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Is there any point in taxing companies at all - they provide jobs for tax payers.

by Eye_of_Mordor 13y ago

lmm 13y ago
Taxing their profits encourages them to spend any spare cash hiring more tax payers rather than sitting on it.
- Eye_of_Mordor 13y ago
  Corporations pay out taxed dividends from their profits.
  - lmm 13y ago
    Taxed at a much lower rate than ordinary people's income though. (And more to the point the kind of person who gets money from dividends is less likely to spend it on tax-generating economic activity like buying food)
    - Eye_of_Mordor 13y ago
      Yes, the logic is that the corporation paid tax on their profits before dividends. Perhaps there's a case for corporation tax abolition and increased dividend taxation?
      - lmm 13y ago
        I actually wouldn't be averse to that, but it'd be hard to internationally coordinate such a change (and it would have to be internationally coordinated, or corporations would move to the places that had the lowest corporation tax while their owners would move to the places that had the lowest dividend tax). And there's still the problem of keeping your wealth in a corporation and avoiding paying tax on it until you use it (which creates the wrong incentive - we want to encourage rich investors to spend the money and put it back into the system, or at least invest in new ventures, rather than leaving it in their company's bank account accumulating compound interest).
        Eye_of_Mordor 13y ago
        Actually, there's nothing to coordinate in setting your corporation tax to zero, but you'd likely incrementally increases dividend taxes.
dalke 13y ago
Obviously providing jobs for tax payers isn't unique to companies. I can pay for a nanny, chauffeur, and private cook even if I don't have a company. Since your logic is "X provides jobs so X shouldn't be taxed" then I shouldn't have to be taxed if I have any household staff, no? That logic makes no sense. (If it makes sense to you, please elaborate. How many employees and how many FTEs does one need before this special exemption kicks in, and why that level?) Now, by "company" I assume you mean "corporation." Corporations form for various reasons, the biggest being liability. Without it, shareholders could be sued individually. This protection is worth something to the shareholders. I think it's perfectly reasonable that the state, which is the authority that grants companies the right to exist, should be able to extract something from the company - taxes and fees, for example - in order that the company may continue. Do you think that corporations should exist without paying any fees to the state? If so, why should they get liability protection for free? If the tax rate is too high, then people could switch from the corporate form of company to a sole proprietorship. A sole proprietor can have employees, and thus "provide jobs for tax payers", even though the business itself is not taxed separately from the proprietor's income. Now, obviously there's a large set of trade-offs, and the example I gave - a switch to sole proprietorship - is too blunt. My point is that the idea that "provide jobs" necessarily implies "should not be taxed" is so simplistic that it more indicates a lack of understanding of why there are companies in the first place.
- Eye_of_Mordor 13y ago
  I think you are angry with corporations 'getting away with it', but you can view them as an enabler of tax: - taxes from their employees - taxes from their dividends What if there were no corporation tax - how would revenues be affected?
  - dalke 13y ago
    I can view them as lots of ways. For that matter, I've owned two companies myself, one where the business income was part of my income and one where they were separate. But I'm not answering your question as you've not answered the ones I posed to you. As it stands, it appears that you don't know much about corporations nor corporate taxation. It seems rather a waste of my time to continue this exchange if I don't think you're making a reasonable effort at it, or tire of weak attacks on my character.

Is there any point in taxing companies at all - they provide jobs for tax payers.

lmm 13y ago

Taxing their profits encourages them to spend any spare cash hiring more tax payers rather than sitting on it.

Eye_of_Mordor 13y ago
Corporations pay out taxed dividends from their profits.
- lmm 13y ago
  Taxed at a much lower rate than ordinary people's income though. (And more to the point the kind of person who gets money from dividends is less likely to spend it on tax-generating economic activity like buying food)
  - Eye_of_Mordor 13y ago
    Yes, the logic is that the corporation paid tax on their profits before dividends. Perhaps there's a case for corporation tax abolition and increased dividend taxation?
    - lmm 13y ago
      I actually wouldn't be averse to that, but it'd be hard to internationally coordinate such a change (and it would have to be internationally coordinated, or corporations would move to the places that had the lowest corporation tax while their owners would move to the places that had the lowest dividend tax). And there's still the problem of keeping your wealth in a corporation and avoiding paying tax on it until you use it (which creates the wrong incentive - we want to encourage rich investors to spend the money and put it back into the system, or at least invest in new ventures, rather than leaving it in their company's bank account accumulating compound interest).
      - Eye_of_Mordor 13y ago
        Actually, there's nothing to coordinate in setting your corporation tax to zero, but you'd likely incrementally increases dividend taxes.

dalke 13y ago

Obviously providing jobs for tax payers isn't unique to companies. I can pay for a nanny, chauffeur, and private cook even if I don't have a company. Since your logic is "X provides jobs so X shouldn't be taxed" then I shouldn't have to be taxed if I have any household staff, no? That logic makes no sense. (If it makes sense to you, please elaborate. How many employees and how many FTEs does one need before this special exemption kicks in, and why that level?) Now, by "company" I assume you mean "corporation." Corporations form for various reasons, the biggest being liability. Without it, shareholders could be sued individually. This protection is worth something to the shareholders. I think it's perfectly reasonable that the state, which is the authority that grants companies the right to exist, should be able to extract something from the company - taxes and fees, for example - in order that the company may continue. Do you think that corporations should exist without paying any fees to the state? If so, why should they get liability protection for free? If the tax rate is too high, then people could switch from the corporate form of company to a sole proprietorship. A sole proprietor can have employees, and thus "provide jobs for tax payers", even though the business itself is not taxed separately from the proprietor's income. Now, obviously there's a large set of trade-offs, and the example I gave - a switch to sole proprietorship - is too blunt. My point is that the idea that "provide jobs" necessarily implies "should not be taxed" is so simplistic that it more indicates a lack of understanding of why there are companies in the first place.

Eye_of_Mordor 13y ago
I think you are angry with corporations 'getting away with it', but you can view them as an enabler of tax: - taxes from their employees - taxes from their dividends What if there were no corporation tax - how would revenues be affected?
- dalke 13y ago
  I can view them as lots of ways. For that matter, I've owned two companies myself, one where the business income was part of my income and one where they were separate. But I'm not answering your question as you've not answered the ones I posed to you. As it stands, it appears that you don't know much about corporations nor corporate taxation. It seems rather a waste of my time to continue this exchange if I don't think you're making a reasonable effort at it, or tire of weak attacks on my character.