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Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

bloomberg.com

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Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#71

Post by unclebucknasty »

elsewhen wrote: post #69
unclebucknasty wrote: post #23

Earlier quoted context omitted.

Wouldn't apply to S-corps, as pass-through taxation from the company is applied at the owners' personal tax rate(s). But, indirectly, the biggest incentive that I can see would be with regard to retained earnings and reinvestment. For an S-corp, shareholders pay tax on profits according to their ownership percentage, irrespective of whether they even receive a distribution from those profits. And, if on Jan 1, the co…

> Wouldn't apply to S-corps see my post above - at times trump has stated that this _would_ apply to pass-through entities (s-corps, sole proprietorships and LLCs). at the moment however, this point remains unclear.

Yeah, not sure about that. Was responding to the hypothetical posed by my parent.

Would be interesting if it applied to pass-throughs though. Actually, more like completely nuts and ripe for abuse.

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#72

Post by hackuser »

cortesoft wrote: post #65
hackuser wrote: post #52

Earlier quoted context omitted.

Personal consumption is the leading 'driver' (or one of them) of the U.S. economy. I also don't see the distinction: Why shouldn't corporations pay their share, and why should private citizens have to pay more to cover it (taxes are a zero sum game)? Why is a citizen's personal budget somehow of little value, but corporate budgets are sacrosanct? I'm more concerned with protecting private people than corporations. >…

Other people have made the argument as to why we should lower or eliminate corporate income tax much better than I ever could; here is one such argument https://www.theatlantic.com/business/archive/2010/10/why-we-... In short, corporations never 'take' income. It is the shareholders and executives who 'take' the income. Tax the money at that point, and at a level that offsets the loss of corporate income taxes. This…

I don't know there's such a thing in economics as 'taking' income. Money is taxed when it is transacted between entities; it's pretty simple. Buy something, pay someone, pass your inheritance to your children, etc., and it's taxed. (It's not taxed when it sits still.)

Now people want to give certain transactions a special status; for some creative reason, this time it's different. What I see is that the transactions that are 'special', such as corporate and estate taxes, benefit the same group of people. Also, the same people shouldn't have their income taxed as highly because they are more important than everyone - they are 'job creators'. How come it's never the taxes of the working class, such as sales tax, that need special treatment?

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#73

Post by hackuser »

WillPostForFood wrote: post #67
hackuser wrote: post #58

Earlier quoted context omitted.

> it is very apparent that the current tax rate is determining their behavior That isn't necessarily true. It could be due to other laws, such as the one that allows them to stash money overseas tax-free. Perhaps that's the law that should change.

Yes, I should have said current tax law, not tax rate, but the getting a lower rate abroad is clearly the main driver.

> I should have said current tax law, not tax rate, but the getting a lower rate abroad is clearly the main driver.

I wasn't clear: I don't know that I accept that, though of course I've heard it many times. It's a narrative that suits people who want to cut taxes for corporations, but those people always have very convenient narratives. Has anyone seen evidence?

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#74

Post by alkonaut »

crusso wrote: post #62
alkonaut wrote: post #57

Earlier quoted context omitted.

You misunderstood me: I'm not saying the states shouldn't be competing for business. I'm saying states shouldn't be allowed to give tax breaks to individual companies and not to others. That's effectively having different tax codes for different companies. It's is analogous to having different laws for different people (which, I assume would not be constitutional). The point is to create good economic environments wi…

If a state wants to offer tax incentives to green energy companies, that shouldn't be allowed?

That could be done without targeting individual companies so yes. Same as it is legal to give incentives to buy green cas by subsidizing light or electric cars taxing gas or heavy cars.

The kind of targeted breaks I'm thinking of is e.g. this: http://app.leg.wa.gov/billsummary?BillNumber=2089&Year=2013#...

That's just basically Boeing saying "Give us a tax break of N billion or we move from Washington". Legislators afraid to lose their jobs approve. The state keeps the jobs, the legislators keep their jobs. Everyone is happy? Well, except the people in the state that lost a ton of tax revenue.

To be clear: this isn't a tax cut for "the Washington aerospace industry". There aren't going to be any competitors creating buildings for the manufacturing of plane fuselages in Washington state - it's a tax cut directed directly towards Boeing alone. You wouldn't have to be a star lawyer to prove that point.

The argument that "but they create jobs in the state so even with the tax break, Washington state benefits from having them there" doesn't float either. That's how blackmail works. I need my knee caps so even after paying the mobster $10000 for keeping them I come out ahead!

If states weren't able to offer company targeted tax breaks like that, then Boeing couldn't have blackmailed Washington legislators like that. Which would benefit everyone involved (Except of course - Boeing).

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#75

Post by geff82 »

vkou wrote: post #30
geff82 wrote: post #16

We don't know about the side effects yet, but a 15% corporate tax would be the starting signal for some entrepreneurial friends of mine to found a company in the USA the second the bill has passed. There is no other big market with such a low corporate tax.

