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Post by Doug on Aug 26, 2014 10:19:31 GMT -5
If it comes from the shareholders then they dump the stock or vote out the board.
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Post by millring on Aug 26, 2014 10:51:50 GMT -5
Oh, and Bernie Sanders -- the most quoted politician on facebook -- says that our entire problem lies in the fact that we don't tax our corporations enough. In fact, our rate is the lowest of the industrialized nations. I'm not sure how he explains the Horton/Burger King thing, but there you have it. What explains it is that a retail business like Burger King or Walmart is hard to move offshore so they are stuck paying corporate income taxes unlike many other business that have ways to avoid them. All their labor costs are here--you can't order your Whopper from Bangalore. Now service industries and manufacturing are a different story. But how does it keep one from paying corporate taxes to base in a country that taxes at a higher rate?
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Post by aquaduct on Aug 26, 2014 11:07:13 GMT -5
Oh, and Bernie Sanders -- the most quoted politician on facebook -- says that our entire problem lies in the fact that we don't tax our corporations enough. In fact, our rate is the lowest of the industrialized nations. I'm not sure how he explains the Horton/Burger King thing, but there you have it. What explains it is that a retail business like Burger King or Walmart is hard to move offshore so they are stuck paying corporate income taxes unlike many other business that have ways to avoid them. All their labor costs are here--you can't order your Whopper from Bangalore. Now service industries and manufacturing are a different story. The location of employees or retail locations do not determine the nationality of the company. It's significant assets and where the board of directors is located. Hence Coca Cola can become a foreign company by moving the formula from one vault to another and renting space for the executive offices (even if those executives don't spend much time there). No need to change anything else in the company. It's why Burger King is about to become Canadian.
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Post by dickt on Aug 26, 2014 11:40:12 GMT -5
What explains it is that a retail business like Burger King or Walmart is hard to move offshore so they are stuck paying corporate income taxes unlike many other business that have ways to avoid them. All their labor costs are here--you can't order your Whopper from Bangalore. Now service industries and manufacturing are a different story. But how does it keep one from paying corporate taxes to base in a country that taxes at a higher rate? You still did not read the article which says that Canada has a lower corporate tax rate.
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Post by Doug on Aug 26, 2014 12:00:09 GMT -5
Companies move to where there is the lowest tax rate. That's just good business. Make our corporate tax rate 0% and watch the money flow in.
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Post by Supertramp78 on Aug 26, 2014 13:21:59 GMT -5
Just looking at the numbers, a very good case could be made to eliminate all corporate income taxes. If you add up all the money we get from corporate taxes, it amounts to about 10% of the total US revenue. That's it. Income tax is about 47%, Payroll taxes make up 34% (and that is essentially money that could be in your salary but isn't), ant what is left is estate, excise, and misc other taxes.
If the corporate tax rate was reduced to zero, what would the incentive be for companies to move their operations (and in some cases their jobs) somewhere else? All you would really have to do is have this result in an increase in employment by about 6% and it is a wash with payroll and income taxes making up the difference.
Sure a lot of the money they would save would be eaten up by the top wage earners for each company as well as the shareholders if they pay dividends. But some of it will go into marketing, productions improvements, new hires, expansion and benefits. Even if you gave ALL the money to the top wage earners, they would just have to pay some percentage of it back in income tax. The nominal corporate tax rate is 35%. The highest personal income tax rate is 39.6%. So forget the corp tax, give all that money to the board of directors and we net 4.6%.
