Corporate Income Tax

[seayakin]

Given all the discussion, I'm thinking it would be a good idea to eliminate corporate taxes completely. Here is an older article in the Atlantic about this. A bunch of carve outs and deductions for specific business would have to be eliminated.

By doing this, I think we would make it much less desirable for a corporation to ship profits oversees. It would make it harder for the Congress to subsidize business through tax breaks. Obviously, revenues generated would have to be increased or the federal expenditures severely cut.

Personally, I value many of the federal aid programs and would support increasing personal tax rates to cover these costs.

 

[Trebuchet]

The thing about the high USA corporate tax rate is than pretty much no corporation actually pays that. Many pay nothing at all. I'm all for reducing the base rate if they close the multitude of loopholes at the same time. Not much chance of that happening, of course.

 

[ahhell]

The thing about the high USA corporate tax rate is than pretty much no corporation actually pays that. Many pay nothing at all. I'm all for reducing the base rate if they close the multitude of loopholes at the same time. Not much chance of that happening, of course.

This

 

[Meadmaker]

I think that was seayakin's point, sort of. If there were no corporate taxes, there would be no loopholes. What we have right now is a system where we have high corporate taxes, but they are sufficiently high that the most influential corporations can buy some congressmen who will exempt them from the corporate taxes.

 

[Brainster]

The thing about the high USA corporate tax rate is than pretty much no corporation actually pays that. Many pay nothing at all. I'm all for reducing the base rate if they close the multitude of loopholes at the same time. Not much chance of that happening, of course.

Well, if you reduce the rate to zero, as the OP suggested, I'm sure that they'd be happy to close the loopholes.

As for corporations not paying those high tax rates, Apple Computer has paid over $20 billion in corporate income taxes each of the last two years. Just eyeballing, it appears that they pay about 26% of their pretax income in taxes.

 

[seayakin]

I think that was seayakin's point, sort of. If there were no corporate taxes, there would be no loopholes. What we have right now is a system where we have high corporate taxes, but they are sufficiently high that the most influential corporations can buy some congressmen who will exempt them from the corporate taxes.

Yes this what I was suggesting. I am not writing this facetiously but other than the loss of revenue, what problems might this create?


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[bam]

From a global perspective it would likely cause a worldwide recession when corps started relocating their headquarters to the US and other countries lost good paying jobs and tax income.

A tax like the APT tax makes a lot more sense. Lower the tax rate so businesses can be competitive and eliminate as many loopholes as you can. Get lobbyists and special interest out of the mix.

 

[Meadmaker]

Yes this what I was suggesting. I am not writing this facetiously but other than the loss of revenue, what problems might this create?


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The loss of income is a pretty big deal. That is, after all, the whole point of taxes. Other than that, though, I don't see any problems.

 

[The Great Zaganza]

As a wise man once said:" taxation is the art of getting the most milk with the least amount of moo - and these days all I get is moo."

 

[psionl0]

I think that was seayakin's point, sort of. If there were no corporate taxes, there would be no loopholes.

The loopholes would still abound when dividends were paid to shareholders. It can be quite difficult to clamp down on schemes where dividends are called "loans" instead or shipped to other corporations to avoid the tax payable.

If you live in the company house or drive the company car then theses things would be paid for with untaxed money rather than after income tax money.

 

[The Don]

The share of the tax burden carried by corporations (large and small) has fallen from around 30% in the 50's and 60's to mid-single digits. IOW there has already been a massive shift from corporations to individuals.


edited to add.....

This has also coincided with a period of time in which the wealth in the US has been increasingly concentrated in the hands of a small minority of people. This could be coincidental, both could be symptoms of other factors or it could just be that corporations (large and small) are overwhelmingly owned by people in the top quintile or decile. For sure mutual funds and pension funds are also big shareholders but then again the very richest are also own a lot of those mutual funds and benefit the most from the pension funds.

A reduction in corporate profits means both capital increases in the value of shares and increased dividends for shareholders. A win/win for those who already have the most.

 

[lionking]

Companies benefit from the infrastructure paid by tax revenue, like roads, schools (which supply educated labor), telecommunications, etc etc. it's only fair that they make a contribution to the public purse.

 

[The Don]

Yes this what I was suggesting. I am not writing this facetiously but other than the loss of revenue, what problems might this create?


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The loss of revenue itself would be quite a problem. It would also provide an incentive for those who can afford to do so, to structure their personal tax affairs to be as "corporate" as possible reducing the personal tax take as well (or at least shifting the tax burden from the wealthy to the middle classes).

Don't think that corporations won't still buy congresscritters to make sure that they can continue to suck at the public teat. Even if their tax burden is zero, I'm sure that they'd like a few billion in grants to encourage them to set up in one part of the country or another.

The proposal has a whiff of the "flat tax" to me - something which sounds superficially reasonable but which, on closer examination, turns out to vastly favour those who already have the most.


edited to add...

Here's the wikipedia article on the author of the piece linked in the OP

https://en.wikipedia.org/wiki/Megan_McArdle

She's a libertarian, which may go some way to frame the arguments she proposes.

 

[seayakin]

The loss of income is a pretty big deal. That is, after all, the whole point of taxes. Other than that, though, I don't see any problems.

Yes I agree. I would advocate that income taxes and capital gains be increased to cover the cost. I know this is a DOA even if someone proposed it. However, the point about having corporations then buy stuff for owners and executives would be an obvious way around this even if the revenue side of things were resolved through increased income and capital gains.

I see now the wealthy could bury personal expenses in a corporate structure.


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