Of course it would, the government is already taking taxes from employees by means of income tax. Double dipping by taking from the company means less money for the employees.
No, employee compensation is an expense to the company, the more they pay the employees, the lower the eventual profit, which is the basis upon which income tax is determined.
Still, this left over money will be available to spend in other areas like R&D, marketing, etc. The government does not have a right to 30% of it or whatever the corporate tax rate is.
I actually don't get why corporation should pay taxes. When the profit of the company is distributed, or paying the employees, the employees/shareholders will be taxed on that money.
Corporate taxes allow governments some level over control over corporate policy by incentivizing certain behaviors through deductions/credits etc. Also, dropping the corporate tax rate to 0 would probably be politically impossible, even an identical amount was then taxed on the individuals who benefit.
>Corporate taxes allow governments some level over control over corporate policy by incentivizing certain behaviors through deductions/credits etc.
Money is fungible. From an accounting perspective $1 given via tax credits is identical to $1 check given by the government. That said, your point is still valid because the former is much more politically palatable than the latter.
I actually don't get why corporation should pay taxes. When the profit of the company is distributed, or paying the employees, the employees/shareholders will be taxed on that money.
Corporations benefit from the lawful society, the road system, the public-educated workforce, the clean water, the geopolitical ties of the US, etc...
The government needs to collect money to pay for current and futures investments that created that environment... no? What's the most effective way?
loans are different for corporations due to the interest being deductible (colloquially called 'tax shields'). along with the carryforward provision, that can so valuable that it's the principal reason why a given company is bought. personal loans have no such leeway and value.
The interest on personal loans is also deductible, if used for (a) education, (b) buying a residence, or (c) for business activities of the individual.
sure, there are a few exceptions, but carveouts result in distortions that lead to unintended consequences, as we see in all of those instances (e.g., higher economic rents). for greater fairness and more efficiency in markets, we should reduce carveouts for both corporations and individuals, not try to justify the ones we have.
> Depreciation is already a delayed acknowledgment of expenses. Without depreciation someone would deduct the entire amount of a cost immediately and pay much lower taxes. No, if a company buys say land they can’t deduct anything because land retains value until the point of sale. The same is true buying stock or other items that maintain value over time. The general rule is something is a deductible expense at the p…
Your comment again makes no sense. Land is NOT depreciable and neither is stock. Depreciation is not an exemption of taxes. You must realize that selling something that has been depreciated results in you selling it for a profit and thus is taxable. Depreciation reduces the cost basis. I’m not sure if at this point you are trolling by your comments always saying the opposite of the actual tax laws.
I never said land deprecated try reading my comment again: “if a company buys say land they can’t deduct anything” that’s an example of default behavior. Try rereading what I actually said where again you can deduct the purchase price at the time of sale not purchase.
As to depreciation being an exception that’s what it means when you change the baseline rules of a system with new rules. By default you take the deduction on sale, depreciation means you can take deduction early. It’s literally called “Modified Accelerated Cost Recovery System (MACRS)” the entire point of it is to speed things up rather than as you suggest slow anything down. Thus removing depreciation from the tax code and companies would need to wait years or even decades or deduct these costs from their profits. Thus as I said before it’s a hand out which happens to be built into the tax code.
No, employee compensation is an expense to the company, the more they pay the employees, the lower the eventual profit, which is the basis upon which income tax is determined.
Still, this left over money will be available to spend in other areas like R&D, marketing, etc. The government does not have a right to 30% of it or whatever the corporate tax rate is.
No, you are repeating your mistake. Companies are free to spend on marketing or R&D, which are common expenses, thereby reducing their profit and by extension, reducing the amount upon which they are taxed.
>> The government does not have a right to 30%
Apparently it does, since governments all over the globe have been levying taxes on corporations for decades. Unless you think the Cayman Islands, Bahrain, and Isle of Man should be the model for industrial countries.
A loan isn’t a loss. A business can’t deduct that either.
Of course not. The $155k tuition is the loss. The $150k loan is just a sudden influx of money used to compensate for the investment losses, the same as a company receiving investment funding.
It's not a loss - it's training. If the individual created a sole proprietorship it might be deductible, too.
Your comment again makes no sense. Land is NOT depreciable and neither is stock. Depreciation is not an exemption of taxes. You must realize that selling something that has been depreciated results in you selling it for a profit and thus is taxable. Depreciation reduces the cost basis. I’m not sure if at this point you are trolling by your comments always saying the opposite of the actual tax laws.
I never said land deprecated try reading my comment again: “if a company buys say land they can’t deduct anything ” that’s an example of default behavior. Try rereading what I actually said where again you can deduct the purchase price at the time of sale not purchase. As to depreciation being an exception that’s what it means when you change the baseline rules of a system with new rules. By default you take the dedu…
It’s not a hand out whatsoever. Firstly you are making an assumption that everything that is depreciated can be sold when the majority of depreciated items are not sold, ever. They get used up over time, kind of like... depreciation. That is why that capitalized items are capitalized, not land, which again _does not get depreciated_ so I don’t know why you would use that as your comparison for normal deduction. You are looking at this absolutely backwards. Let’s say depreciation was eliminated completely in your perfect world, because you say it’s a hand out right? Now you buy something for $100,000, say construction of a building, that building falls apart and breaks down after 39 years, it was not sold. Now you have nothing to sell and never got any deduction. Now who wants to spend their money on something that is never recognized as a cost? Depreciation is there to normalize the recognition of that building falling apart. Of course all types of items depreciate at different time periods which are all defined by law. Unless you are in favor of there being no deductions for taxes of all costs, meaning you tax gross revenue, there is no reason not to depreciate. Accelerated depreciation means you pay less tax and have more money at the start of a project when it is needed and pay more to the government later when it has stabilized. Again depreciation reduces cost basis, so even if you sold it, you pay additional taxes on that when you sell it, offsetting the benefit of your depreciation. Now where is the hand out in that?