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Some Corporations Pay a Lot More Taxes Than Others

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Re: Some Corporations Pay a Lot More Taxes Than Others

#51

Post by tasty_freeze »

flachsechs wrote: post #46
danmaz74 wrote: post #18

Earlier quoted context omitted.

Yes, and what happens when those corporations keep hundreds of billions in profits in the bank for years - see eg Apple?

they're already doing it, so this isn't much of a 'what if'. the problem is that money is kept offshore and never spent, because it's at risk of getting taxed immediately upon repatriation.

my understanding is that is absolutely not true. Apple doesn't have $90B or whatever sitting in a bank vault in Ireland. That money goes to a bank in NY, and Apple has access to it and uses it, though that money can't be used freely as money which Apple has paid US taxes on. It is still part of the economy.

https://www.bloomberg.com/graphics/2016-apple-profits/

Re: Some Corporations Pay a Lot More Taxes Than Others

#52

Post by TheCoelacanth »

danmaz74 wrote: post #18
grandalf wrote: post #2

This is why corporate taxes are a dumb idea. Firms should not keep one set of books for management accounting and another set that they use for tax purposes. When money is paid to an individual, tax it as income tax. Very simple. Don't give firms an incentive to act as tax shelters or tax avoiders. Think about all the legal fees that have been spent by the firms on that list to avoid and reduce corporate taxes. It's…

Yes, and what happens when those corporations keep hundreds of billions in profits in the bank for years - see eg Apple?

Taxes would still get paid on capital gains when Apple's stock price goes up. As long you raise the capital gains tax to compensate for getting rid of the corporate income tax, that scenario doesn't cause any problems.

Re: Some Corporations Pay a Lot More Taxes Than Others

#53

Post by adventured »

paulsutter wrote: post #50

Walmart has high taxes(profit) because it has run out of ideas. Amazon has low taxes(profit) because it reinvests almost everything it makes. > Wal-Mart's pretax income since 2008 has totaled $209 billion, Amazon's less than $11 billion. Of course many unprofitable companies invest poorly, but Amazon's massive sustained growth indicates they've invested well.

No, Walmart has always been a careful, profitable business by necessity (thanks to extremely low margins). It's not just because they ran out of ideas to fund in the last ten or N years.

For most of their early existence, they didn't have bubbly capital markets to ride as Amazon did during the dotcom bubble and presently. What made Amazon possible turned out to be a very short-term fluke of history that Bezos took great advantage of. He needed to thread the needle and did just that. Amazon nearly collapsed into insolvency specifically because rather than rely on a profitable business they were leaning on funding to subsidize their vast red ink (as eg Uber is currently). That's an approach Walmart never had the option of taking, and in the decades since they've also never had the luxury of routinely being valued at 200x earnings. Amazon isn't a special alien organism, they're one part retailer (boring old retail), one part platform for distribution (eg retail and media), one part software company (cloud etc); they are particularly good at what they do.

Walmart pays high taxes because they generate most of their income in the United States market. Which is the same reason that Delta has a high corporate income tax, and the same reason Whole Foods does. It's the reason Foot Locker paid a 34% corporate income tax rate last year.

Re: Some Corporations Pay a Lot More Taxes Than Others

#54

Post by rpiguy »

grandalf wrote: post #2

This is why corporate taxes are a dumb idea. Firms should not keep one set of books for management accounting and another set that they use for tax purposes. When money is paid to an individual, tax it as income tax. Very simple. Don't give firms an incentive to act as tax shelters or tax avoiders. Think about all the legal fees that have been spent by the firms on that list to avoid and reduce corporate taxes. It's…

Simply taxing revenue is bad for start ups and puts them at a even more of a disadvantage.

Re: Some Corporations Pay a Lot More Taxes Than Others

#56

Post by rossriley »

Nursie wrote: post #43
rossriley wrote: post #11

Earlier quoted context omitted.

