Should corporations pay tax?

[MarketMasher]

Quote from Scataphagos:

... like the major ones of phony deduction to offshore subsidiaries and not having to pay the tax until the money is brought onto US shores.

I've heard and seen this pointed out before on tv, but no one ever points out WHO introduced this idea, pushed for it and WHY.

I think a lot of the reason this stuff is skirted is because no one's NAME ever gets hung onto it. And the MOST interesting thing is - if it was sponsored originally by a Republican, I'd think the Democrats would want to raise the point, and if it was sponsored by a Democrat, I'd think the Republicans would want to point that out.

Unless they worked hand-in-hand on that one....

 

[Wallace]

one argument against company/business taxation is that it's anti employment, a
cost that reduces money available to hire additional workers
Ireland's low tax rate - close to the Laffer's 'flat rate' has been very successful and
something the Irish won't give up to appease the rest of the EU
I Was surprised tho to learn that corporate tax is higher in the US than Canada -
reduced this year to 16.5% , which prompts the argument picking on banks that
they get a free profit ride for no good reason the ordinary citizen isn't getting, and
the tax reduction hasn't resulted in new hires
a side note: VAT - value added tax; when introduced in Canada - GST - goods and
services tax resulted in a deficit and the party in power losing the next election, not
sure if that's just coincidence

 

[benwm]

Courtesy of Bloomberg Businessweek, I read that US combined federal-and-state tax rate is 39.2%, the second highest in the world, after Japan's 39.5%. Note that much of Eastern Europe has a flat corporate tax below 20%, such as Bulgaria and Serbia 10%, Russia 16%.

The high corporate tax rate hurts small businesses relatively speaking since of course big corporations can spend larger amounts on tax advice and organizing their operations outside of the US in lower tax destinations. General Electric, for example, pays an effective tax rate of 3.6%.

Not too surprising then that the US faces both high unemployment and budget deficits when the economic policies of the two main parties are so counterproductive, discouraging investment in both the US economy and workers.

In 1901, US corporate tax rate was 1% (yes, ONE percent!), so that shows how far the country has shifted to the left in the past 110 years...

 

[the1]

A flat tax will never happen because it gives congress an incredible amount of control over the economic actions of the population. Imagine R/E taxes and Mortgage Interest disappearing as a deduction. That lessons the desire to buy a home. When people buy homes they spend more money decorating, planting flowers, putting on additions, etc. Kiss all this goodbye with a flat tax.

Quote from Scataphagos:

The government needs tax revenue, of course. It needs to decide upon what it is based, then execute.

If a major portion is "corporate income tax", then it should be exactly that with no loop holes... like the major ones of phony deduction to offshore subsidiaries and not having to pay the tax until the money is brought onto US shores.

By the same token, taxing corporation earnings and also taxing dividend distributions is unfair... same money earned is taxed twice.

The government should not even be considering raising taxes on citizens until fraud, waste and duplications in government have been addressed... and until corporate loopholes have been closed.

Art Laffer has been saying all along, "12% FLAT TAX... on corporate earnings and personal incomes"... would be revenue neutral.

Don't you think such a policy would attract foreign companies to make their stuff here and hire US workers?

The Odumbo Circle Jerk on taxes and wealth redistribution ain't gonna get it... not now, not ever!

And the current polices of "taxing certain fewer and fewer payers at ever higher and higher rates... so that politically favored others can pay less/zero tax".. is IMMORAL AND CORRUPT!!

 

[nitro]

Quote from benwm:

Courtesy of Bloomberg Businessweek, I read that US combined federal-and-state tax rate is 39.2%, the second highest in the world, after Japan's 39.5%. Note that much of Eastern Europe has a flat corporate tax below 20%, such as Bulgaria and Serbia 10%, Russia 16%.

The high corporate tax rate hurts small businesses relatively speaking since of course big corporations can spend larger amounts on tax advice and organizing their operations outside of the US in lower tax destinations. General Electric, for example, pays an effective tax rate of 3.6%.

