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Why? Profits are taxed to the individuals that own the company. Should a corp pay 40%+ in taxes and then the individual pays another 40% of what flows down?
by Justin_K 4y ago
Why? Profits are taxed to the individuals that own the company. Should a corp pay 40%+ in taxes and then the individual pays another 40% of what flows down?
Let's say a small to med size Corp profits 1M. Take away your theoretical 40%. Then another 10% for the state (CA as an example). Then 5% for property taxes. Then 5% for payroll taxes. You're now left with 400k that flows to owners.
From that you take another 40 + 10% in income tax and you're left with 200K.
An 80% effective rate would seem a high wouldn't it?
- vba616 4y agoYou can make an argument, and I think many people have, that only rich people should be taxed and not corporations, because only some of the stakeholders in corporations are rich. But there are two questions that I can think of raised by eliminating taxation of corporations. One is, will the revenue be made up by increasing taxes on rich individuals; and, Two, how can we prevent wealthy individuals from using corporations to shelter their income from taxes, if they are all tax free? I'm not sure it is a simple problem. Plus, do the complaints about "double taxation" really make much sense in the big picture? Money flows around and around in the economy and gets taxed an unlimited amount of times in the long run. Maybe there are reasons for aspects of the current system that seem kludgy at first glance.
- bradknowles 4y agoIf I, as a "natural person", hire someone to clean my back yard, then I expect to pay taxes on that income as it comes to me, and I expect the person I'm hiring to pay taxes on it as it comes to them. And if corporations want to "be people too", then they should be prepared to pay comparable taxes as "natural persons" do. Otherwise, corporations should be corporations, and people should be people, and you don't mix the two up.