. Then, since this income is entirely the result of cronyism, the accomplices will listen when the billionaire directs them on how to spend their income — and thus the billionaire can spend it as if it were their own income, as they please; usually not on assets, mind you, but rather usually for expenses that personally benefit the billionaire, e.g. things like huge parties or political lobbying. This is the classic "high-society wife" setup, but it can be extended to hundreds of accomplices.)
thaumasiotes 5y ago
> Gee, it's almost like taxing corporate profits twice has caused massive distortions everywhere: Sure. > 100% inheritance tax above $4 million. If you don't think this would cause "massive distortions everywhere", I have some bad news...
asteroidbelt 5y ago
> Tax the wealthy. Please don't tax the wealthy. I have a couple friends who are in top 0.1%. They have enough money for the rest of their lives. If you start taking money from them, they will simply stop working and start spending more time with friends and family. The correct goal is not to take money from the rich (which can be achieved by taxing them; this is what Bolsheviks did and it resulted in millions of deaths from starvation), but to get rid of poverty. Taxing the rich won't help with poverty. Because if even if top 1% will be paying 100% taxes and still continue to work, total government tax income will be increased by 20% or so (that's from richest 1% get 30% of income). That's not a lot, and these money will be spent inefficiently by the government (as government always does). The government already has more than enough money, but it spends it inefficiently, and this issue need to be addressed (by fixing the system), for example: * fix gerrymandering * replace FPTP voting with some variant of ranked choice voting * increase the limits of the candidate money collection (currently they are very limited for the candidates, but unlimited for parties) So when more independent or less dependent on parties candidates are elected, more issues can be fixed, for example: * fix many regulations which drives hospital prices up * fix regulations which makes lives of ISP monopolies too easy and so on.
- pope_meat 5y ago
  Tell your 0.1 friends to focus on all those points you made, and quick, because they will be the scapegoat for the mob. Things are getting bad enough to where "cutting ones nose to spite the face" starts to make sense, redistributing the misery the rich have insulated themselves from. Just my feeling on the situation.
  - asteroidbelt 5y ago
    > Tell your 0.1 friends to focus on all those points you made They know it already, most of my friends are classical liberals/conservatives. > they will be the scapegoat for the mob You are probably in the top 10% (as most people here on HN), so a lot of people here might become the same scapegoat. > Things are getting bad enough to where "cutting ones nose to spite the face" I'm not sure things are getting bad. Poorest people now are more rich than poorest people 30 years ago. Like in the US now average electrician makes 70K a year. That's a lot of money. And anyone can be electrician. They say income inequality raises, which is bad, but it might be not that bad, because common inequality measures do not includes the costs of free stuff given to poorest people from the government, like better free hospitals which they can use in case of emergency. > starts to make sense redistributing the misery the rich have insulated themselves from. As I said, taxing the wealthiest (especially with extremely high taxes like proposed by certain "liberal" activists) will not make poor people more rich. It will make poor people even more poor because of economic recession. Different measures are needed.
riversflow 5y ago
>Tax the wealthy. Don't let them take "charitable" deductions or use tax-exempt IRAs. 100% inheritance tax above $4 million. Agree. especially about inheritance[1]. However, as I've said before corporate taxes are double taxation, corporation are paying their dues as every person involved with the corporation is freed from the liability of the business's actions by way of the state allowing liability limiting corporate entities to exist. When the business assumes liability from the owners, it also assumes tax responsibility. >has caused massive distortions everywhere: yeah, like in the global level of CO2, or the amount of plastic in the ocean, or the amount of mercury in fish, or....

