Companies can make a profit in only one of two ways; either through customers or through investors. And, so, ergo, when taxes on businesses and corporations go higher, it is either the customer or the investor (i.e., the shareholder) who end up paying the burden. On the customer side, it manifests in higher prices and on the investor end, it manifests in lower stock prices and equity.............................................................................................Of course the latter scenario is no big deal, correct? I mean, it is, after all, only the rich people who are invested in the market, no? Well, no, not really. While the progressives are quick to point out (accurately in fact) that the bottom 90% of wage-earners in this country own only 19% of stock and mutual fund equity, they also leave something very important out. They leave out the fact that this same 90% also own 41% of pension value and 45% of whole-life insurance value - both of which are heavily invested in the market..............................................................................................The bottom-line, folks. When you raise (or keep high) the corporate tax rate, yeah, you might be nailing those miserable executives and managers that we all seem to despise these days, but your also hurting a lot of teachers, firemen, policemen, and many small business owners, too (collateral damage perhaps we should call it). The question is, is it worth it? I don't know. I would personally like to see the corporate income tax go away and instead raise the top individual rate back to 40% and do away with the special consideration for capital gains. That way, folks, we could have a) a truly progressive tax policy and b) a business climate in which businesses can actually focus on, you know, business!........................................................................................................P.S. If the question is whether to nix the corporate income tax without the stipulations that I've proffered , that's a much more difficult question. While I clearly have reservations about this form of taxation, it does in fact bring in 3-400 billion a year. Whether the increased economic activity that could possibly result from doing away with the corporate tax would make up for this loss in revenue, I'd have to ask somebody smarter than me. I suspect that I would want my proposal to pass in its entirety.
24 comments:
There are many more than two ways. For example, the company can make less profit, or the company as seek out ways to be more efficient, or it can pay lower salaries. That is just three ways.
Also, the money that people invest in the stock market does not go to the company. When you buy stock, the money you pay goes to the person who owns the stock with the broker skimming a percentage off the top.
Taxes are just part of doing business. As I have said elsewhere, companies pay your taxes. They give you your taxes in the form of a salary and then you give them to the government.
Eliminate corporate taxes and they will have to increase your salary because you will have to make up the difference.
Rather, let corporations pay all the taxes. If you want to eliminate taxes, eliminate them from us, and give them back to the corporations.
It's all the same, Jerry. Lower profits equal lower equity and lesser wages equal lesser consumer purchasing power...............And, I'm sorry, but I'll just never accept a policy that a) treats me and Jennifer Aniston the same and b) puts American businesses at a distinct disadvantage in an ever increasingly competitive world.
Also, question, how does your system treat certain capital gains. If some rich guy, for instance, sells a Gilbert Stuart painting and makes a $300,000 profit on it, does that dude have to pay any tax on that. The dude's not a corporation, so, no, no?
Capital gains are taxed the same as business income. It is salary income that is not taxed. Businesses pay the tax on salary, not the individual.
But he's not a business. He's just some dude who bought a painting and sold it later.
If there was a business involved in the transaction, such as a gallery, they would handle the tax issue. Since there is no business involved in the transaction, the individual has to deal with the tax implications, just as you do now.
I think we should eliminate the income tax for people making less than $50,000. While Jerry's idea to only tax corporations is interesting, I'm not going to support it at this time. In any case, neither of your ideas have any chance of happening.
My suggestion, that we raise taxes on both corporations and high-income individuals, has a greater chance of becoming law because it works within the existing system and isn't as radical as what either of you are suggesting.
I think we should also pass a law that says CEOs can't be compensated with stock.
Will: If the question is whether to nix the corporate income tax without... Whether the increased economic activity that could possibly result...
Why would there be increased economic activity? I say there would be significantly decreased economic activity. Because most Americans would have less to a lot less to spend. Either government would have to virtually eliminate most social programs, or taxes would have to be raised significantly to make up the difference.
Either way (with or without your stipulations) I think the "Will Hart corporatist tax plan" would be an unmitigated disaster.
Will: [are] only the rich people... invested in the market? ...no, not really.
An article by Professor G. William Domhoff at the University of CA Santa Cruz says the top 20 percent (wealthiest Americans) own 91.9 percent of stocks while the bottom 80 percent own 8.9 percent (table 5a).
My conclusion? For now (at least), I'm going to believe my sourced information over Will's unsourced information.
I just found this article from September of 2010...
Why Obama Is Proposing Whopping Corporate Tax Cuts -- and Why He's Wrong...
Author of the article?
ROBERT REICH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Mr. Reich's conclusion is, "Obama's whopping proposed corporate tax cuts help legitimize the supply-side dogma that the economy's biggest obstacle to growth is the cost of capital, rather than the plight of ordinary working people".
So how does this square with what you say Robert Reich advocates in his book "Supercapitalism"? I am definitely thinking this is another example of you massively misinterpreting another's words (like you did with Paul Krugman on Truth/Dudley's blog).
I agree that my proposal to only tax corporations does not stand a chance of coming to light. It is never even talked about. However, Will's plan to eliminate taxes on corporations has been bandied about. It could come to pass if republicans got control of both houses and the presidency.
It is the ultimate corporate wet dream.
sociology.ucsc.edu/whorulesamerica/power/wealth.html scroll down to table 2. There you will see that the bottom 90% control 41% of pension equity (I'm part of that, wd - I'm vested in teacher retirement) and 45% of life insurance equity. So, wd, why do you hate the teachers so much?............Lower corporate tax rates, wd, could possibly make us more competitive in an increasingly global economy. It is your anachronistic positions of taxing the shit out of people and businesess that would be an unmitigated disaster.
