On taxing corporations

[BenBurch]

If corporations were not ever taxed, but we shifted all of the tax to the stockholders proportionately, it would no longer be possible to offshore assets to a tax haven because your ownership of the stock is that which is taxed, and you own it in whatever country you are a citizen.

 

[JoeEllison]

It wouldn't work, the rich folks would just purchase stock through overseas dummy corporations.

 

[ARubberChickenWithAPulley]

What part of stock holding are you talking about taxing? Simply holding stock doesn't result in anything taxable unless you sell the stock for a capital gain or are receiving dividends. And both of those are already taxed.

 

[WildCat]

Taxing stocks would be a terrible idea. As is taxing corporations, because no business pays taxes - their customers pay them. Any tax on a business is just a hidden tax on you. But so long as people are willing to believe the myth that businesses pay taxes the shell game will continue.

 

[balrog666]

A very silly idea.

What are you trying to accomplish with such a proposal?

 

[Beerina]

Maybe if the government didn't tax so much, or do so much work granting loopholes to the competition, corporations wouldn't be trying to flee the confiscatory levels of taxation.

 

[Tailgater]

Wouldn't that pretty much kill any foreign investment too?

 

[drkitten]

Maybe if the government didn't tax so much, or do so much work granting loopholes to the competition, corporations wouldn't be trying to flee the confiscatory levels of taxation.

I doubt it. There is no level of taxation that companies will not try to avoid. In fact, they have a legal obligation to try to avoid tax to the greatest extent possible under law (look up "fiduciary duty").

 

[linusrichard]

Taxing stocks would be a terrible idea. As is taxing corporations, because no business pays taxes - their customers pay them. Any tax on a business is just a hidden tax on you. But so long as people are willing to believe the myth that businesses pay taxes the shell game will continue.

You say that this is a reason why taxing corporations is a terrible idea, but I think it's really a reason why taxing corporations is a great idea! If the business passes along the tax incidence to its customers, like you say, then the only people who have to pay are those who choose to pay, and the tax is spread out among them, and the business doesn't suffer, which is great for economic development! It makes me wonder why businesses go to such lengths to lobby legislatures for lower taxes, though.

In truth, though, I think the incidence falls on both consumer and corporation - the business raises prices (customers pay part of the tax), which results in fewer sales, which results in lower profits (business pays part of the tax).

 

[tek]

Taxing stocks would be a terrible idea. As is taxing corporations, because no business pays taxes - their customers pay them. Any tax on a business is just a hidden tax on you. But so long as people are willing to believe the myth that businesses pay taxes the shell game will continue.

Saying businesses don't pay taxes because the cost is passed on is like saying rain doesn't land on the ground because of evaporation.

I find it somewhat hypocritical most seeking the abolition of corporate taxation usually don't have any problem with the concept of corporate personhood. Seems unfair they as people can get out of both death AND taxes.

 

[WildCat]

You say that this is a reason why taxing corporations is a terrible idea, but I think it's really a reason why taxing corporations is a great idea! If the business passes along the tax incidence to its customers, like you say, then the only people who have to pay are those who choose to pay,

The only way this could change consumer habits is if consumers started growing their own food, smelting their own metal, machining their own tools, growing their own textile crops from which to make their own clothes, etc etc. Because business expenses would drop across the board, and would make little difference from a business competition standpoint within the country. Now, you could argue that we'd lose the value of exports but there's no reason you couldn't place an excise tax on exports if you desire. But I think the money is better recovered through higher workers salaries that would likely result.

The real reason business taxes are popular is that the ignorant masses think the government is really sticking it to the man when the reality is far different.

 

[WildCat]

Saying businesses don't pay taxes because the cost is passed on is like saying rain doesn't land on the ground because of evaporation.

Uh, yeah, it's just like that!

Explain to me how the current tax scheme is really sticking it to those fat cat CEOs?

I find it somewhat hypocritical most seeking the abolition of corporate taxation usually don't have any problem with the concept of corporate personhood. Seems unfair they as people can get out of both death AND taxes.

Like I said, please explain how it's really all those fat cat executives who are paying all these taxes. I haven't noticed how much they're hurting...

 

[geni]

Taxing stocks would be a terrible idea. As is taxing corporations, because no business pays taxes - their customers pay them. Any tax on a business is just a hidden tax on you. But so long as people are willing to believe the myth that businesses pay taxes the shell game will continue.

