What good is the corporate tax?

[Anarchist420]

It's a piss-poor revenue raiser, it results in the loss of jobs, it reduces efficiency in business, and it causes higher prices.

It only raises ~1/5 of what the individual income tax raises.

Just get rid of it, take away their patents and limited liability status and then everything will be better.

I don't know what's worse--the artificially low interest rates we have now or the corporate tax.

I mean, they ought to just reduce government levels to 1790 levels, and simply get by on a 10% uniform tariff and a 40cent tax on cigarettes. Just the original 4 cabinets would be good; $85B for Defense, and 7B for State, 4B for Treasury, 3B for DoJ/Atty. Gen., and like 1B for Congress and other expenditures. Then the Old Republic and 10th Amendment rights would be restored. I mean, what's so difficult about that?

 

[ModestGamer]

It's a piss-poor revenue raiser, it results in the loss of jobs, it reduces efficiency in business, and it causes higher prices.

It only raises ~1/5 of what the individual income tax raises.

Just get rid of it, take away their patents and limited liability status and then everything will be better.

I don't know what's worse--the artificially low interest rates we have now or the corporate tax.

I mean, they ought to just reduce government levels to 1790 levels, and simply get by on a 10% uniform tariff and a 40cent tax on cigarettes. Just the original 4 cabinets would be good; $85B for Defense, and 7B for State, 4B for Treasury, 3B for DoJ/Atty. Gen., and like 1B for Congress and other expenditures. Then the Old Republic and 10th Amendment rights would be restored. I mean, what's so difficult about that?

well for starters. you sit kind of where I sit on the whole thing. but I want the destruction of goverment to reach down to the local level.

 

[ElFenix]

it makes people think they're not paying taxes when they really are.

 

[dullard]

It's a piss-poor revenue raiser, it results in the loss of jobs, it reduces efficiency in business, and it causes higher prices.

It only raises ~1/5 of what the individual income tax raises.

Just get rid of it, take away their patents and limited liability status and then everything will be better.

If it is a poor revenue raiser that doesn't bring in much money, then it doesn't do much harm. You can't argue both sides. Either it brings in a lot of money (lots of harm to businesses) or it doesn't. Heck, roughly half of all massive profit-making fortune 500 companies pay $0 in corporate taxes. They can't be harmed that much if they pay no taxes.

Taking away patents would destroy businesses more than just about any tax proposal ever introduced.

As Bierce stated quite eloquently, a corporation is an "ingenious device for obtaining individual profit without individual responsibility". Corporations have massive rights, priviledges, etc. The tax in principle can be a way to balance the playing field back to the side of the people.

Think about it. If corporations weren't taxed, anyone could set up a corporation for themselves, work as a sole-proprietor contractor to your employer instead of an employee, then have the corporation buy all of the things they need. Instant way to transfer your income tax free to yourself. Or at worst, at the 10% long term capital gains rate which is far below most of the current income tax rates. The corporate tax is needed to somewhat make Warren Buffet pay at least some taxes.

 

[IceBergSLiM]

patents exist for a very good reason as does limited liability. how can you be so stupid?

 

[werepossum]

it makes people think they're not paying taxes when they really are.

Bingo. Progressive politicians love to raise taxes when the dumb masses can't see they are being raised and will blame evil corporations.

 

[ElFenix]

If it is a poor revenue raiser that doesn't bring in much money, then it doesn't do much harm. You can't argue both sides. Either it brings in a lot of money (lots of harm to businesses) or it doesn't. Heck, roughly half of all massive profit-making fortune 500 companies pay $0 in corporate taxes. They can't be harmed that much if they pay no taxes.

they have to be doing a lot of tax planning and taking actions specifically to fulfill that tax planning in order to do that. obviously they believe the cost to do so is lower than the tax. but it does modify their behavior and that's an effect of the tax.

 

[xj0hnx]

If it is a poor revenue raiser that doesn't bring in much money, then it doesn't do much harm. You can't argue both sides. Either it brings in a lot of money (lots of harm to businesses) or it doesn't.

That's some of the worst "logic" I have ever heard. Just because what they take doesn't amount to much against government spending doesn't mean that it doesn't hurt the companies. If I had a billion dollars, and you had ten, and I took three dollars from you I wouldn't even notice it, but you sure would.

 

[nonlnear]

they have to be doing a lot of tax planning and taking actions specifically to fulfill that tax planning in order to do that. obviously they believe the cost to do so is lower than the tax. but it does modify their behavior and that's an effect of the tax.

This is but another shining example of one of the other (de facto) purposes of government: to subsidize the legal industry. The ABA is an incredibly powerful lobbying force, made even moreso by the number of members they have in elected offices. They systematically advocate for laws that necessitate the provision of professional legal services. When the majority of legislators are lawyers by training, why would anyone expect them to produce a tax code that removed the livelihoods of most of the tax attorneys in the country?

