31–40 of 80 posts
Why on Earth do we bother with a corporate income tax at all? Just get rid of it and bump up capital gains to compensate.
Fixing this sort of loophole should be far higher on Congress's list of priorities than it is now. There is no reason why a massively profitable corporation like Google should pay so little in taxes when poor Americans are nickel-and-dimed with sales, payroll and income taxes.
Something must be done about these evil corporations which exist outside the US, don't bring money into the US, do no business in the US, and pay no taxes in the US!
Why on Earth do we bother with a corporate income tax at all? Just get rid of it and bump up capital gains to compensate.
Actually, no company _really_ pays taxes. Taxes are another cost of doing business which is passed on to the consumer
In the general case, an increase in costs will come out of some combination of: 1) increased prices passed onto consumers; 2) decreased wages at the firm; and 3) decreased profits at the firm. There's no economic law that says they'll all come out of #1, unless it's such a perfectly-competitive commodity business that everyone is charging barely above cost for their services to begin with (not the usual case in Silicon Valley).
Consider the flip side: If all cost reduction were automatically passed on directly into price cuts, there would be no incentive for companies to trim costs. But that isn't the case, of course; one reason firms aim to reduce their costs is that reducing costs while keeping prices fixed is one way to increase profits. Similarly, increased costs without the ability to raise prices can reduce profits. In both cases it depends on the surrounding market.
Earlier quoted context omitted.
its not like it was years ago when CitiCorp set up theri stock trading units in the Islands for a similar purpose..
Citi went farther. They did things like declare a particular desk in a skyscraper in NY to be legally in the Cayman Islands. The IRS was not amused.
Anyone interested in this will also be interested in learning about IKEA: http://www.economist.com/PrinterFriendly.cfm?story_id=691913... And, more recently, some details about how they do it: http://www.ft.com/intl/cms/s/0/2437643c-2985-11e0-bb9b-00144...
The founder of ikea essentially owns everything through a charity and avoid all taxes for effective purposes.
Why on Earth do we bother with a corporate income tax at all? Just get rid of it and bump up capital gains to compensate.
Great question. My understanding was that the (primary) purpose of corprate income tax is not to directly collect revenue, but rather to encourage reinvestment by firms in the economy. Increasing CGT would discourage investment. Can others please enlighten us?
When you reinvest into equipment, the logic goes that the productivity increases and new higher paid jobs are created even though the lower end labor is eliminated or reduced.
Increasing capital gains tax would in effect make everyone accelerate the sale of their company before the taxes are effective, so it was a mass liquidation of capital.
But, I don't believe it would discourage investment because people would simply tax plan around the capital gains tax. A while back, during Reagan and friends presidency, the personal income tax as well as capital gains tax was more than 35%. People actually invested more into corporations because the corporate tax rates were lower (ironically).
Of course, the loopholes should be closed, but until they are we could at least keep things fair by making the same techniques available to anyone.
Back when Commodore was a company I had the opportunity to get a look at its tax structure (I was interviewing for a VP position with the parent company). It was pretty impressive how effectively one could exploit nominal loop-holes in various jurisdiction tax codes to achieve near zero taxation. One of the more dubious strategies was having a company in the Cayman Islands that owned the cars that people drove and pa…
Lol. It sounds like I worked with your friend. I'd like to note that the US is also a noted tax haven for foreign countries. We aggressively allow our country act as a tax shield for European and Asian companies so we should be throw rocks either when we live in a glass house
I doubt the real world works like this, though.
Why hasn't someone created a company that handles this setup for small to midsize companies? Think of it as the Paychex for legal tax evasion. Their clients could all share the same legal addresses in Ireland and the Netherlands. They could keep up with the shifting tax laws and take care of opening all the appropriate banks accounts and filling out the right forms. Of course, the loopholes should be closed, but unti…
Most tax professionals that are capable will provide these tax plans to their clients, but they'll do so quietly because its not something you'd want to advertise and also people generally dont like it when they find out you've gone "offshore" and etc.