It’s a Myth That Corporate Tax Cuts Mean More Jobs

[Harry Bosch]

Hard for me to think of many things more important than a job. My wife and I argue about this all the time, but my job pays for everything in our house. It also pays for my retirement someday, my healthcare, and everything else.

I'd say society and the rule of law have something to do with it.

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Maybe so, but no one is suggesting they lose control. I'll say it again because it apparently didn't go through the first time: a minority share of non-voting stock.

If you keep taking a little piece year after year in time you have taken control away from the owner.

I have no idea what you're talking about.

I agree that society and rule of law are important. I actually think that they all go together.

But regardless, let's reverse the question. If it could be income neutral, what would be lost in eliminating corporate taxes?

 

[Horatio Parker]

I agree that society and rule of law are important. I actually think that they all go together.

But regardless, let's reverse the question. If it could be income neutral, what would be lost in eliminating corporate taxes?

First of all, how that revenue neutrality is obtained is relevant.

Like I said earlier, productive activity should have a lighter tax burden than non-productive. Exclude a portion of the economy from taxes, and you lose the ability to use taxes to regulate. The point of a cigarette tax is to discourage smoking. That it also raises revenue is secondary.

Tax free corporations are an invitation to use corporate structure to shelter income and wealth.

 

[Horatio Parker]

An interesting comment:

There is a function of the corporate tax that goes beyond raising revenue, that is to favor partnerships, that are fully liable for any damage that they might do, over corporations which have limited liability. I like to look at the corporate tax as an insurance payment. It surprises me that so few corporations become partnerships in order to avoid the double taxation, this must mean that the insurance value is greater than the cost (the corporate income tax).

This result may more accident than intention, but it's an interesting point.

 

[Harry Bosch]

I agree that society and rule of law are important. I actually think that they all go together.

But regardless, let's reverse the question. If it could be income neutral, what would be lost in eliminating corporate taxes?

First of all, how that revenue neutrality is obtained is relevant.

Like I said earlier, productive activity should have a lighter tax burden than non-productive. Exclude a portion of the economy from taxes, and you lose the ability to use taxes to regulate. The point of a cigarette tax is to discourage smoking. That it also raises revenue is secondary.

Tax free corporations are an invitation to use corporate structure to shelter income and wealth.

Sorry, but I wasn't being very specific. I would eliminate corporate taxes, eliminate all corporate loopholes and giveaways, and make it income neutral by raising taxes on the higher income tax brackets. I would use regulations to regulate companies, not taxes. The only group who this would hurt are higher income, retired wealthy shareholders holding stocks to shelter income. But that could be tweaked to make it neutral. Large corporations would probably lose a little competitive advantage over smaller, but they still have enormous advantages due to their size (economies of scale).

 

[Horatio Parker]

First of all, how that revenue neutrality is obtained is relevant.

Like I said earlier, productive activity should have a lighter tax burden than non-productive. Exclude a portion of the economy from taxes, and you lose the ability to use taxes to regulate. The point of a cigarette tax is to discourage smoking. That it also raises revenue is secondary.

Tax free corporations are an invitation to use corporate structure to shelter income and wealth.

Sorry, but I wasn't being very specific. I would eliminate corporate taxes, eliminate all corporate loopholes and giveaways, and make it income neutral by raising taxes on the higher income tax brackets. I would use regulations to regulate companies, not taxes. The only group who this would hurt are higher income, retired wealthy shareholders holding stocks to shelter income. But that could be tweaked to make it neutral. Large corporations would probably lose a little competitive advantage over smaller, but they still have enormous advantages due to their size (economies of scale).

Pretty good I guess, but it doesn't address the tax shelter issue.

Plus relying on only regulation is less flexible than regulation or tax policy.

 

[Harry Bosch]

Sorry, but I wasn't being very specific. I would eliminate corporate taxes, eliminate all corporate loopholes and giveaways, and make it income neutral by raising taxes on the higher income tax brackets. I would use regulations to regulate companies, not taxes. The only group who this would hurt are higher income, retired wealthy shareholders holding stocks to shelter income. But that could be tweaked to make it neutral. Large corporations would probably lose a little competitive advantage over smaller, but they still have enormous advantages due to their size (economies of scale).

Pretty good I guess, but it doesn't address the tax shelter issue.

Plus relying on only regulation is less flexible than regulation or tax policy.

I'm not getting you regarding tax shelter. Are you talking about cash held in a corporation? Again, I think that all tax loopholds should be eliminated if corporate taxes are eliminated. Cash held in a company is equity. Equity is vital for a healthy company. But I think if should be taxed when distributed to owners and workers. And I think that it should be taxed at the individuals tax bracket.

 

[Horatio Parker]

Pretty good I guess, but it doesn't address the tax shelter issue.

Plus relying on only regulation is less flexible than regulation or tax policy.

I'm not getting you regarding tax shelter. Are you talking about cash held in a corporation? Again, I think that all tax loopholds should be eliminated if corporate taxes are eliminated. Cash held in a company is equity. Equity is vital for a healthy company. But I think if should be taxed when distributed to owners and workers. And I think that it should be taxed at the individuals tax bracket.

I'm not a lawyer or accountant, I don't know how to create a tax shelter, but here's what Beardsley Ruml, head of the NY Fed (and opponent of corporate income tax) under Roosevelt said:

The corporation income tax cannot be abolished until some method is found to keep the corporate form from being used as a refuge from the individual income tax and as a means of accumulating unneeded, uninvested surpluses. Some way must be devised whereby the corporation earnings, which inure to the individual stockholders, are adequately taxed as income of these individuals.

