4 ms·

Sorry but I don't make much money and I don't know how taxation really works but if people outside the US paid [CorporationName] and the income is being taxed o

by 3825 13y ago

Sorry but I don't make much money and I don't know how taxation really works but if people outside the US paid [CorporationName] and the income is being taxed outside the US (albeit at closer to 0%) why does [CorporationName] have to pay taxes in the US? I think we have to use common sense here. I can see why we want to tax a corporation if they just set up a shell company and pay royalties to the shell companies from revenue generated within the US but if the income is earned outside the US, why do we care? Why do we tax income that was not earned in the US? A simple (but very difficult) way to fix it would be to eliminate all tax incentives, reduce the tax rate, and peg tax to revenue and not to profit. So if you had revenue of $100 and expenses of $110, you would still pay taxes on the $100 revenue (at a newly reduced rate). This would encourage people to try to improve efficiency and profit margin. After all, I pay income taxes on all my income, not on the savings after I have spent my money. Why should companies get to pay taxes on "profit" and not on revenue?

pesenti 13y ago
This is part of scheme to avoid paying taxes on foreign income altogether: http://www.bloomberg.com/news/2013-05-22/google-joins-apple-avoiding-taxes-with-stateless-income.html http://www.bloomberg.com/news/2013-05-22/google-joins-apple-...
avinashv 13y ago
> Why should companies get to pay taxes on "profit" and not on revenue? Because then a company that makes losses (expenses exceed revenues) is still taxable, which isn't sensible. Taxes are not an expense, they are a tax on earned income. Depending on where you live, you probably won't be paying taxes on your whole income: you might get tax breaks for anything from housing loans, to write-offs for travel to and from your business, etc. in the same way that a business gets to claim expenses against generating their revenue.
justincormack 13y ago
This is not about the US. Those of us who live in the rest of the world and pay taxes would also like companies like Google and Apple to pay tax in the countries they operate in.
- 3825 13y ago
  > This is not about the US. Those of us who live in the rest of the world and pay taxes would also like companies like Google and Apple to pay tax in the countries they operate in. Hang on a minute. Maybe I am a little naive but I don't understand what all this hub bub is all about. Are you saying that people in country X (not the US) pay Corporation A real money but Corporation A legally does not pay taxes in country X? If that's the case, I think the fault is with your tax code than with corporation A. I am sorry but if I could get away with paying less in taxes, I absolutely would. There is no shame in trying to pay as little tax as one legally can.
deleted 13y ago
[deleted]
dragonwriter 13y ago
> After all, I pay income taxes on all my income, not on the savings after I have spent my money. Actually, you, like a corporation, pay taxes on income after deductible expenses, and you, unlike a corporation, even get the privilege of assuming a certain amount of deductible expenses without proving it. OTOH, almost everything a corporation can do with money other than lock it in a vault is a deductible expense, so there is that. > Why should companies get to pay taxes on "profit" and not on revenue? In theory, I think, because corporations are legal fictions and the actual benefits that their shareholders, employees, etc. -- the non-fictional people involved -- derive from them are taxed as personal income or capital gains, and corporate tax serves as a fee on delaying those personal taxes by retaining profits in the corporation.
PeterisP 13y ago
Taxing revenue instead of income would be an extreme incentive towards vertically integrated businesses, making all other choices uncompetitive. For example, if a chocolate bar is sold by overseas manufacturer A to an importer B then to a wholesaler distributor C then to a small retail shop D then to you - then if taxes were paid on revenue, then that chocolate bar would be taxed 4 times, and each step would bump the price up by the tax rate in addition to the current markup; However, if a manufacturer A would buy all the elements in the chain and sell it directly to you, then it would pay 4 times less taxes, and it would be impossible for others to compete with that pricing difference.
- jules 13y ago
  Ideally a company would pay taxes for the services it uses. If you use a public road, you pay a small tax for using that. Unfortunately not very practical.
  - cmccabe 13y ago
    It's very practical. It's called sales tax. Gasoline sales taxes are supposed to be used to maintain roads. In general, taxing income and profit is difficult to do fairly. It requires a really complex and invasive bureaucracy that scrutinizes everyone and every business. Sales tax, on the other hand, is easy to do fairly. You already have to regulate sales to enforce anti-fraud laws, food and drug laws, and other regulations. People often say that sales tax is regressive, whereas income tax is progressive. But in practice, income tax is regressive, really falling only on the middle class. For example, multi-billionaire Warren Buffet pays a lower tax rate than his secretary. http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/index.html http://money.cnn.com/2013/03/04/news/economy/buffett-secreta...

