6 ms·

Taxing corporate income is a flawed concept. Corporate headquarters are easily moved, and Corporate income is easily shifted between corporations and individual

by codexb 3y ago

Taxing corporate income is a flawed concept. Corporate headquarters are easily moved, and Corporate income is easily shifted between corporations and individuals in different tax jurisdictions all over the world. You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. The US should do the same. Corporate tax is already effectively eliminated for corporations in the US, as the income is just passed through to individual owners and shareholders who pay tax on their individual income. The only corporations who pay tax in the US are large corporations who need massive amounts of cash on hand for research and reinvestment for new products and ventures.

thedaly 3y ago
> The only corporations who pay tax in the US are large corporations who need massive amounts of cash on hand for research and reinvestment for new products and ventures. Apple would seemingly fit this description, but they still skirt taxes by offshoring their headquarters.
- ProllyInfamous 3y ago
  The same lawyers who removed Ireland's infamous "Double Dutch" tax-avoidance scheme also wrote Apple's favorable replacement tax-avoidance scheme. Man with money, wins.
Closi 3y ago
Relying solely on VAT has big issues too - it is a regressive tax (VAT paid as a percentage of net household income tends to be higher for poorer households), B2B businesses would be fully untaxed, and it doesn't really tax the businesses (the tax is on the consumer price rather than the business profit). > You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. This is misleading - the EU put in place VAT as well as a minimum 15% corporation tax.
- onlyrealcuzzo 3y ago
  > it is a regressive tax We already have a "progressive" tax system in which ~70% of Federal revenue (not including SS & Medicare which are separate line items funded separately) comes from individual income tax. Why can't we have a corporate tax that actually works and is evenly distributed instead of "progressive"?
  - hellojesus 3y ago
    The entire point of the US system at birth was for excise taxes to exist. You can make them astronomical on luxury items and keep them minimal or nonexistent on food, etc. to achieve a progressive outcome. I spit on 16A. The US was designed not to have any direct tax, including federal income tax, unless it passed the apportionment test.
    - dsq 3y ago
      > The entire point of the US system at birth was for excise taxes to exist Could you please elaborate?
      - hellojesus 3y ago
        Direct taxes paid to the federal government are subject to apportionment in the US constitution. Therefore, for an income tax to be paid, it would have to be apportioned, meaning that states would have to pay a total amount equivalent to their proportion of the population. If NY has 10% of the total population, 10% of income taxes would need to be paid from NY. Similarly if TX only has 2% of the population, the tax would need 2% of its funding from TX. If everyone paid the same amount, this would be easy. But if you wanted to only tax millionaires, for example, that means that the millionaires in NY would be responsible for 10% of the total tax paid while those in TX would be responsible for 2%. Now consider that there are 1000 millionaires in NY but only 2 in TX. Each NY millionaire would be required to pay (.1)(1/1000)=.0001 of the total tax bill while each millionaire in TX would be required to pay (.02)(1/2)=.01. Obviously those in TX would never agree to such a tax. The goal with this is debated, but I believe it was done specifically to make passing direct taxes near impossible. Indirect taxes, such as excise taxes, are preferable since people only pay them if they want to. They can always elect to not purchase a good or service to avoid the tax. Additionally, it allows a much more progressive system than income taxes, since you can impose severe luxury taxes based on consumption only. The 16A came along and changed this by explicitly exempting income from the apportionment requirements. Likely this was one of the major catalysts in the destruction of the American experiment.