No, Jerry, there wasn't a gallery involved. He bought it from a private collector and sold it to another private collector. And he made a killing.
This, from Robert Reich's book, "Supercapitalism"............"Finally, I will come to some conclusions you may find surprising — among them, why the move toward improved corporate governance makes companies less likely to be socially responsible. Why the promise of corporate democracy is illusory. WHY THE CORPORATE INCOME TAX SHOULD BE ABOLISHED (my emphasis). Why companies should not be held criminally liable. And why shareholders should be protected from having their money used by corporations for political purposes without their consent."............I'll be waiting for your apology (or at least a correction/acknowledgment), wd.
I have mentioned this before, Will. I am not a fan of the corporate income tax because the corporation is not a end-earner (like an end-consumer, only for revenue). The corporate entity is fictitious and corporate earnings are already taxes as they are received.
However, the problem of tax sheltering would occur. Do you have a solution for that? Profits could set in corporations indefinitely, and never been taxed for 100 years. In fact, I could incorporate for the sole purpose of sheltering income, could I not?
I am not educated in corporate finance, but it just seems problematic.
Well, let's see, wouldn't at least some of those profits show up in the equity of the shareholders and then be taxed as capital gains? I do see your point, though, money simply being sat on. We'll definitely have to work on that one.
Will: ...scroll down to table 2
Can't do that because...
Sorry 'www.sociology.ucsc.edu' does not exist or is not available.
Will: I'll be waiting for your apology, correction, acknowledgment.
No apology will be forthcoming. I already said... I don't know what his argument is, but (given that) I'd probably respectfully disagree.
Remember?
Anyway, I see you're repeating that nonsense about Paul Krugman in a new post... instead of apologizing, correcting yourself, or acknowledging you were wrong (which is what you should have done).
You accused me of MASSIVELY MISINTERPRETING ANOTHER'S WORDS.......I just provided you with Mr. Reich's own words and proved you once again to be nothing more than an unapologetic slanderer.......As for Mr. Krugman's almost laughably idiotic statement, his words are obvious and you need to take a class in basic linguistics apparently.
It's like when Al Gore took credit for creating the Internet. He said it. It's part of the historic record. But blind partisan apologists both claim that "invent" means nothing like "create" and also re-write history to put Al Gore in the DARPA labs heroically creating the Internet years before he got elected to Congress.
Don't worry, Will. We can see the historic record. Their actual words. On Krugman. On Gore. On the main who pointed out the facts of Pelosi's labor policy.
No one really listens to your opponents' "i wish they didn't say it so they didn't" attempts.
But liberals don't say stupid things, dmarks. Only conservatives do. Didn't you know that?
Will: I just provided you with Mr. Reich's own words and proved you once again to be nothing more than an unapologetic slanderer.
Apparently it is you who can't read. I said, and I repeat (again)... I don't know what his argument is, but (given that) I'd probably respectfully disagree.
The "his own words" you provided me are the what (which I already knew), not the why.
Will: you need to take a class in basic linguistics apparently.
I think you and dmarks need to look into taking that class. You don't know that Paul Krugman was NOT calling for a housing bubble, and dmarks doesn't know that Al Gore was NOT saying he "invented" the internet (Al Gore was taking credit for legislation that helped create the internet in it's present form).
Perhaps the denseness of your moderation is to blame?
You shamelessly and moronically accused me of fabricating and distorting Mr. Reich's position. I then proceeded to offer you MR. Reich's own words and you still tried to impugn my integrity. I have every right to ask for an acknowledgment.
Yeah, dmarks, we really gotta stop quoting these guys verbatim.
AGAIN, in the first paragraph, Mr. Krugman introduces the the concept of the "double dipper iconoclasts" and clearly states that he agrees with them. In the second paragraph, he outlines the the basic point of the double dippers and, again, he agrees with it. Then he shows how the Fed should accomplish this and, again, he supports it. Face it, wd, Mr. Krugman simply said a stupid thing (just like economists from all stripes say stupid things) and he should just admit it and move on.............What, you don't think that liberals are capable of saying ANYTHING stupid? "We have to first pass the bill in order to see what's in it." Not even that?
Will: We have to first pass the bill in order to see what's in it.
That's a fabricated quote Will. The actual quote is, "We have to pass the bill so that *you* can find out what is in it, away from the fog of the controversy".
What Nancy Pelosi meant was that after the controversary and lies about the health care legislation people were confused about the positive aspects of it... and after it passed people would find out how good it really is. Which is pretty much what is happening.
Will: Yeah, dmarks, we really gotta stop quoting these guys verbatim.
You didn't (initially) quote PK verbatim. You omitted sections of what he said (thus changing the meaning of what he said). Jerry caught it and pointed out your deception.
Then you proceeded to duplicitiously reinterperet what PK said... even though it was clear to others who comment here (Jerry, me and #37927) that you were (and continue to) distort.
I explained this to you already, slick. I DID NOT omit anything. That was how the Weekly Standard printed it. If anybody was involved in deception, they were. But, please, explain to me how this omission changes the meaning one iota. He's quoting the guy not because he disagrees with him but because he AGREES with him. Show me anything in this idiotic missive by the weaselly Mr. Krugman which exonerates him.......And I'm still waiting for that in-time testimony from Barney Frank in which he supposedly warns people about the dangers of Fannie and Freddie.
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