by coryrc 5y ago

derefr 5y ago

That’s what taxing corporate income (or more targeted, corporate assets) attempts to do: tax the wealthy. Because by-and-large, wealthy people don’t accomplish the things they want to do by drawing an income and then spending it; but rather by setting up corporate vehicles that have their goal as the corporate mission statement, and then getting other corporations to fund its treasury (as negotiated compensation in deals) rather than funding them personally. Think about it like this: when I want to buy a house, I buy a house. When a billionaire wants to buy a house, they create a property management company (as a subsidiary of their existing business interests) that buys and rents out the house, negotiate for their existing business interests to fund it, and then they rent the house from that PMC. Excess liquid assets sitting in a large corporation’s treasury, are essentially sitting in the wallets of its directors. They’re left there only because the tax implications are better if they’re moved toward their purpose-build vehicles at the last moment possible.

asteroidbelt 5y ago
> That’s what taxing corporate income does: tax the wealthy. No it doesn't. It equally affects both large shareholders and small shareholders. E. g. pension funds will get lower gains, and regular dudes 401k (or whatever they are called in your country) will get smaller yields. I don't have numbers, but I suspect the richest people get only small percent of large corporations income.
coryrc 5y ago
"then they rent the house from that PMC." They'll pay tax on that realized income. And if they build up all that wealth in stock value, then if we don't tax it while they are alive we'll take it when they die, so we'd take away the incentive to hoard all the wealth with those schemes. "That’s what taxing corporate income (or more targeted, corporate assets)" Incorrect. Targeting corporate assets hurts heavy industry. Targeting income hurts low-margin business like grocery. And we already have a tax on corporate profits: capital gains tax on dividends and stock appreciation! It mostly affects people who are doing well and less so people and companies doing poorly. It automatically compensates for market changes (sector doing great paid more, a whole sector slumping pays less).
- derefr 5y ago
  > They'll pay tax on that realized income. And if they build up all that wealth in stock value, then if we don't tax it while they are alive we'll take it when they die, so we'd take away the incentive to hoard all the wealth with those schemes. I don't think you quite understood the scheme here: they never own the PMC. They don't gain the appreciation value of the house or anything like that. It's not an investment to them. They just got someone else to set up the PMC and buy the house, for the positive side-benefits that come from having arranged to assume (at least partial) directorship over that PMC. Maybe it's easier to picture it at larger scale, with an explicit example: say you're a famous property developer who has built a bunch of hotels with your name on them. In one sense, those are businesses for their own sake. But in another sense, those are your vacation homes. You can stay in them, for free, any time you like, which the hotel will likely book as a business expense (hosting one of its directors for an official evaluation of operations on behalf of shareholders.) That business expense will also extend to any perks the hotel offers its ultra-premium clients (often a class only set up in the first place as a way to justify giving directors these perks) — e.g. hotel-employed drivers assigned to pick the billionaire up from the airport, and then attached to them to fetch whatever they need as long as they're there. If you build a bunch of hotels that provide you a free place to stay anywhere you go, then you don't need vacation homes. You never need to buy them, rent them, own them in any sense. They're never realized as income, any more than a "company car" or "company-supplied laptop" that you need to give back when you quit is income. By itself, this would be ridiculous; it'd be like starting a car rental agency just to have a "company car." But, because these are also profitable businesses for their own sake, you can get investors (incl. your own investment businesses) to put money into them, such that you never need to put any of your own (post-tax) money into them. You don't actually even need to personally be a shareholder in the hotel chain, "only" a director of it, to reap these benefits! And, if you're also a person with a lot of connections — someone with a rolodex of reliable CEOs and executives to staff these businesses with — then you never need to worry about actually building or running the business, either. This is how billionaires — or at least, capitalist billionaires — get away with never realizing much income (or even having very many estate-tax-able assets as part of their net worth!) at all. They just cause corporations to invest money in other corporations, never actually touching any of the money or the resulting assets themselves, but rather ending up in arrangements where business expenses of the invested-in corporations are being spent directly on their own happiness, mostly by having temporary use of the business's assets whenever they like, as some non-transactional, pure-expense part of the business's operation. The vast majority of their assets are soft power — social influence — realized/"invested" by putting people into power in roles in businesses, where those people in power in those roles can then give them perks in return. (And, if they ever need real liquid assets for some reason, then they just make arrangements with other billionaires to 1. start non-profits; 2. get some underemployed accomplices [e.g. relatives] employed at their non-profits in high-paying [but not to the point of being individually highly taxed] roles; and 3. get corporations that owe each billionaire favors, to direct charitable donations to one-another's nonprofits. Then, since this income is entirely the result of cronyism, the accomplices will listen when the billionaire directs them on how to spend their income — and thus the billionaire can spend it as if it were their own income, as they please; usually not on assets, mind you, but rather usually for expenses that personally benefit the billionaire, e.g. things like huge parties or political lobbying. This is the classic "high-society wife" setup, but it can be extended to hundreds of accomplices.)

