Taxing corporations

[strigori]

Demand drives the economy, not companies. Companies exist to provide a good or service that is in demand by the population. When the vast majority of the country lives paycheck to paycheck and can be done in by something like a hospital stay or a car no longer running, the demand for things beyond the necessities falls dramatically.

 

What needs to happen is wages for all existing workers need to increase. Most people will buy something. A new shirt, or a car, or simply go out to dinner, or go on vacation. This injects money directly into the economy. The influx of money means businesses need to hire more workers, who in turn inject their money into the economy. Cutting taxes on businesses does none of this. It simply raises profit margins. And that money by and large never makes it back into the real economy. It resides on spreadsheets or in the stock market. Neither of which generate any real benefit to the national or global economy.

 

And what we need is more small businesses, and more innovation. Not more giant mega corps. We would benefit from breaking up some of the monsters. "Too big to fail" should be automatic for a trustbusting situation to start.

 

My fix is to use the tax code to enforce a maximum allowable percentage difference between the highest paid and lowest paid employees(effective per hour compensation accounting for all forms of pay, including stock options). A violation of this percentage difference activates a 99,9% tax rate on all corporate earnings. And regardless of what the execs want, the stockholders would force the pay adjustments as to still receive a return on their investment. This ends CEOs making 8 figure incomes and having employees making $8 an hour. Without the top 1% hoarding most of the money, we all do better. The billions of dollars injected into the economy would spur growth at record levels.

[strigori]

This has been an interesting discussion. I'm open to any crazy idea if it has economists' backing -- I mean, it seems plausible that plenty of good policy ideas do not get tried often because they are politically difficult.

 

But there's perhaps a lot less consensus about this than the one guy from Boston University indicates.

 

His argument doesn't sound that bad, in theory. It seems to be, "You won't be able to stop companies from doing this offshore tax stuff. So, remove the incentives. Keep it all here. Tax the individuals." And generally, I favor the idea that it's not about a sense of fairness or anything, it's about volume and growing the economy at large.

 

I am not an economist, though. Though I am sure the proponents would tell us their proposals don't fall under the examples given, history would not seem to be on their side.

You can't keep criminals from committing crimes, so lets get rid of the laws and police. Its the same argument. A few IRS forensic accountants would be able to find the ways they are hiding money. It can be stopped, there is just not a lot of will for it right now as, to use the crime analogy, the Mob own the lawmakers.

[zoogs]

Well, I don't know. If it's that easy and feasible, then let's do it. I think the counter argument is that companies will choose to spring up in other, more tax-friendly environments. And other countries' laws we have no control over.

 

I don't know if that is valid, or if that would happen.

[strigori]

Well, I don't know. If it's that easy and feasible, then let's do it. I think the counter argument is that companies will choose to spring up in other, more tax-friendly environments. And other countries' laws we have no control over.

 

I don't know if that is valid, or if that would happen.

It can be that simple, the IRS simply does not have the budget to do so. Per Congress. And you get the most right wing members call to eliminate it all together. The only way to escape taxes for these businesses is to not do business here, and relocate all the office people to this new country. And I kinda doubt many of these guys want to live in 3rd world countries. Most of the EU or England have plenty of tax laws, and often less rights to hide behind. Particularly on the personal income taxes, which when you get down to it is what the execs are after. More personal wealth.

[BigRedBuster]

nobody is talking about cutting taxes on rich people.

 

The way Nike does business now, they would continue paying taxes. Heck, raise their taxes.

 

Now, if they would start making their shoes in the US at a good wage, they pay no income tax. BUT, all owners stock holders and employees (including management) pay taxes on what they make.

[strigori]

Obama proposed tax breaks for companies that bring jobs back from overseas, but the GOP vehemently opposed it. And never let it go anywhere in Congress.

 

The ultimate crux of the problem is if you cut taxes on corps, all that extra money simply goes to people who don't really need it, and only spend it on stocks, or ship it off to Swiss bank accounts. And the Capital Gains, can typically be avoided by quickly dumping into more stocks, thereby evading taxes on it. If we want to even start a talking about cutting corp taxes, we need to look at taxing stock transactions.

[BigRedBuster]

Obama proposed tax breaks for companies that bring jobs back from overseas, but the GOP vehemently opposed it. And never let it go anywhere in Congress.

 

The ultimate crux of the problem is if you cut taxes on corps, all that extra money simply goes to people who don't really need it, and only spend it on stocks, or ship it off to Swiss bank accounts. And the Capital Gains, can typically be avoided by quickly dumping into more stocks, thereby evading taxes on it. If we want to even start a talking about cutting corp taxes, we need to look at taxing stock transactions.

I have said many times in this thread. Tax the owners, stock holders, employees (including upper management). Tax people who gain benefit from the corporation.

 

You can't just stop taxing corporations without major tax reform in other areas.

 

And...as for Obama's proposal and what the GOP did. I don't remember that but it doesn't surprise me. I've made it pretty clear on this board I believe the GOP is a bunch of idiots.

[ColoNoCoHusker]

 

Obama proposed tax breaks for companies that bring jobs back from overseas, but the GOP vehemently opposed it. And never let it go anywhere in Congress.

 

The ultimate crux of the problem is if you cut taxes on corps, all that extra money simply goes to people who don't really need it, and only spend it on stocks, or ship it off to Swiss bank accounts. And the Capital Gains, can typically be avoided by quickly dumping into more stocks, thereby evading taxes on it. If we want to even start a talking about cutting corp taxes, we need to look at taxing stock transactions.

I have said many times in this thread. Tax the owners, stock holders, employees (including upper management). Tax people who gain benefit from the corporation.

 

You can't just stop taxing corporations without major tax reform in other areas.

 

And...as for Obama's proposal and what the GOP did. I don't remember that but it doesn't surprise me. I've made it pretty clear on this board I believe the GOP is a bunch of idiots.

 

 

It kills me that politicians still try to sell surgical tax change at this point. Corporate & individual tax codes need to be thrown out. It's patch upon patch creating "rat's nest" scenario. The complexity is more damaging to business than the tax rate, imo.

[strigori]

 

 

Obama proposed tax breaks for companies that bring jobs back from overseas, but the GOP vehemently opposed it. And never let it go anywhere in Congress.

 

The ultimate crux of the problem is if you cut taxes on corps, all that extra money simply goes to people who don't really need it, and only spend it on stocks, or ship it off to Swiss bank accounts. And the Capital Gains, can typically be avoided by quickly dumping into more stocks, thereby evading taxes on it. If we want to even start a talking about cutting corp taxes, we need to look at taxing stock transactions.

I have said many times in this thread. Tax the owners, stock holders, employees (including upper management). Tax people who gain benefit from the corporation.

 

You can't just stop taxing corporations without major tax reform in other areas.

 

And...as for Obama's proposal and what the GOP did. I don't remember that but it doesn't surprise me. I've made it pretty clear on this board I believe the GOP is a bunch of idiots.

 

 

It kills me that politicians still try to sell surgical tax change at this point. Corporate & individual tax codes need to be thrown out. It's patch upon patch creating "rat's nest" scenario. The complexity is more damaging to business than the tax rate, imo.

 

You are not seriously on the "consumption tax" bandwagon? Because those are your options. And consumption taxes are the most regressive form of taxation in existence.

[zoogs]

I think it's about replacing the tax code with something much simpler. I agree that the complexity, not really the rate, is the big issue.

[strigori]

I think it's about replacing the tax code with something much simpler. I agree that the complexity, not really the rate, is the big issue.

I don't think there is a ton of disagreement that the current codes are a clusterF. But the replacement ideas have tended to be worse than what we have now.