Well the problem is that you just create a loophole. You can already avoid paying any corporation tax by taking money out of a company as salary. In the UK you have dividend tax credit so effectively when you take a dividend you get the tax back that has already been paid (as corporation tax). So both those reasonable ways of extracting money from a company allow you to not pay any additional tax above what income ta…

>> In the UK you have dividend tax credit Not any more, that got shelved a few years back AFAICT.

Yes, sorry I did expand in another comment, it's now been replaced with a percentage, but the principle is the same, you pay 7.5% on dividends which is effectively the income tax equivalent minus the 19% corporation tax that has already been paid.

Re: Some Corporations Pay a Lot More Taxes Than Others

#57

Post by mcguire »

Tyr42 wrote: post #44
losvedir wrote: post #25

Earlier quoted context omitted.

> I've always thought that the answer was to have wealth taxes Oh, I totally think this is where we should be going, too! Income seems like such a weird thing to tax; the wealthiest people don't necessarily have income, and high earners aren't necessarily that wealthy. In terms of "tax the rich", I think wealth taxes are more along the lines of what people envision. It would simplify things so much, too; you don't ha…

What if you just spend all your money before you are taxed? This seems to reward non-tangable things, like trips, since they don't count towards your networth unlike say, a house.

A professor I once knew said,"You can only eat so much filet mignon."

Re: Some Corporations Pay a Lot More Taxes Than Others

#58

Post by Quarrelsome »

rossriley wrote: post #30
Quarrelsome wrote: post #26

Earlier quoted context omitted.

> when you take a dividend you get the tax back that has already been paid Yea, that needs to stop. This idea of being "taxed twice" is ridiculous because companies are not people. If they were then yes they would be taxed twice and it would be "unfair" but then they'd also be taxed at the proper rate.

No, I was explaining that this already happens. Actually at least in the UK the system is just changing over to be more clear so rather than the tax credit you just get a lower rate. So for instance instead of the 25%ish that you would expect to pay in tax on your income you pay 7.5% on your dividends which is more or less the income tax rate minus the corporation tax already paid.

yeah but your company paid the corp tax, not you. That's isn't fair because your company can offset its losses and individuals cannot. Its not a fair comparison.

Re: Some Corporations Pay a Lot More Taxes Than Others

#59

Post by marrington »

losvedir wrote: post #25
zimablue wrote: post #8

Earlier quoted context omitted.

I think that what you're suggesting (based on a vague understanding of the UK tax system) is abolishing corporate taxes and taxing dividends as income? I'd be curious to hear someone who knows more accounting's view on this. I've always thought that the answer was to have wealth taxes, easier to avoid but surely what we should actually aim for.

> I've always thought that the answer was to have wealth taxes Oh, I totally think this is where we should be going, too! Income seems like such a weird thing to tax; the wealthiest people don't necessarily have income, and high earners aren't necessarily that wealthy. In terms of "tax the rich", I think wealth taxes are more along the lines of what people envision. It would simplify things so much, too; you don't ha…

"Otherwise their wealth will dwindle over time and others will have a shot"

Wealth is not a zero sum game, it's the opposite. Wealth creates more wealth for the society around us.

Re: Some Corporations Pay a Lot More Taxes Than Others

#60

Post by marcosdumay »

losvedir wrote: post #25
zimablue wrote: post #8

Earlier quoted context omitted.

I think that what you're suggesting (based on a vague understanding of the UK tax system) is abolishing corporate taxes and taxing dividends as income? I'd be curious to hear someone who knows more accounting's view on this. I've always thought that the answer was to have wealth taxes, easier to avoid but surely what we should actually aim for.

> I've always thought that the answer was to have wealth taxes Oh, I totally think this is where we should be going, too! Income seems like such a weird thing to tax; the wealthiest people don't necessarily have income, and high earners aren't necessarily that wealthy. In terms of "tax the rich", I think wealth taxes are more along the lines of what people envision. It would simplify things so much, too; you don't ha…

You can already stop at your two cons. Those are pretty insurmountable themselves.

Number 1 in particular creates a huge intervention in the details of an economy. Any government would want to fine tune this, and not create a tax aimed mostly on revenue collection. In particular, you do not want to go out of your way to bankrupt people when they make productive investments.

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