Trump Wants Tax Plan to Cut Corporate Rate to 15% • Hacker News Board

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#41

Post by nodesocket » Mon, Apr 24, 2017, 8:06 PM UTC

rpedela wrote: post #20

nodesocket wrote: post #2

The thing that most people fail to realize is that a lower corporate tax rate helps the overall enconomy and all Americans. Companies now suddenly have increased capital to spend on growth (hiring, R&D, and acquisitions). Additionally it boost earnings which will likely increase most people's retirement accounts and stock portfolios. Typical that I'm getting downvoted without any rebuttal.

That is the ideal but that isn't reality. The big corporations have large departments devoted to tax avoidance. Where does that saved money go? Usually distributed as dividends to shareholders, executive bonuses, or enormous bank accounts where the money does nothing (e.g. Apple). The best way to improve the economy is put more money into the hands of normal people so that they will buy more stuff which in turn helps…

While some companies indeed return profits back with stock buybacks or increased divvys, lots of companies do expand and grow their hiring and R&D.

Here is the problem, without corporations and small/medium businesses this entire world that we live in ceases to exist. Jobs are what make this all possible.

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#42

Post by harryh » Mon, Apr 24, 2017, 8:06 PM UTC

ska wrote: post #36

harryh wrote: post #27

Earlier quoted context omitted.

The IRS is not stupid. It's perfectly capable of distinguishing a real business from a dummy business set up just to pay personal expenses. There are all kinds of rules about this sort of thing.

The IRS is not stupid, but wealthy enough people have been very effective at creating and exercising approaches to bring their marginal tax rates down to impressively low numbers. So if the IRS is smart but this still happens a lot, there must be something else at work, no?

The primary way that wealthy people bring down their marginal tax rates is buy earning more of their income as capital gains not through the creation of phony businesses to pay for their personal expenses.

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#43

Post by maxerickson » Mon, Apr 24, 2017, 8:07 PM UTC

ska wrote: post #36

harryh wrote: post #27

Earlier quoted context omitted.

The IRS is not stupid. It's perfectly capable of distinguishing a real business from a dummy business set up just to pay personal expenses. There are all kinds of rules about this sort of thing.

The IRS is not stupid, but wealthy enough people have been very effective at creating and exercising approaches to bring their marginal tax rates down to impressively low numbers. So if the IRS is smart but this still happens a lot, there must be something else at work, no?

Do you have examples that aren't long term capital gains?

(which enjoy a low rate but are not really sophisticated financial engineering)

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#44

Post by notadoc » Mon, Apr 24, 2017, 8:07 PM UTC

technotony wrote: post #8

I think the big thing about this is that it will lead more companies to bring capital back to the US from overseas where they are hoarding it. If they either spend it or distribute it to Americans that's likely good for the economy. It also improves the IRR for projects, which should lead to more investment. Hopefully, it works to get the economy going.

If the goal is to repatriate earnings why not incentivize repatriation instead? Bring it back tax-free if you invest it in R&D on needed projects, x many new jobs, etc.

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#45

Post by [deleted] » Mon, Apr 24, 2017, 8:08 PM UTC

nodesocket wrote: post #2

The thing that most people fail to realize is that a lower corporate tax rate helps the overall enconomy and all Americans. Companies now suddenly have increased capital to spend on growth (hiring, R&D, and acquisitions). Additionally it boost earnings which will likely increase most people's retirement accounts and stock portfolios. Typical that I'm getting downvoted without any rebuttal.

[deleted]

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#46

Post by 542458 » Mon, Apr 24, 2017, 8:08 PM UTC

harryh wrote: post #27

abhv wrote: post #18

Lower corporate taxes can also help create structures which allow wealthier people to avoid taxes. For example, if you can create a structure in which all of your consulting income + capital-asset income goes into a C-corp, and you pay most of your own expenses through the C-corp (e.g., Trump tower home office), then you can keep most of your income taxed at only 15%. The C-corp holds it forever, and pays your expens…

The IRS is not stupid. It's perfectly capable of distinguishing a real business from a dummy business set up just to pay personal expenses. There are all kinds of rules about this sort of thing.

