Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Trump Wants Tax Plan to Cut Corporate Rate to 15%

wsj.com

Post reply on HN
Print view View original

91–100 of 129 posts

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

#91

Post by dragonwriter »

abhv wrote: post #79
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.

If I own a software business that earns 500k-1m a year, currently, I can organize as an LLC and induce pass-thru income that is taxed marginally at ~50% (federal, state, NYC). If I organize as a C-corp, I pay the corporate rate which is also roughly 40%, and I also get double-taxed on salary and any dividends paid to owners. Under these new rules, if a C-corp gets taxed at 15%, there is a strong incentive to pass all…

> If I organize as a C-corp, I pay the corporate rate which is also roughly 40%, and I also get double-taxed on salary and any dividends paid to owners.

Salaries for C-corp employees, including top officers that happen to be major shareholders, are a deductible business expense (well, there may be some issues if they are over $1 million annually, but...), so you only get double taxed on dividends.

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

#93

Post by pavlov »

Finland tried this same thing with the same "dynamic effects will offset lost tax revenue!" rhetoric a few years ago, and it didn't work out anything like expected.

At the start of 2014, Finland lowered its corporate tax rate to 20% (from a previous 24.5%). The lost tax revenue amounted to $800M EUR, but the government claimed that half of that would be recouped thanks to positive dynamic effects the tax cut would create in the national economy.

Two years later, they were forced to admit [1] that none of those dynamic effects materialized.

Cutting corporate tax may still be a good thing, but it's most likely nothing close to revenue-neutral anywhere in the developed world. So this plan would expand the US budget deficit (which Republicans seem to hate only when they're not the ones expanding it with tax cuts).

[1] http://yle.fi/uutiset/3-7773569 (in Finnish)

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

#94

Post by ed_balls »

542458 wrote: post #90
abhv wrote: post #79

Earlier quoted context omitted.

If I own a software business that earns 500k-1m a year, currently, I can organize as an LLC and induce pass-thru income that is taxed marginally at ~50% (federal, state, NYC). If I organize as a C-corp, I pay the corporate rate which is also roughly 40%, and I also get double-taxed on salary and any dividends paid to owners. Under these new rules, if a C-corp gets taxed at 15%, there is a strong incentive to pass all…

Actually, it's even worse than that. From Trump's tax plan: > Right now, freelancers, sole proprietors, unincorporated small businesses and pass-through entities are taxed at the high personal income tax rates. [...] The Trump plan addresses this challenge head on with a new business income tax rate within the personal income tax code that matches the 15% corporate tax rate They want to change it so S-corp income get…

Many countries have that and CEOs don't set up this way. Illegal and bad for PR.

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

#95

Post by harryh »

ed_balls wrote: post #94
542458 wrote: post #90

Earlier quoted context omitted.

Actually, it's even worse than that. From Trump's tax plan: > Right now, freelancers, sole proprietors, unincorporated small businesses and pass-through entities are taxed at the high personal income tax rates. [...] The Trump plan addresses this challenge head on with a new business income tax rate within the personal income tax code that matches the 15% corporate tax rate They want to change it so S-corp income get…

Many countries have that and CEOs don't set up this way. Illegal and bad for PR.

What is an example of a country that is set up this way?

This part of the Trump plan I actually do think is completely bonkers so I assume that it won't get anywhere.

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

#98

Post by unclebucknasty »

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?

It's not the IRS as much as the loopholes bought by special interests.

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

#99

Post by aanm1988 »

nodesocket wrote: post #41
rpedela wrote: post #20

Earlier quoted context omitted.

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.

And I can support corporate tax cuts on the idea of helping small/medium businesses because it does just leave them with more money.

Where you lose me is all the trickle down voodoo economics ideas about how slashing taxes on big corporations and he wealthy is going to help me.

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

#100

Post by aanm1988 »

giarc wrote: post #25
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.

There was a Planet Money podcast (or similar) recently that talked about tax cuts to small/medium size businesses. They looked at a few anecdotal cases and small cuts in taxes didn't result in enough money to hire someone or spend large amounts. They just simply weren't paying a ton in tax anyways, so a cut here or there wasn't a big change.

How many businesses fail that could have succeeded with lower taxes?
Post reply on HN