weberer 3y ago
>You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. The USA already has sales tax at the state and local level. Corporate tax is a separate tax on profits.
- ukd1 3y ago
  It's generally a lot less than VAT equivalents though.
  - caminante 3y ago
    Can you help the grandparent and link some analysis? I'm not finding anything to support this claim. VAT absolutely performs worse in many environments [0]. [0] https://en.m.wikipedia.org/wiki/Value-added_tax#VAT-free_countries_and_territories https://en.m.wikipedia.org/wiki/Value-added_tax#VAT-free_cou...
- hellojesus 3y ago
  It's all double taxed though,and so it is terrible. Not only does the Corp have to pay on profits, but any way in which those profits are distributed are then once again taxed. It is a fool's system. Corrupt to the core by gov welfare queens.
adolph 3y ago
> the income is just passed through to individual owners and shareholders who pay tax on their individual income What is the corollary to "socialize risk, privatize reward" which has to with the cost of taxes being passed along to a level at which tax avoidance costs more than the tax? Maybe it would be "Inverse-Gulliver," where the Liliputians all live to lift Gulliver instead of tie him down.
dwallin 3y ago
"Corporate headquarters are easily moved, and Corporate income is easily shifted between corporations and individuals in different tax jurisdictions all over the world." This is a consequence of policy choices, not some inherent natural law.
- refurb 3y ago
  Sure, but what’s the alternative? Go with China’s approach? Capital controls? Appropriating companies that try and move to other countries? Generally economies that do that don’t perform well over the long run.
  - dwallin 3y ago
    Are you truly going to proclaim that we have explored all options for how to structure a global economy? We arrived where we are via a mix of self-interest and local optimization and it seems unlikely we have arrived at even a local maxima. I'm not going to claim I have the solution. Anyone who tells you they do is either deluded or has something to sell you. And that definitely includes those who want you to believe that modern capitalism is the end-all be-all of society. What I want is to stop the self-imposed helplessness. What are some things that might work? How can we validate them? How can we roll them out?
    - refurb 3y ago
      Are you going to suggest that this isn't a very hard, if not impossible problem to solve? Do you assume that nobody has tried to solve it? Because that would be false, several countries have tried and failed. Saying "Somebody should solve this problem" while simultaneously saying "I don't have a solution, but we should stop the self-imposed helplessness" isn't really saying much at all.
- codexb 3y ago
  It's a natural law so long as you have a framework for incorporated entities and you want to allow international trade. Incorporated entities are intangible. They are just ideas. They don't have to exist in any particular geographical area.
systemvoltage 3y ago
VAT is literally the reason for sluggish EU growth. 20% tax prempts many buyers from purchasing the good in the first place. We should do the exact opposite of VAT taxation.
Cthulhu_ 3y ago
VAT only scales with consumption though, and rich people / companies will ensure to keep their purchases inside of their businesses so VAT never applies. The other one you're omitting is income tax, which is likely why the Netherlands is welcoming these companies - they may miss out on billions worth of corporate tax, but if a company hires people here, that'll earn the state some in income taxes, especially high wage positions.