 

[dullard]

That's some of the worst "logic" I have ever heard. Just because what they take doesn't amount to much against government spending doesn't mean that it doesn't hurt the companies. If I had a billion dollars, and you had ten, and I took three dollars from you I wouldn't even notice it, but you sure would.

1) They don't take $3 out of $10. Most companies pay none. See here. Or how about actual numbers. Since 2009 taxes aren't fully in, I don't have that data. But 2008 numbers are in. Total corporate profit before tax in 2008: $1475B. Total corporate taxes in 2008: $304B. That is an average of 20.6% of profit that was taxed. Or in your terms, about $2 out of $10.

2) Sure, you could complain that 2008 was a bad year for corporations. Lets try 2005 instead. Total corporate profit before tax: $1113B. Total corporate taxes: $278B. Average of 18.5%. By the way, in 2003, the average corporate tax rate was 16.6%. None of those numbers are $3 out of $10.

3) You didn't even come close to understanding my argument. Here it is again in different words to help you understand: If they took a lot from companies, then it would harm them a lot. If they took little from companies, then it wouldn't harm them a lot. What do you disagree with there? The OP basically argued that little was taken but that they were harmed a lot.

4) Corporations still make quite a large profit. $1.17 trillion after tax in 2008. They seem to be running strong at our current tax rate (about $2 out of $10) and that was double their after-tax profit that they had in the early 2000s. To me, that data doesn't signal that they are suffering a big harm.

 

[Throckmorton]

OK, so what happens when you replace the corporate tax with higher income tax? Corporations have to pay their employees more to make up for it!

 

[ElFenix]

OK, so what happens when you replace the corporate tax with higher income tax? Corporations have to pay their employees more to make up for it!

transparency++

 

[shira]

well for starters. you sit kind of where I sit on the whole thing. but I want the destruction of goverment to reach down to the local level.

Wow. Let me guess: You took a course in government in the 6th grade, so now you're an expert on the subject.

I now completely understand why in another thread you opined that a course in high school chemistry gives you a better understanding of global warming than PhDs in climatology.

 

[daishi5]

3) You didn't even come close to understanding my argument. Here it is again in different words to help you understand: If they took a lot from companies, then it would harm them a lot. If they took little from companies, then it wouldn't harm them a lot. What do you disagree with there? The OP basically argued that little was taken but that they were harmed a lot.

Not completely true, corporations do a lot of juggling to their numbers both to make themselves look better and to reduce their expenses that are based on those numbers (likes taxes). It could be possible that the companies pay very little in taxes, but are harmed by all of the work they do purely to avoid taxes. As long as the effort involved to avoid the tax costs less than the tax, it is logical to avoid the tax. Thus the true cost of the tax is not well represented by the amount actually paid.

 

[nonlnear]

3) You didn't even come close to understanding my argument. Here it is again in different words to help you understand: If they took a lot from companies, then it would harm them a lot. If they took little from companies, then it wouldn't harm them a lot. What do you disagree with there? The OP basically argued that little was taken but that they were harmed a lot.

Not completely true, corporations do a lot of juggling to their numbers both to make themselves look better and to reduce their expenses that are based on those numbers (likes taxes). It could be possible that the companies pay very little in taxes, but are harmed by all of the work they do purely to avoid taxes. As long as the effort involved to avoid the tax costs less than the tax, it is logical to avoid the tax. Thus the true cost of the tax is not well represented by the amount actually paid.

Exactly. For dullard's argument to be complete you have to include all the overhead caused by compliance and tax "optimization". The tax receipts are only one (large) piece of the bill. Add on a chunk of those companies' finance/accounting departments, their entire tax attorney bills, some of the miscellaneous regulatory compliance overhead, etc. Not to mention the huge lobbying bills incurred by companies seeking sweetheart tax abatements and government guaranteed (or otherwise subsidized) financing, and other preferential tax treatment. Corporate welfare isn't cheap!

 

[Throckmorton]

transparency++

I only want more tax transparency if we get more spending transparency too. In other words, every time a person drives on a road, gets saved by firemen, flies in a plane, collects Social Security, or whatever there is some kind of reminder that it was paid for by tax dollars. Otherwise you end up with teabagger syndrome where idiots call for the destruction of government because they don't want to pay taxes, while at the same time benefiting greatly from government spending.

 

[ModestGamer]

flat consumption tax. everyone pays even the rich fuckers. You know why it will never happen. rich fuckers.

 

[werepossum]

transparency++

Great point, which is why I'm an avid supporter of the FairTax. Even people at or below the poverty line, who would be prebated what they spend on the FairTax, would be forced to confront that cost at least psychologically every time they buy something. There's a reason that high taxing politicians like lots of little taxes, even though administration and compliance costs are much higher than with one big tax, and it's to hide the true cost of government.