by 3825 13y ago

pesenti 13y ago

This is part of scheme to avoid paying taxes on foreign income altogether: http://www.bloomberg.com/news/2013-05-22/google-joins-apple-avoiding-taxes-with-stateless-income.html http://www.bloomberg.com/news/2013-05-22/google-joins-apple-...

avinashv 13y ago

> Why should companies get to pay taxes on "profit" and not on revenue? Because then a company that makes losses (expenses exceed revenues) is still taxable, which isn't sensible. Taxes are not an expense, they are a tax on earned income. Depending on where you live, you probably won't be paying taxes on your whole income: you might get tax breaks for anything from housing loans, to write-offs for travel to and from your business, etc. in the same way that a business gets to claim expenses against generating their revenue.

justincormack 13y ago

This is not about the US. Those of us who live in the rest of the world and pay taxes would also like companies like Google and Apple to pay tax in the countries they operate in.

3825 13y ago
> This is not about the US. Those of us who live in the rest of the world and pay taxes would also like companies like Google and Apple to pay tax in the countries they operate in. Hang on a minute. Maybe I am a little naive but I don't understand what all this hub bub is all about. Are you saying that people in country X (not the US) pay Corporation A real money but Corporation A legally does not pay taxes in country X? If that's the case, I think the fault is with your tax code than with corporation A. I am sorry but if I could get away with paying less in taxes, I absolutely would. There is no shame in trying to pay as little tax as one legally can.

deleted 13y ago

[deleted]

dragonwriter 13y ago

> After all, I pay income taxes on all my income, not on the savings after I have spent my money. Actually, you, like a corporation, pay taxes on income after deductible expenses, and you, unlike a corporation, even get the privilege of assuming a certain amount of deductible expenses without proving it. OTOH, almost everything a corporation can do with money other than lock it in a vault is a deductible expense, so there is that. > Why should companies get to pay taxes on "profit" and not on revenue? In theory, I think, because corporations are legal fictions and the actual benefits that their shareholders, employees, etc. -- the non-fictional people involved -- derive from them are taxed as personal income or capital gains, and corporate tax serves as a fee on delaying those personal taxes by retaining profits in the corporation.

PeterisP 13y ago

Taxing revenue instead of income would be an extreme incentive towards vertically integrated businesses, making all other choices uncompetitive. For example, if a chocolate bar is sold by overseas manufacturer A to an importer B then to a wholesaler distributor C then to a small retail shop D then to you - then if taxes were paid on revenue, then that chocolate bar would be taxed 4 times, and each step would bump the price up by the tax rate in addition to the current markup; However, if a manufacturer A would buy all the elements in the chain and sell it directly to you, then it would pay 4 times less taxes, and it would be impossible for others to compete with that pricing difference.

jules 13y ago
Ideally a company would pay taxes for the services it uses. If you use a public road, you pay a small tax for using that. Unfortunately not very practical.
- cmccabe 13y ago
  It's very practical. It's called sales tax. Gasoline sales taxes are supposed to be used to maintain roads. In general, taxing income and profit is difficult to do fairly. It requires a really complex and invasive bureaucracy that scrutinizes everyone and every business. Sales tax, on the other hand, is easy to do fairly. You already have to regulate sales to enforce anti-fraud laws, food and drug laws, and other regulations. People often say that sales tax is regressive, whereas income tax is progressive. But in practice, income tax is regressive, really falling only on the middle class. For example, multi-billionaire Warren Buffet pays a lower tax rate than his secretary. http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/index.html http://money.cnn.com/2013/03/04/news/economy/buffett-secreta...