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Post by Fingerplucked on Aug 26, 2014 13:26:24 GMT -5
Not to sound like I'm agreeing with Doug or anything, but why tax corporations or unincorporated companies at all? I was going to say that corporations only pay around 2% of our total tax revenue, but according to this pie chart, I'd be wrong. So it's 10% to 13%, not 2%. Still, it's not that big a factor in the overall picture, so why not eliminate it completely and make up for it by raising individual rates? Forget corporate tax rates and instead eliminate tax breaks for the rich like the lower rates for capital gains. Tax the people who are earning money off corporations. We don't need to tax the corporations themselves. Because despite what the supreme court and select politicians say, corporations aren't people. (They don't even have a belly button.) The current fuss over inversions is little more than a distraction. I get pissed off at companies like Burger King the same as most people, but while we're getting all worked up over it (and wondering what Warren Buffet is doing), we're forgetting that most companies pay little or no taxes due to legal technicalities. When a company like GE spends tens of millions per year on their legal team to avoid paying taxes, it's a pretty good sign that our whole corporate tax system is messed up. It's also unfair to all the smaller companies that cannot afford a stellar legal tax team. Eliminate corporate taxes completely. Tax individuals with a progressive rate that eliminates loopholes based on favoritism for certain sources of income. We'll more than make up that lost 10% to 13% in tax revenue.
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Post by millring on Aug 26, 2014 13:28:08 GMT -5
But how does it keep one from paying corporate taxes to base in a country that taxes at a higher rate? You still did not read the article which says that Canada has a lower corporate tax rate. I get that. But Bernie Sanders is all over the internet saying that the very reason we are in trouble is because our corporate tax rate is the lowest of all the industrialized nations. example:
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Post by Supertramp78 on Aug 26, 2014 13:33:18 GMT -5
I'll do you better than that. Eliminate corporate and personal income taxes and replace it with a sales tax. Companies already don't pay sales tax if what they buy is later sold to someone else and taxed at that time. I don't care how well you hide your income, you can't hide your purchases. Rich people buy more stuff than poor people. But poor people but stuff too. I would venture that what rich people pay in sales taxes TODAY is more than I make in salary in a year. (point of reference, anyone spending over a million dollars a year on stuff is paying more in sales tax than I make) The cost of the IRS and the cost of all the millions of accountants who are tasked with making sure nobody breaks the rules of the IRS could all be slashed. Come to the US and fire your accounting department. You might need a few more guys in finance to track cash flow but finance guys are cheaper than accountants anyway.
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Post by Fingerplucked on Aug 26, 2014 13:37:34 GMT -5
I'll do you better than that. Eliminate corporate and personal income taxes and replace it with a sales tax. Companies already don't pay sales tax if what they buy is later sold to someone else and taxed at that time. I don't care how well you hide your income, you can't hide your purchases. Rich people buy more stuff than poor people. But poor people but stuff too. I would venture that what rich people pay in sales taxes TODAY is more than I make in salary in a year. (point of reference, anyone spending over a million dollars a year on stuff is paying more in sales tax than I make) The cost of the IRS and the cost of all the millions of accountants who are tasked with making sure nobody breaks the rules of the IRS could all be slashed. Come to the US and fire your accounting department. You might need a few more guys in finance to track cash flow but finance guys are cheaper than accountants anyway. You and I agree on a lot of things, but a flat tax is not one of them, no matter how you package it. Your idea does have some appeal, but it's also problematic. My guess is that it would create more problems than it would solve.
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Post by Supertramp78 on Aug 26, 2014 13:38:39 GMT -5
note - our corporate tax rate isn't the lowest in the world. not by far.
Let's say we are 35%
The average in Europe is 20% Asia - 22% Latin America - 27% Canada - 27% Mexico - 30%
There are scant few countries anywhere with a corporate tax rate higher than ours
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Post by brucemacneill on Aug 26, 2014 13:55:07 GMT -5
This is really scarey. You guys are talking like Republicans. What have y'all been vapeing?
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Post by Rob Hanesworth on Aug 26, 2014 14:26:00 GMT -5
Companies move to where there is the lowest tax rate. That's just good business. Make our corporate tax rate 0% and watch the money flow in. Wrong. Companies move where there is the lowest cost of doing business. Taxes are only one factor. Others are cost of labor, cost of materials, including any cost to get them to the manufacturing site, cost of transporting product to customers, etc., etc. To say taxes are the only consideration is naïve.
