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Unpopular opinion - eliminate corporate taxes. Anyone big enough avoids them anyway so what's the point? Just put higher taxes on individuals based on consumpti

by mbesto 5y ago

Unpopular opinion - eliminate corporate taxes. Anyone big enough avoids them anyway so what's the point? Just put higher taxes on individuals based on consumption (a la VAT) and income actually derived for that tax year.

sebmellen 5y ago
While I sort of agree, I also think the reason this happens in the first place is because all US political entities play nice to the giants. There’s much talk about raising corporate tax, but that’s actually misplaced — if we fixed tax loopholes we could even go as far as to lower corporate tax for smaller corporations, which I think would be the proper approach. But of course the political class is disincentivized to admit this.
chollida1 5y ago
I used to think that but IMHO the biggest issue today is the growing wealth gap, and how did that gap get so big? Ownership of companies, and more specifically people not getting their wealth from income but from share price appreciation. Getting rid of corporat tax would only make this gap grown even wider and bring down the amount of tax that governments bring in. it would be the worst of both worlds, decreased government revenue and wider wealth gap.
- mbesto 5y ago
  > Getting rid of corporat tax would only make this gap grown even wider and bring down the amount of tax that governments bring in. That's why this needs to be offset by higher individual taxes. illustrative math: company has $100M revenue, $50M paid in salaries+taxes, $5M "real profit", $0 paid in taxes today because they hide the $5M profit new proposal Company has $100M revenue, $55M paid in salaries+taxes, 0M "real profit", $0 paid in taxes Government now gets to collect $5M in taxes. The burden is higher on salaries+taxes now. This would temporarily push wages down to offset, BUT in the long run it would either (1) the company would have to readjust wages for high performers and (2) increased profits to companies would mean more jobs. Either way, it would simply correct itself.
  - chollida1 5y ago
    But again, the rich don't pay taxes like we do so any proposal that attempts to work by increasing individual taxes just won't work:) The company is already paying fair wages, more profits won't change that. in your scenario government revenue goes down as no corporate taxes are now collected and no additional individual taxes will be paid. How does this help the government?
    - mbesto 5y ago
      > n your scenario government revenue goes down as no corporate taxes are now collected and no additional individual taxes will be paid. My scenario very clearly illustrated that the government would collect $5M in taxes where they wouldn't have before. > the rich don't pay taxes like we do so any proposal that attempts to work by increasing individual taxes just won't work:) Which is why consumption taxes work (hence my suggestion of VAT)
KingMachiavelli 5y ago
How does that work for corporations that have a lot of non-US employees? That would in effect be a massive tax break for them because only a subset of their employees are paying the higher/new VAT tax.
- mbesto 5y ago
  I mean who cares? Doesn't this sort of already happen for the opposite case?
tim333 5y ago
Trouble is it makes it too easy to avoid other taxes. Just send your income and gains to your tax free company.
- mbesto 5y ago
  What you're suggesting is a single member LLC and that income eventually becomes your personal income. So that loophole gets closed pretty quick.

by mbesto 5y ago

sebmellen 5y ago

While I sort of agree, I also think the reason this happens in the first place is because all US political entities play nice to the giants. There’s much talk about raising corporate tax, but that’s actually misplaced — if we fixed tax loopholes we could even go as far as to lower corporate tax for smaller corporations, which I think would be the proper approach. But of course the political class is disincentivized to admit this.

chollida1 5y ago

I used to think that but IMHO the biggest issue today is the growing wealth gap, and how did that gap get so big? Ownership of companies, and more specifically people not getting their wealth from income but from share price appreciation. Getting rid of corporat tax would only make this gap grown even wider and bring down the amount of tax that governments bring in. it would be the worst of both worlds, decreased government revenue and wider wealth gap.

mbesto 5y ago
> Getting rid of corporat tax would only make this gap grown even wider and bring down the amount of tax that governments bring in. That's why this needs to be offset by higher individual taxes. illustrative math: company has $100M revenue, $50M paid in salaries+taxes, $5M "real profit", $0 paid in taxes today because they hide the $5M profit new proposal Company has $100M revenue, $55M paid in salaries+taxes, 0M "real profit", $0 paid in taxes Government now gets to collect $5M in taxes. The burden is higher on salaries+taxes now. This would temporarily push wages down to offset, BUT in the long run it would either (1) the company would have to readjust wages for high performers and (2) increased profits to companies would mean more jobs. Either way, it would simply correct itself.
- chollida1 5y ago
  But again, the rich don't pay taxes like we do so any proposal that attempts to work by increasing individual taxes just won't work:) The company is already paying fair wages, more profits won't change that. in your scenario government revenue goes down as no corporate taxes are now collected and no additional individual taxes will be paid. How does this help the government?
  - mbesto 5y ago
    > n your scenario government revenue goes down as no corporate taxes are now collected and no additional individual taxes will be paid. My scenario very clearly illustrated that the government would collect $5M in taxes where they wouldn't have before. > the rich don't pay taxes like we do so any proposal that attempts to work by increasing individual taxes just won't work:) Which is why consumption taxes work (hence my suggestion of VAT)

KingMachiavelli 5y ago

How does that work for corporations that have a lot of non-US employees? That would in effect be a massive tax break for them because only a subset of their employees are paying the higher/new VAT tax.

mbesto 5y ago
I mean who cares? Doesn't this sort of already happen for the opposite case?

tim333 5y ago

Trouble is it makes it too easy to avoid other taxes. Just send your income and gains to your tax free company.

mbesto 5y ago
What you're suggesting is a single member LLC and that income eventually becomes your personal income. So that loophole gets closed pretty quick.