 

[Harry Bosch]

I'm not getting you regarding tax shelter. Are you talking about cash held in a corporation? Again, I think that all tax loopholds should be eliminated if corporate taxes are eliminated. Cash held in a company is equity. Equity is vital for a healthy company. But I think if should be taxed when distributed to owners and workers. And I think that it should be taxed at the individuals tax bracket.

I'm not a lawyer or accountant, I don't know how to create a tax shelter, but here's what Beardsley Ruml, head of the NY Fed (and opponent of corporate income tax) under Roosevelt said:

The corporation income tax cannot be abolished until some method is found to keep the corporate form from being used as a refuge from the individual income tax and as a means of accumulating unneeded, uninvested surpluses. Some way must be devised whereby the corporation earnings, which inure to the individual stockholders, are adequately taxed as income of these individuals.

Okay, I think that I get you now. However, the current corporate tax system does not prevent or penalize companies from accumulating "surpluses" (I prefer the term retained earnings, equity or reserves). Net income is taxed. Retained earnings (profits retained in a company) is not taxed.

As a side issue, I think that corporate "reserves" are good. They increase the likehood that a company will survive a downturn. They increase a companies strength, therefore, banks will offer better terms. A very well capitalized company won't need bank loan (thus saving fees and interest). A stronger company is more likely to invest in Rnd, invest in their employees (better 401k, better health benefits, training, and etc.); be philanthropic, buyout competitors, and etc.

 

[Loren Pechtel]

Reality: Corporate taxes generally show up as higher prices. This makes them a regressive tax and thus a bad thing.

Reality: there's no such thing as a free lunch.

I've offered an alternative, you just want handouts.

I'm not the one asking for handouts.

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But regardless, let's reverse the question. If it could be income neutral, what would be lost in eliminating corporate taxes?

They don't get to bash the evil guy anymore.

 

[Horatio Parker]

Reality: there's no such thing as a free lunch.

I've offered an alternative, you just want handouts.

I'm not the one asking for handouts.

If you're arguing that corporations shouldn't pay taxes, you're arguing for handouts.

 

[Crazy Eddie]

Saying that doesn't make it so.

That's because you're an idiot.

I agree that society and rule of law are important. I actually think that they all go together.

But regardless, let's reverse the question. If it could be income neutral, what would be lost in eliminating corporate taxes?

First of all, how that revenue neutrality is obtained is relevant.

Like I said earlier, productive activity should have a lighter tax burden than non-productive. Exclude a portion of the economy from taxes, and you lose the ability to use taxes to regulate. The point of a cigarette tax is to discourage smoking. That it also raises revenue is secondary.

Tax free corporations are an invitation to use corporate structure to shelter income and wealth.

It sounds like you would be in favor of promoting a higher tax on, say, sellers of financial products and a reduction for the production of tangible goods. Lower taxes for farmers and construction workers, higher taxes for banks, lenders and realtors.

 

[Horatio Parker]

That's because you're an idiot.

I agree that society and rule of law are important. I actually think that they all go together.

But regardless, let's reverse the question. If it could be income neutral, what would be lost in eliminating corporate taxes?

First of all, how that revenue neutrality is obtained is relevant.

Like I said earlier, productive activity should have a lighter tax burden than non-productive. Exclude a portion of the economy from taxes, and you lose the ability to use taxes to regulate. The point of a cigarette tax is to discourage smoking. That it also raises revenue is secondary.

Tax free corporations are an invitation to use corporate structure to shelter income and wealth.

It sounds like you would be in favor of promoting a higher tax on, say, sellers of financial products and a reduction for the production of tangible goods. Lower taxes for farmers and construction workers, higher taxes for banks, lenders and realtors.

Higher taxes or outlawed altogether. And certainly rentiers should pay for the privilege.

 

[Harry Bosch]

That's because you're an idiot.

I agree that society and rule of law are important. I actually think that they all go together.

But regardless, let's reverse the question. If it could be income neutral, what would be lost in eliminating corporate taxes?

First of all, how that revenue neutrality is obtained is relevant.

Like I said earlier, productive activity should have a lighter tax burden than non-productive. Exclude a portion of the economy from taxes, and you lose the ability to use taxes to regulate. The point of a cigarette tax is to discourage smoking. That it also raises revenue is secondary.

Tax free corporations are an invitation to use corporate structure to shelter income and wealth.

It sounds like you would be in favor of promoting a higher tax on, say, sellers of financial products and a reduction for the production of tangible goods. Lower taxes for farmers and construction workers, higher taxes for banks, lenders and realtors.

Higher taxes or outlawed altogether. And certainly rentiers should pay for the privilege.

Crap. Outlaw bankers, realators, and landlords? All this time I thought that we were having a serious discussion! I'll go back to watching football and kayaking with the kids!

 

[Horatio Parker]

Crap. Outlaw bankers, realators, and landlords? All this time I thought that we were having a serious discussion! I'll go back to watching football and kayaking with the kids!

Sorry for the confusion, no, outlawing things like speculative attacks on currencies.

 

[Harry Bosch]

Crap. Outlaw bankers, realators, and landlords? All this time I thought that we were having a serious discussion! I'll go back to watching football and kayaking with the kids!

Sorry for the confusion, no, outlawing things like speculative attacks on currencies.

Okay, gotcha. But I gotta tell you, my football team won last Saturday (the Oregon Ducks); and have been kayaking with kids on a river. So my response time will be delayed!!

 

[Loren Pechtel]

I'm not the one asking for handouts.

If you're arguing that corporations shouldn't pay taxes, you're arguing for handouts.

I'm not a corporation.

I'm saying to move that tax bill from the corporations to the owners of the corporations.

 

[ZiprHead]

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