thaumasiotes 5y ago

> Gee, it's almost like taxing corporate profits twice has caused massive distortions everywhere: Sure. > 100% inheritance tax above $4 million. If you don't think this would cause "massive distortions everywhere", I have some bad news...

asteroidbelt 5y ago

> Tax the wealthy. Please don't tax the wealthy. I have a couple friends who are in top 0.1%. They have enough money for the rest of their lives. If you start taking money from them, they will simply stop working and start spending more time with friends and family. The correct goal is not to take money from the rich (which can be achieved by taxing them; this is what Bolsheviks did and it resulted in millions of deaths from starvation), but to get rid of poverty. Taxing the rich won't help with poverty. Because if even if top 1% will be paying 100% taxes and still continue to work, total government tax income will be increased by 20% or so (that's from richest 1% get 30% of income). That's not a lot, and these money will be spent inefficiently by the government (as government always does). The government already has more than enough money, but it spends it inefficiently, and this issue need to be addressed (by fixing the system), for example: * fix gerrymandering * replace FPTP voting with some variant of ranked choice voting * increase the limits of the candidate money collection (currently they are very limited for the candidates, but unlimited for parties) So when more independent or less dependent on parties candidates are elected, more issues can be fixed, for example: * fix many regulations which drives hospital prices up * fix regulations which makes lives of ISP monopolies too easy and so on.

pope_meat 5y ago
Tell your 0.1 friends to focus on all those points you made, and quick, because they will be the scapegoat for the mob. Things are getting bad enough to where "cutting ones nose to spite the face" starts to make sense, redistributing the misery the rich have insulated themselves from. Just my feeling on the situation.
- asteroidbelt 5y ago
  > Tell your 0.1 friends to focus on all those points you made They know it already, most of my friends are classical liberals/conservatives. > they will be the scapegoat for the mob You are probably in the top 10% (as most people here on HN), so a lot of people here might become the same scapegoat. > Things are getting bad enough to where "cutting ones nose to spite the face" I'm not sure things are getting bad. Poorest people now are more rich than poorest people 30 years ago. Like in the US now average electrician makes 70K a year. That's a lot of money. And anyone can be electrician. They say income inequality raises, which is bad, but it might be not that bad, because common inequality measures do not includes the costs of free stuff given to poorest people from the government, like better free hospitals which they can use in case of emergency. > starts to make sense redistributing the misery the rich have insulated themselves from. As I said, taxing the wealthiest (especially with extremely high taxes like proposed by certain "liberal" activists) will not make poor people more rich. It will make poor people even more poor because of economic recession. Different measures are needed.

riversflow 5y ago

>Tax the wealthy. Don't let them take "charitable" deductions or use tax-exempt IRAs. 100% inheritance tax above $4 million. Agree. especially about inheritance[1]. However, as I've said before corporate taxes are double taxation, corporation are paying their dues as every person involved with the corporation is freed from the liability of the business's actions by way of the state allowing liability limiting corporate entities to exist. When the business assumes liability from the owners, it also assumes tax responsibility. >has caused massive distortions everywhere: yeah, like in the global level of CO2, or the amount of plastic in the ocean, or the amount of mercury in fish, or....