4 ms·

So in a no corp-tax world, if a US C-corp just keeps retained earnings and not pays out a dividend, then what? (Like Apple did for years.) Granted, you still h

So in a no corp-tax world, if a US C-corp just keeps retained earnings and not pays out a dividend, then what? (Like Apple did for years.) Granted, you still have capital gains from stock trading, etc. But if corporate profits not taxed, the company can simply sit on the money. They don't have to spend it on R&D, or anything else, as they do not need a tax write off. It's a double-edge sword and there really isn't a silver bullet.

crazygringo 13y ago
> you still have capital gains from stock trading, etc. That's the whole point -- without corporate taxation, shares in corporations are more valuable, and the taxation is drawn from capital gains instead -- and capital gains tax should be far higher, of course (and ideally progressive as well, based on your total income). Sure, companies can "sit on their money", but they already can. And that money is presumably invested anyways, so it's still being productive (on R&D in other companies, for example), and it certainly gets spent eventually.
- sologoub 13y ago
  > Sure, companies can "sit on their money", but they already can. Not entirely, it is taxed at least once when earned (corp earnings tax). Personally, high capital gains tax gives me a lot of hesitation, as you actually want to encourage people to invest and not dissuade them from doing it. Not sure exactly how this works, but Switzerland appears to be taxing total networth. http://en.wikipedia.org/wiki/Taxation_in_Switzerland#Property_tax http://en.wikipedia.org/wiki/Taxation_in_Switzerland#Propert... A very low rate would still amount to a huge sum if you consider the total networth of all US "natural persons".
  - mike_herrera 13y ago
    > Personally, high capital gains tax gives me a lot of hesitation, as you actually want to encourage people to invest and not dissuade them from doing it. Interesting. I hold the opposite position as I would rather make company re-investments more attractive. > ...Switzerland appears to be taxing total networth. This is a wonderful idea! Though I could imagine the games that could be played with valuations.

crazygringo 13y ago

> you still have capital gains from stock trading, etc. That's the whole point -- without corporate taxation, shares in corporations are more valuable, and the taxation is drawn from capital gains instead -- and capital gains tax should be far higher, of course (and ideally progressive as well, based on your total income). Sure, companies can "sit on their money", but they already can. And that money is presumably invested anyways, so it's still being productive (on R&D in other companies, for example), and it certainly gets spent eventually.

sologoub 13y ago
> Sure, companies can "sit on their money", but they already can. Not entirely, it is taxed at least once when earned (corp earnings tax). Personally, high capital gains tax gives me a lot of hesitation, as you actually want to encourage people to invest and not dissuade them from doing it. Not sure exactly how this works, but Switzerland appears to be taxing total networth. http://en.wikipedia.org/wiki/Taxation_in_Switzerland#Property_tax http://en.wikipedia.org/wiki/Taxation_in_Switzerland#Propert... A very low rate would still amount to a huge sum if you consider the total networth of all US "natural persons".
- mike_herrera 13y ago
  > Personally, high capital gains tax gives me a lot of hesitation, as you actually want to encourage people to invest and not dissuade them from doing it. Interesting. I hold the opposite position as I would rather make company re-investments more attractive. > ...Switzerland appears to be taxing total networth. This is a wonderful idea! Though I could imagine the games that could be played with valuations.