It's worth repeating too that corporations don't really pay taxes so much as pass them on. Everything a corporation owns is owned by the stockholders, many of whom are not at all wealthy. Everything a corporation pays in taxes must either be taken from the stockholders directly (in dividend reductions) or indirectly (through loss of value), or else passed along to the consumer. The nations with low or no corporate taxes have a huge advantage in that their corporations have a competitive advantage over foreign competitors in that they have nothing to either pass along, or take from their shareholders, meaning that their products can be cheaper, or their stock more attractive and less subject to hostile takeover, or both.

 

[jackace]

Personally I'm not a big fan of corporations even existing. We can't really punish a corporation, and it's too easy for the people running the corporation to move assets to a new corporation and let the old corporation die along with all it's liabilities.

 

[ayabe]

flat consumption tax. everyone pays even the rich fuckers. You know why it will never happen. rich fuckers.

You've got it backwards. The rich would love such a tax model, their contributions would go way down overall and the burden would be shifted to the middle and poor disproportionately.

Corporations wants to defined as whatever suits their interests for the moment, being a hybrid citizen/corporation and getting to enjoy the benefits of both is an increasing threat to democracy in this country.

Pick one or the other, don't want ANY corporate taxes? OK then you are just a corporation and cannot claim any individual rights as a citizen or group of citizens. No more lobbying either, sorry.

 

[ElFenix]

It's worth repeating too that corporations don't really pay taxes so much as pass them on. Everything a corporation owns is owned by the stockholders, many of whom are not at all wealthy. Everything a corporation pays in taxes must either be taken from the stockholders directly (in dividend reductions) or indirectly (through loss of value), or else passed along to the consumer. The nations with low or no corporate taxes have a huge advantage in that their corporations have a competitive advantage over foreign competitors in that they have nothing to either pass along, or take from their shareholders, meaning that their products can be cheaper, or their stock more attractive and less subject to hostile takeover, or both.

studies have shown it's mostly the 9-5 wager earners and lower management that bears the largest burden of the taxes, rather than consumers or shareholders.

shareholders love hostile takeovers (they get a big premium over the market value of their shares). management hates them (they lose their cushy jobs). you can't hostilely take over a company unless its current shareholders are on your side (proxy fight against management). lots of studies during the big hostile takeover days in the late 80s showed that the previous shareholders walked away with most of the value. which makes sense. the first companies targetted were the best pickings and the previous shareholders didn't have a benchmark to go by. by the end of the period you got slimmer pickings and the shareholders were expecting 2x premiums.

 

[Throckmorton]

Great point, which is why I'm an avid supporter of the FairTax. Even people at or below the poverty line, who would be prebated what they spend on the FairTax, would be forced to confront that cost at least psychologically every time they buy something. There's a reason that high taxing politicians like lots of little taxes, even though administration and compliance costs are much higher than with one big tax, and it's to hide the true cost of government.

It's worth repeating too that corporations don't really pay taxes so much as pass them on. Everything a corporation owns is owned by the stockholders, many of whom are not at all wealthy. Everything a corporation pays in taxes must either be taken from the stockholders directly (in dividend reductions) or indirectly (through loss of value), or else passed along to the consumer. The nations with low or no corporate taxes have a huge advantage in that their corporations have a competitive advantage over foreign competitors in that they have nothing to either pass along, or take from their shareholders, meaning that their products can be cheaper, or their stock more attractive and less subject to hostile takeover, or both.

Well I don't really pay taxes either. I pass them on to my employer, who passes them on to the citizens of this county, who pass them on to their employers.

 

[ModestGamer]

You've got it backwards. The rich would love such a tax model, their contributions would go way down overall and the burden would be shifted to the middle and poor disproportionately.

Corporations wants to defined as whatever suits their interests for the moment, being a hybrid citizen/corporation and getting to enjoy the benefits of both is an increasing threat to democracy in this country.

Pick one or the other, don't want ANY corporate taxes? OK then you are just a corporation and cannot claim any individual rights as a citizen or group of citizens. No more lobbying either, sorry.

Why don't we have a flat tax if the rich find it advantegous ?

 

[Brainonska511]

Why don't we have a flat tax if the rich find it advantegous ?

Because they haven't conned over enough people to get it to actually pass.

 

[werepossum]

Well I don't really pay taxes either. I pass them on to my employer, who passes them on to the citizens of this county, who pass them on to their employers.

Incorrect. Your employer doesn't give a damn about your taxes, only the bottom line it takes to keep you working and how it measures up to your output's value. If your taxes go up 20% your pay does not automatically go up to match, and whether or not you get a raise at all depends on the cost/value equation and the job market, not your taxes. Sophistry fail.