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What if they also pay taxes that are not listed as income taxes, say, like the majority of corporate taxes? [1] This leaves significant portions of their effec

What if they also pay taxes that are not listed as income taxes, say, like the majority of corporate taxes? [1] This leaves significant portions of their effective taxes off the table. [1] https://www.cbo.gov/sites/default/files/cbofiles/attachments/effective_rates_0.pdf https://www.cbo.gov/sites/default/files/cbofiles/attachments...

BirdPlusPlus 5y ago
The unfortunate truth about corporate taxes is they're not really possible. There are two possible outcomes. 1. The business cannot absorb the levied tax into its overhead and shuts down. Production and operations cease. Said business doesn't buy materials or supplies, workers become unemployed, and customers do not shop. Result: a net revenue loss in sales, payroll, and income taxes. 2. The business can absorb the levied tax into its overhead... which is then offloaded onto the consumer whose buying power and standard of living decreases. Follow the money long enough and you'll find most taxes are paid by the individual consumer in roundabout and convoluted ways.
- ChrisLomont 5y ago
  >Follow the money long enough and you'll find most taxes are paid by the individual consumer in roundabout and convoluted ways. I take it you didn't look at the link I posted. The entire field of economics would disagree with you. Part of the cost is shifted to consumer, depending on elasticity. The rest is paid by owners. Billionaires tend to own companies that pay tax, money which would otherwise have accrued to the owner. That is what the CBO report I linked quantifies.
- mercutio2 5y ago
  I don't think economists agree that tax incidence is so consistently one sided. It's a whole field of study. "Not really possible" seems like an extraordinary claim.
  - BirdPlusPlus 5y ago
    Just earlier this week I was talking about this concept over drinks with my uncle, who has a PHD in Economics. - though I didn't mean to imply that the entire tax gets offloaded downstream. That was clumsy. My point is that taxing corporations without inordinately harming their employees and consumers' standards of living is impossible. Even worse, it grants a competitive edge to established corporations over lesser competing firms, which lack the connections or resources to navigate that tax code as efficiently. It just isn't healthy for the market or effective at its purpose. If we're serious about maintaining healthy competitive markets and a public with purchasing power, we should consider different options.
    - ChrisLomont 5y ago
      Agreed. Also taxes are levied where collection is possible; economic theory is not the only consideration. Thus income is taxed in many forms, since it's easier to tax than say value. And there's political reasons - corp tax is popular with the masses even if it's inefficient.
- closeparen 5y ago
  A single medical issue or college-bound child can cost decades worth of consumer products. It could be rational to make that tradeoff.
maerF0x0 5y ago
I think OP's point is that say the company is "theirs" and earns $100M . Now the company pays, say, 25% corporate tax rate. So there is 75M to pay the owner. Owner takes it as income and now pays 25% tax, so they're left with 56M . Effective tax is ~44% at that point from the original $100M. I argue with my friends that tax rate is less important than turn over rate. My spending is someone else's income, so with enough generations of spending/income all the money becomes 99.999% the government's. Eg: I pay $1 to my friend, he pays 20c tax and keeps 80c. Then pays back to me 80c. I pay 16c tax and keep 64c. pay it again, 12.8c tax, keep 51.2 --> in 3 generations we're already at nearly 50% tax.
- lotsofpulp 5y ago
  What is the point of counting like that if you are not also incorporating services or benefits received from the government?
  - maerF0x0 5y ago
    i mean if the government wants businesses to pay for that they should just send an actual invoice instead of this awkward x% of profits. The percent model keeps crappy (ie low margin) businesses from paying their actual load on society.
- ChrisLomont 5y ago
  >with enough generations of spending/income all the money becomes 99.999% the government's This doesn't make sense. The govt spends all the money they take in (and then some) back to the private sector. It's paid in SS, payrolls, purchases, services. Your example ignores that the govt spends that 20c tax you listed on police, goods, social security, wages, etc, along with some borrowed from markets, so in practice the govt ends up with negative money, which is called the national debt.
  - maerF0x0 5y ago
    yes, but the government spending from collected taxes is only a small fraction of the taxable economy and thus over time the money still accumulates in the coffers. It's only when money is stagnant (or exchanging without profit) that it becomes in accessible from taxes. Removing the long term investment incentives (Long term capital gains) and introducing a penalty for not spending it during your life time (Estate tax) is how you ensure even those avenues of protection are gone.