Corporations are a legal person thus they pay tax. As soon as they are prepared to stop being a legal person they can stop paying taxes. Corporation tax is simply societies way of reducing the net loss caused by corporations going bankrupt and not paying their bills (since guess who will end up paying the bills eventualy)?

 

[WildCat]

Corporations are a legal person thus they pay tax. As soon as they are prepared to stop being a legal person they can stop paying taxes.

Don't be silly. We have all kinds of taxes that can be applied differently or not at all to different classes of persons.

Corporation tax is simply societies way of reducing the net loss caused by corporations going bankrupt and not paying their bills (since guess who will end up paying the bills eventualy)?

Never heard that one before, nor do I see the thought that drives it.

 

[Suddenly]

Never heard that one before, nor do I see the thought that drives it.

A corporation exchanges limited risk for double taxation, both corporate income and dividends are taxed. Small businesses can avoid this via being an S corp or an LLC type hybrid. Just a basic thing. Corporations are also supposed to be subject to laws governing their existence, but nobody seems to want to talk about that much when discussing the free market.

Has less than nothing to do with CEO pay. That is a whole different issue relating to boards of directors and cults of personality and a bunch of other garbage.

 

[linusrichard]

The only way this could change consumer habits is if consumers started growing their own food, smelting their own metal, machining their own tools, growing their own textile crops from which to make their own clothes, etc etc.

Not at all. Consumers could also consume less. Or they could consume substitutes.

The real reason business taxes are popular is that the ignorant masses think the government is really sticking it to the man

You've said something like this a few times already, but you give no reason to believe this is true, and no reason to care.

You also didn't address the other thing I said. Look - the gov't levies taxes on a business, right? This is going to increase their costs. The business has to raise prices or lose profits. Elementary stuff. According to you, they always raise their prices at least the same amount as the tax. This seems doubtful, but moving on -- if they do raise prices, they will lose sales. Also elementary stuff. So if they're losing some money one way or another, how are they not bearing part of the incidence of the business tax?

 

[WildCat]

Not at all. Consumers could also consume less. Or they could consume substitutes.

Why would it be rational to consume less? And there are no substitutes - the tax would be the same regargless of which brand/type you bought.

You've said something like this a few times already, but you give no reason to believe this is true, and no reason to care.

I'm still waiting for one of you guys to explain the origin of moneys businesses use to pay taxes, if it doesn't come from their customers. No one has been able to explain it yet, can you?

You also didn't address the other thing I said. Look - the gov't levies taxes on a business, right? This is going to increase their costs. The business has to raise prices or lose profits. Elementary stuff. According to you, they always raise their prices at least the same amount as the tax.

Ceteris paribus, yes. I don't see how it can be any other way.

This seems doubtful, but moving on -- if they do raise prices, they will lose sales.

Generally true, but not always.

Also elementary stuff. So if they're losing some money one way or another, how are they not bearing part of the incidence of the business tax?

Because every penny that business collects comes from their customers. the customers bear it all, any way you slice it.

 

[WildCat]

A corporation exchanges limited risk for double taxation, both corporate income and dividends are taxed. Small businesses can avoid this via being an S corp or an LLC type hybrid. Just a basic thing. Corporations are also supposed to be subject to laws governing their existence, but nobody seems to want to talk about that much when discussing the free market.

Has less than nothing to do with CEO pay. That is a whole different issue relating to boards of directors and cults of personality and a bunch of other garbage.

I just don't see it as being society's problem if Company A can't pay its creditors, nor the rationale that corporate income taxes be used to pay for this.

 

[Suddenly]

I just don't see it as being society's problem if Company A can't pay its creditors, nor the rationale that corporate income taxes be used to pay for this.

There isn't a superfund being set up or anything. Taxes go into the general fund, and everybody gets to accept the cost of limited liability. As the corporate form also greatly increases liquidity it isn't all bad.

 

[Francesca R]

Taxing stocks would be a terrible idea. As is taxing corporations, because no business pays taxes - their customers pay them. Any tax on a business is just a hidden tax on you. But so long as people are willing to believe the myth that businesses pay taxes the shell game will continue.

Do you think that if corporation tax was reduced to zero tomorrow, the entire gain would be passed on to customers in the form of lower prices?