361–370 of 423 posts
The mechanics would be different, of course, as e.g. the whole point of AMT is to disallow some deductions, and many businesses would be bankrupt without (totally reasonable) deductions.
The problem in collecting these taxes is not the ability to do so, it is rather the will to do so.
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I know this isn't exactly parallel to the digital service tax, but for the larger debate: The huge obvious revenue tax is VAT. On (almost) anything sold in France they get 20%, and it's very hard to dodge. It does not depend on where you claim your headquarters to be. All these arguments about which country gets to collect a few percent tax, of a few percent profit, are dwarfed by this much larger slice. Which every…
Maybe, but there are several arguments against using it in this context: - Collection can be reduced by deducting VAT on company purchases, meaning the company only pays the difference between the VAT charged to the customer and the VAT they've incurred on purchases. - It's regressive. It primarily affects poorer consumers since it is effectively a tax on the end user rather than the company. - Some countries aren't…
There's an argument that VAT is regressive but this isn't it. Who effectively pays (meaning economic incidence) is complicated. But sometimes it works out that poorer people pay a larger proportion of their income in VAT than do richer people. It seems entirely OK to have a mixture of regressive and progressive taxes.
And sure, not completely free within the EU, but the range of acceptable rates is pretty wide, maybe 17-27 exist today? I haven't done the numbers but France could surely raise an order of magnitude more money from VAT than they collect from corporate profits, if they wished.
I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…
Because the tax code is relatively simple for W2 employees. Not so much for corporations.
> "You're technically owned by an Irish company you invented to avoid taxes? Cool. The c-suite plus your accountants are going to prison for the next five years and we're seizing the X billion you actually owe plus a punitive fine."
It gets doubly complicated once you cross borders, because transferring assets like that might be legal under some treaty between country A and B.
Truth is, if society doesn't want these practices to be legal it has to write a tax code that doesn't make them legal.
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Because they act as a stand alone entity, and they may make and keep profit that doesn’t get dispersed to the employees.
A company doesn’t “keep” anything. It eventually uses all of its money to either pay dividends (or stock buybacks, their financial equivalent), salaries, business expenses. We tax corporate profits , not income. That takes out of the dividend stream, so we tax capital gains (the tax the investors pay on dividends/stock appreciation) correspondingly lower. You could in theory get rid of the corporate tax and just tax…
All companies will hoard all cash waiting (perhaps decades) until the tax rates are lower, and then pay it out as salaries/dividends with a lower rate; it’s already happening with overseas profit and “tax holiday” years, but so far only Apple/Google size companies can participate.
Once you enable this for domestic companies, every employee making >$80K will incorporate, keep money in company and draw minimal salary actually needed for everyday life, waiting for favorable tax day or needing the money. The tax base would be reduced by 10-50% if not more (due to progressive taxation) and though it may even out in the end, it would make tax receipts unpredictable and likely somewhat lower overall.
I don’t see the issue with corporate taxation - it’s a liability shield, and it has a cost. Those who don’t like it can do a tax pass-through and risk the liability. Almost no one wants to do that.
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US citizens are taxed on global income regardless of whether they live in the US, or whether any of their money will ever enter the US. It's only right for US corporations to be taxed the same way. Most of these insane financial contortions are done because they aren't taxed on foreign, non-repatriated earnings - creating an incentive to convert domestic earnings into 'foreign' ones, that get repatriated the next tim…
Is it right? I know a lady that has dual-citizenship because a parent is US citizen and one Australian; she had to move in US after living 25 years exclusively in Australia because she had to pay taxes in both countries, in Australia as a resident citizen and in US because she was a citizen. The only other option was to give up to US citizenship, like others do. Is it right?
You still have to file, and to pay the difference, if any, every year.
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> How to fix it? Make a tax code as simple as possible. So simple there is no room for interpretation.
I would highly recommended reading "A Fine Mess: A Global Quest for a Simpler, Fairer, and More Efficient Tax System." It compares tax systems around the world, unpacks common issues and suggests a fix (in short a "broad base low rate" strategy). https://www.amazon.com/Fine-Mess-Global-Simpler-Efficient/dp...
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I can’t figure out what to deduct that is more than the $12.2k single filer deductible. I have $500k/yr I’d love to pay less taxes on at the moment due to a booming side business + healthy salary. Can’t find any deductions worth my time and the CPA filing fees.
I bet a CPA could.
Edit: I mean, if I own a share I pay taxes when I sell it and make money
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Laws of physics are discovered by human experiment. Economics are defined by humans. They’re taught to each other by humans. It’s all wrapped in how we treat each other at scale. Separating the two is impossible except as a semantics game.
They're separable by experimental verification. The laws of physics are multiple orders of magnitude more accurate than the laws of economics, and the physicists are certain that at least one of their models is wrong. Try getting an admission like that out of an economist!
The same way we are distributing information, we could better distribute literally to normalize human condition.
But profits demand we fill stores with gadgets versus TP.