BirdPlusPlus 5y ago

The unfortunate truth about corporate taxes is they're not really possible. There are two possible outcomes. 1. The business cannot absorb the levied tax into its overhead and shuts down. Production and operations cease. Said business doesn't buy materials or supplies, workers become unemployed, and customers do not shop. Result: a net revenue loss in sales, payroll, and income taxes. 2. The business can absorb the levied tax into its overhead... which is then offloaded onto the consumer whose buying power and standard of living decreases. Follow the money long enough and you'll find most taxes are paid by the individual consumer in roundabout and convoluted ways.

ChrisLomont 5y ago
>Follow the money long enough and you'll find most taxes are paid by the individual consumer in roundabout and convoluted ways. I take it you didn't look at the link I posted. The entire field of economics would disagree with you. Part of the cost is shifted to consumer, depending on elasticity. The rest is paid by owners. Billionaires tend to own companies that pay tax, money which would otherwise have accrued to the owner. That is what the CBO report I linked quantifies.
mercutio2 5y ago
I don't think economists agree that tax incidence is so consistently one sided. It's a whole field of study. "Not really possible" seems like an extraordinary claim.
- BirdPlusPlus 5y ago
  Just earlier this week I was talking about this concept over drinks with my uncle, who has a PHD in Economics. - though I didn't mean to imply that the entire tax gets offloaded downstream. That was clumsy. My point is that taxing corporations without inordinately harming their employees and consumers' standards of living is impossible. Even worse, it grants a competitive edge to established corporations over lesser competing firms, which lack the connections or resources to navigate that tax code as efficiently. It just isn't healthy for the market or effective at its purpose. If we're serious about maintaining healthy competitive markets and a public with purchasing power, we should consider different options.
  - ChrisLomont 5y ago
    Agreed. Also taxes are levied where collection is possible; economic theory is not the only consideration. Thus income is taxed in many forms, since it's easier to tax than say value. And there's political reasons - corp tax is popular with the masses even if it's inefficient.
closeparen 5y ago
A single medical issue or college-bound child can cost decades worth of consumer products. It could be rational to make that tradeoff.

maerF0x0 5y ago

I think OP's point is that say the company is "theirs" and earns $100M . Now the company pays, say, 25% corporate tax rate. So there is 75M to pay the owner. Owner takes it as income and now pays 25% tax, so they're left with 56M . Effective tax is ~44% at that point from the original $100M. I argue with my friends that tax rate is less important than turn over rate. My spending is someone else's income, so with enough generations of spending/income all the money becomes 99.999% the government's. Eg: I pay $1 to my friend, he pays 20c tax and keeps 80c. Then pays back to me 80c. I pay 16c tax and keep 64c. pay it again, 12.8c tax, keep 51.2 --> in 3 generations we're already at nearly 50% tax.

lotsofpulp 5y ago
What is the point of counting like that if you are not also incorporating services or benefits received from the government?
- maerF0x0 5y ago
  i mean if the government wants businesses to pay for that they should just send an actual invoice instead of this awkward x% of profits. The percent model keeps crappy (ie low margin) businesses from paying their actual load on society.
ChrisLomont 5y ago
>with enough generations of spending/income all the money becomes 99.999% the government's This doesn't make sense. The govt spends all the money they take in (and then some) back to the private sector. It's paid in SS, payrolls, purchases, services. Your example ignores that the govt spends that 20c tax you listed on police, goods, social security, wages, etc, along with some borrowed from markets, so in practice the govt ends up with negative money, which is called the national debt.
- maerF0x0 5y ago
  yes, but the government spending from collected taxes is only a small fraction of the taxable economy and thus over time the money still accumulates in the coffers. It's only when money is stagnant (or exchanging without profit) that it becomes in accessible from taxes. Removing the long term investment incentives (Long term capital gains) and introducing a penalty for not spending it during your life time (Estate tax) is how you ensure even those avenues of protection are gone.