by codexb 3y ago

thedaly 3y ago

> The only corporations who pay tax in the US are large corporations who need massive amounts of cash on hand for research and reinvestment for new products and ventures. Apple would seemingly fit this description, but they still skirt taxes by offshoring their headquarters.

ProllyInfamous 3y ago
The same lawyers who removed Ireland's infamous "Double Dutch" tax-avoidance scheme also wrote Apple's favorable replacement tax-avoidance scheme. Man with money, wins.

Closi 3y ago

Relying solely on VAT has big issues too - it is a regressive tax (VAT paid as a percentage of net household income tends to be higher for poorer households), B2B businesses would be fully untaxed, and it doesn't really tax the businesses (the tax is on the consumer price rather than the business profit). > You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. This is misleading - the EU put in place VAT as well as a minimum 15% corporation tax.

onlyrealcuzzo 3y ago
> it is a regressive tax We already have a "progressive" tax system in which ~70% of Federal revenue (not including SS & Medicare which are separate line items funded separately) comes from individual income tax. Why can't we have a corporate tax that actually works and is evenly distributed instead of "progressive"?
- hellojesus 3y ago
  The entire point of the US system at birth was for excise taxes to exist. You can make them astronomical on luxury items and keep them minimal or nonexistent on food, etc. to achieve a progressive outcome. I spit on 16A. The US was designed not to have any direct tax, including federal income tax, unless it passed the apportionment test.
  - dsq 3y ago
    > The entire point of the US system at birth was for excise taxes to exist Could you please elaborate?
    - hellojesus 3y ago
      Direct taxes paid to the federal government are subject to apportionment in the US constitution. Therefore, for an income tax to be paid, it would have to be apportioned, meaning that states would have to pay a total amount equivalent to their proportion of the population. If NY has 10% of the total population, 10% of income taxes would need to be paid from NY. Similarly if TX only has 2% of the population, the tax would need 2% of its funding from TX. If everyone paid the same amount, this would be easy. But if you wanted to only tax millionaires, for example, that means that the millionaires in NY would be responsible for 10% of the total tax paid while those in TX would be responsible for 2%. Now consider that there are 1000 millionaires in NY but only 2 in TX. Each NY millionaire would be required to pay (.1)(1/1000)=.0001 of the total tax bill while each millionaire in TX would be required to pay (.02)(1/2)=.01. Obviously those in TX would never agree to such a tax. The goal with this is debated, but I believe it was done specifically to make passing direct taxes near impossible. Indirect taxes, such as excise taxes, are preferable since people only pay them if they want to. They can always elect to not purchase a good or service to avoid the tax. Additionally, it allows a much more progressive system than income taxes, since you can impose severe luxury taxes based on consumption only. The 16A came along and changed this by explicitly exempting income from the apportionment requirements. Likely this was one of the major catalysts in the destruction of the American experiment.

weberer 3y ago

>You have to tax the income at the source, at the point of sale. It’s why most of the EU shifted to VAT’s decades ago. The USA already has sales tax at the state and local level. Corporate tax is a separate tax on profits.

ukd1 3y ago
It's generally a lot less than VAT equivalents though.
- caminante 3y ago
  Can you help the grandparent and link some analysis? I'm not finding anything to support this claim. VAT absolutely performs worse in many environments [0]. [0] https://en.m.wikipedia.org/wiki/Value-added_tax#VAT-free_countries_and_territories https://en.m.wikipedia.org/wiki/Value-added_tax#VAT-free_cou...
hellojesus 3y ago
It's all double taxed though,and so it is terrible. Not only does the Corp have to pay on profits, but any way in which those profits are distributed are then once again taxed. It is a fool's system. Corrupt to the core by gov welfare queens.

adolph 3y ago

> the income is just passed through to individual owners and shareholders who pay tax on their individual income What is the corollary to "socialize risk, privatize reward" which has to with the cost of taxes being passed along to a level at which tax avoidance costs more than the tax? Maybe it would be "Inverse-Gulliver," where the Liliputians all live to lift Gulliver instead of tie him down.

dwallin 3y ago

"Corporate headquarters are easily moved, and Corporate income is easily shifted between corporations and individuals in different tax jurisdictions all over the world." This is a consequence of policy choices, not some inherent natural law.

refurb 3y ago
Sure, but what’s the alternative? Go with China’s approach? Capital controls? Appropriating companies that try and move to other countries? Generally economies that do that don’t perform well over the long run.
- dwallin 3y ago
  Are you truly going to proclaim that we have explored all options for how to structure a global economy? We arrived where we are via a mix of self-interest and local optimization and it seems unlikely we have arrived at even a local maxima. I'm not going to claim I have the solution. Anyone who tells you they do is either deluded or has something to sell you. And that definitely includes those who want you to believe that modern capitalism is the end-all be-all of society. What I want is to stop the self-imposed helplessness. What are some things that might work? How can we validate them? How can we roll them out?
  - refurb 3y ago
    Are you going to suggest that this isn't a very hard, if not impossible problem to solve? Do you assume that nobody has tried to solve it? Because that would be false, several countries have tried and failed. Saying "Somebody should solve this problem" while simultaneously saying "I don't have a solution, but we should stop the self-imposed helplessness" isn't really saying much at all.
codexb 3y ago
It's a natural law so long as you have a framework for incorporated entities and you want to allow international trade. Incorporated entities are intangible. They are just ideas. They don't have to exist in any particular geographical area.

systemvoltage 3y ago

VAT is literally the reason for sluggish EU growth. 20% tax prempts many buyers from purchasing the good in the first place. We should do the exact opposite of VAT taxation.

Cthulhu_ 3y ago

VAT only scales with consumption though, and rich people / companies will ensure to keep their purchases inside of their businesses so VAT never applies. The other one you're omitting is income tax, which is likely why the Netherlands is welcoming these companies - they may miss out on billions worth of corporate tax, but if a company hires people here, that'll earn the state some in income taxes, especially high wage positions.