Not too surprising then that the US faces both high unemployment and budget deficits when the economic policies of the two main parties are so counterproductive, discouraging investment in both the US economy and workers.

In 1901, US corporate tax rate was 1% (yes, ONE percent!), so that shows how far the country has shifted to the left in the past 110 years...

I don't necessarily disagree with what you are saying, although I think some form of flat tax with no loopholes is the right compromise. But your last statement is vacuous. What you want to know is not the absolute number, but the number with respect to GDP (I think the chart is mislabeled - it is corporate taxes not profits that is the Y-AXIS):

http://finance.yahoo.com/news/Should-U-S-Adopt-Alternative-dg-1944589798.html?x=0

 

[benwm]

Quote from nitro:

What you want to know is not the absolute number, but the number with respect to GDP

But it is not necessarily the case that the total corporate tax take would fall if you reduced the corporate tax rate...

A higher corporate tax take as a % of GDP would be a great thing if it was the result of a lower corporate tax rate. It would be win-win for corporations and government - implying higher profits and helping to reduce the budget deficit.

Consider this - if the corporate tax rate was 10% instead of 35-39%, as a company executive would you bother hiring all the tax advisers, accountants and lawyers to create the web of foreign subsidiaries, trusts, offshore holdings with all the associated complexities involved? For many larger corporations it would not be worth the hassle involved and they'd likely willingly pay higher taxes at home by bringing business back to the US.

And of course there would be the inflow of new businesses in the US that currently don't exist...

IMHO it is actually quite simple economics to solve the US unemployment and deficit problems, it is mostly politics (from BOTH major parties) that gets in the way.

 

[Scataphagos]

Quote from MarketMasher:

I've heard and seen this pointed out before on tv, but no one ever points out WHO introduced this idea, pushed for it and WHY.

I think a lot of the reason this stuff is skirted is because no one's NAME ever gets hung onto it. And the MOST interesting thing is - if it was sponsored originally by a Republican, I'd think the Democrats would want to raise the point, and if it was sponsored by a Democrat, I'd think the Republicans would want to point that out.

Unless they worked hand-in-hand on that one....

This has been an issue for like 40-50 years. Bush had the chance to change this but declined.

Should have never been allowed. Should have been changed long ago.

It's ridiculous for a company to avoid $BILLIONS in income tax by dealing through an offshore corporation or affiliate. The Government/IRS doesn't allow, let's say, a high power lawyer... to have his salary deposited into a Cayman bank and to be taxed only when he brings his money into the US. Some such people could have their salary depoisted overseas for years/decades... then leave the US to join up with their money, never to return... and never to have paid income tax.

Why should a company get away with such shenanigans?

 

[benwm]

I just think the best way to kill off tax havens is to cut your own tax rates, then you take away much of the demand for them.

But that means less power for politicians and smaller government departments, so funnily enough they never pursue that option.

 

[MarketMasher]

Quote from Scataphagos:

This has been an issue for like 40-50 years. Bush had the chance to change this but declined.

Should have never been allowed. Should have been changed long ago.

It's ridiculous for a company to avoid $BILLIONS in income tax by dealing through an offshore corporation or affiliate. The Government/IRS doesn't allow, let's say, a high power lawyer... to have his salary deposited into a Cayman bank and to be taxed only when he brings his money into the US. Some such people could have their salary depoisted overseas for years/decades... then leave the US to join up with their money, never to return... and never to have paid income tax.

Why should a company get away with such shenanigans?

Maybe since corps are now defined as "people" by SCOTUS, that high power lawyer (and anybody else) can just declare himself a "person" (show a birth-certificate?) and do the offshore thing too....

 

[elon]

Where there's a will there's a way. If a corporation hires the creme of the crop accountants, financial analysts and lawyers, they're going to get away with paying no taxes. Its a ROI thing. If the manpower costs less than the taxes then they're not going to pay taxes.