Isn't the correct tax dodge here to use an S-corp and take all your payments through that, since Trump has also promised to slash the passthrough rate to 15%? This way would even be completely legal as far as I can tell.

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#47

Post by harryh » Mon, Apr 24, 2017, 8:08 PM UTC

mmanfrin wrote: post #38

technotony wrote: post #8

I think the big thing about this is that it will lead more companies to bring capital back to the US from overseas where they are hoarding it. If they either spend it or distribute it to Americans that's likely good for the economy. It also improves the IRR for projects, which should lead to more investment. Hopefully, it works to get the economy going.

15% is still 15% compared to the 0% they pay on money funneled to tax havens. A lower rate won't stop this; a closing of the loophole will.

What you call a loophole most every other country in the world calls "territorial taxation." If a good is produced outside the US and sold for a profit outside the US then the US shouldn't collect taxes on the transaction.

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#48

Post by lettergram » Mon, Apr 24, 2017, 8:08 PM UTC

JKCalhoun wrote: post #28

technotony wrote: post #8

I think the big thing about this is that it will lead more companies to bring capital back to the US from overseas where they are hoarding it. If they either spend it or distribute it to Americans that's likely good for the economy. It also improves the IRR for projects, which should lead to more investment. Hopefully, it works to get the economy going.

Greedy companies are greedy. Lowering to 15% won't magically make them good corporate citizens. The carrot and a really big stick are needed. I don't see this admin taking a stick to corporate America.

Implying "Greedy companies are greedy" is bad makes little sense...

Greed is defined as:

> intense and selfish desire for something, especially wealth, power, or food.

I've never met a person who wasn't greedy, seriously even a pastor has the intense desire for followers.

Further, it's literally only possible for a company to exist if it is greedy. How else will they pay their employees, investors, etc?

Now, we can argue some companies are "excessively greedy". However, I think that's still probably not the correct way to describe companies that shaft their employees for the bottom line. By definition being "greedy" implies "intense" or "excessive", I think a better term would be "short sighted".

A company which harms it's employees, customers, etc. and tries to get the most value is "greedy" (just as all companies are), but what makes it "bad" is the poor management.

I think the whole point of this new proposed system (aka 15% tax), is that it tips the pro's vs con's list of companies keeping money here to "pro". That's how economies work.

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#49

Post by jliptzin » Mon, Apr 24, 2017, 8:08 PM UTC

nodesocket wrote: post #2

The thing that most people fail to realize is that a lower corporate tax rate helps the overall enconomy and all Americans. Companies now suddenly have increased capital to spend on growth (hiring, R&D, and acquisitions). Additionally it boost earnings which will likely increase most people's retirement accounts and stock portfolios. Typical that I'm getting downvoted without any rebuttal.

I never understood this argument. I am a business owner. I optimize for personal profit, which is the profit from my business, with some percentage cut out for taxes. When I optimize my business profit, the tax rate is not part of the equation. If I find that hiring someone for $100k / year is a good thing to do for the long term profitably of the company, I will do that. If I need to spend $50k on a machine because it will save me $80k a year in costs, I'll do that. The tax rate is never an issue. It's just some fraction of my already optimized business income that I was able to bring in for the year. Whether that fraction is 15%, 25%, 50% etc makes no difference in any business decision I have previously made. (Unless of course the tax rate is 100%, then there would be no reason for me to work).

Re: Trump Wants Tax Plan to Cut Corporate Rate to 15%

#50

Post by Arnt » Mon, Apr 24, 2017, 8:08 PM UTC

JKCalhoun wrote: post #28

technotony wrote: post #8

I think the big thing about this is that it will lead more companies to bring capital back to the US from overseas where they are hoarding it. If they either spend it or distribute it to Americans that's likely good for the economy. It also improves the IRR for projects, which should lead to more investment. Hopefully, it works to get the economy going.

Greedy companies are greedy. Lowering to 15% won't magically make them good corporate citizens. The carrot and a really big stick are needed. I don't see this admin taking a stick to corporate America.

IIRC the Russians tried a 13% rate for a major tax and found that it worked fairly well. If you hassle enough you can get below 13% (or 15%), but hassle has its own cost.