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Post by aquaduct on Aug 26, 2014 14:28:56 GMT -5
Just looking at the numbers, a very good case could be made to eliminate all corporate income taxes. If you add up all the money we get from corporate taxes, it amounts to about 10% of the total US revenue. That's it. Income tax is about 47%, Payroll taxes make up 34% (and that is essentially money that could be in your salary but isn't), ant what is left is estate, excise, and misc other taxes. If the corporate tax rate was reduced to zero, what would the incentive be for companies to move their operations (and in some cases their jobs) somewhere else? All you would really have to do is have this result in an increase in employment by about 6% and it is a wash with payroll and income taxes making up the difference. Sure a lot of the money they would save would be eaten up by the top wage earners for each company as well as the shareholders if they pay dividends. But some of it will go into marketing, productions improvements, new hires, expansion and benefits. Even if you gave ALL the money to the top wage earners, they would just have to pay some percentage of it back in income tax. The nominal corporate tax rate is 35%. The highest personal income tax rate is 39.6%. So forget the corp tax, give all that money to the board of directors and we net 4.6%. That's a good idea but, as I've indicated, where the corporation pays taxes has nothing to do with where the employees or operations actually are. A smart and simple move would be to just lower the corporate tax rates to where they are competitive- say 15-20%. Keep the companies here and probably increase the effective take.
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Post by millring on Aug 26, 2014 14:29:01 GMT -5
note - our corporate tax rate isn't the lowest in the world. not by far. Let's say we are 35% The average in Europe is 20% Asia - 22% Latin America - 27% Canada - 27% Mexico - 30% There are scant few countries anywhere with a corporate tax rate higher than ours exactly.
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Post by Rob Hanesworth on Aug 26, 2014 14:32:45 GMT -5
You still did not read the article which says that Canada has a lower corporate tax rate. I get that. But Bernie Sanders is all over the internet saying that the very reason we are in trouble is because our corporate tax rate is the lowest of all the industrialized nations. example: John, In your Sanders example he says absolutely nothing about how our corporate tax rate compares to other nations. He may be saying it 'all over the internet' but not in your example. Here is says it used to account for a higher percentage of federal revenue than it does now. No mention of other countries.
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Post by Doug on Aug 26, 2014 14:33:40 GMT -5
Companies move to where there is the lowest tax rate. That's just good business. Make our corporate tax rate 0% and watch the money flow in. Wrong. Companies move where there is the lowest cost of doing business. Taxes are only one factor. Others are cost of labor, cost of materials, including any cost to get them to the manufacturing site, cost of transporting product to customers, etc., etc. To say taxes are the only consideration is naïve. True. But the difference between 35% and 0% is a big chunk. And is we tend to be the customers that's an other cost dissolved. Do away with import taxes on US based companies and increase the import tax on non US based companies and get out of the way so you won't be run over by the companies moving here. So even if the manufacturing stays off shore (for the cheap labor) the money people will be here.
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Post by Deleted on Aug 26, 2014 14:37:04 GMT -5
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Post by millring on Aug 26, 2014 14:43:16 GMT -5
John, In your Sanders example he says absolutely nothing about how our corporate tax rate compares to other nations. He may be saying it 'all over the internet' but not in your example. Here is says it used to account for a higher percentage of federal revenue than it does now. No mention of other countries. I was using that as an example. Do you want me to find a better one, or will you accept that actual point of my post -- that the problem according to Sanders is that we don't have a high enough corporate rate? Of course, you could argue that Sanders also wants to do away with the corporate tax. I don't think that's his point, but you could argue that direction if you really want to rebut my initial post.
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Post by millring on Aug 26, 2014 14:48:27 GMT -5
I used to be against "loopholes". The more I've thought about it, though, the more willing I am to accept that many "loopholes" are there because there are those in government who are wise enough to understand that those in the business/corporate world know better than they what to invest in.
I started to think this way when David Radtke got me rethinking about the upper margin tax rate. At one time it was in excess of 90%. I thought that was outrageous. Then David got me to rethink it. There was never really any intention (or little intention) on the part of the government to confiscate 90% of a taxpayer's marginal income. What the actual intent was was to force that earner to invest -- knowing that he was already a proven success where investing is concerned. It would stimulate the economy and in effect force a trickle down effect.
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