So, they wouldn't sell to the biggest, richest market in the world, with some of the best infrastructure, cheapest energy, no shortage of wealthy customers and educated labour, (With some of the lowest levels of labour protection in the developed world...) Until we slash the taxes they will pay on profits ? Given that we are in an era of cheap credit, your friends sound insane.

You think that there aren't good markets outside the US and that every business needs/wants to go global. If I want to become a millionaire, I can just stay within the EU and not touch the US at all. So my friends (and me included) do not necessarily have to take the burden to setup business in another continent. But very low taxes AND a big single market are an interesting combination.

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#76

Post by geff82 »

DaiPlusPlus wrote: post #29
geff82 wrote: post #16

We don't know about the side effects yet, but a 15% corporate tax would be the starting signal for some entrepreneurial friends of mine to found a company in the USA the second the bill has passed. There is no other big market with such a low corporate tax.

Corporate taxes are on profits - it's very easy for a company, especially a startup, to not make a profit - ever - if they reinvest the earnings before the end of the tax year or the shareholders make drawings. I don't see how low corporate tax rates will spur new startups - but I do see it as incentivizing the repatriation of foreign-earned income by large multinationals. On the contrary, I think a higher and progre…

I can tell you that I would not set foot in a country with high taxes. The US has some special incentives which even nowadays make it attractive (honestly, the US is so rich, big and special that the tax rate does not matter too much in the grand total), but in general, as a European there is no need for me to accept anything more than 25% when starting out. Everyone who starts out wants to keep their money. Especially starters need low taxes so they can invest more (and not only in the present year to get "deductions").

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#77

Post by geff82 »

geff82 wrote: post #76
DaiPlusPlus wrote: post #29

Earlier quoted context omitted.

Corporate taxes are on profits - it's very easy for a company, especially a startup, to not make a profit - ever - if they reinvest the earnings before the end of the tax year or the shareholders make drawings. I don't see how low corporate tax rates will spur new startups - but I do see it as incentivizing the repatriation of foreign-earned income by large multinationals. On the contrary, I think a higher and progre…

I can tell you that I would not set foot in a country with high taxes. The US has some special incentives which even nowadays make it attractive (honestly, the US is so rich, big and special that the tax rate does not matter too much in the grand total), but in general, as a European there is no need for me to accept anything more than 25% when starting out. Everyone who starts out wants to keep their money. Especial…

What I want to say: why bother with a 10% tax rate in Bulgaria (which has access to the EU, but gives you some things to explain why you are there) at 100.000 profit when you can have 1.000.000 profit in the bigger market that the US is at 35%.

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#78

Post by crusso »

alkonaut wrote: post #74
crusso wrote: post #62

Earlier quoted context omitted.

If a state wants to offer tax incentives to green energy companies, that shouldn't be allowed?

That could be done without targeting individual companies so yes. Same as it is legal to give incentives to buy green cas by subsidizing light or electric cars taxing gas or heavy cars. The kind of targeted breaks I'm thinking of is e.g. this: http://app.leg.wa.gov/billsummary?BillNumber=2089&Year=2013#... That's just basically Boeing saying "Give us a tax break of N billion or we move from Washington". Legislators a…

Hence my question. So now if you allow industry-specific taxation, then you just craft a special bill that cuts taxes for large airplane manufacturers and Boeing gets a tax cut.

Boeing has a lot to offer a state. They could put their production in lots of places, including in other countries. If a state finds value in having Boeing there, there's nothing wrong with incentivizing them to go there.

If smaller businesses find that the state is hostile to them for one reason or another - maybe because they feel overtaxed because of big breaks for the big companies, then smaller businesses will not do as well in that state and will tend to migrate elsewhere. Then the state might need to rethink its tax policy like New York has been doing with its reduced rates for new businesses.

At the end of the day, we don't need the Federal government micro-managing the states. The USA wasn't formed that way and it would be yet another Federal overreach that would create backlash and perverse incentives. You mentioned the EU. The EU is dealing with that sort of backlash now with Brexit and other referenda. Overreach by central governments is a proven route to tyranny.

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#79

Post by criley2 »

SilasX wrote: post #17
criley2 wrote: post #9

Earlier quoted context omitted.

>You are missing that the reduction should cause some money sitting in coffers outside to flow back in to US. Microsoft, Apple, Goog etc have billions of dollars parked outside the country They won't bring it back if they have to pay 15% on it. We let them bring it back for 5% in 2004 and the result was a net loss to the taxpayer, if I remember correctly. https://www.wsj.com/articles/SB10001424052970203633104576623..…

Had it not happened, the US government would have gotten 0% of the money and their US operations would have been even more cash-starved.

Cash starved? These businesses are fine. They can borrow money domestically using the foreign horde as collateral.

If they are cash starved, it's because they have no credit and no horde.

Re: Trump Tax Plan Said to Call for Lowering Corporate Rate to 15%

#80

Post by dragonwriter »

SilasX wrote: post #17
criley2 wrote: post #9

Earlier quoted context omitted.

>You are missing that the reduction should cause some money sitting in coffers outside to flow back in to US. Microsoft, Apple, Goog etc have billions of dollars parked outside the country They won't bring it back if they have to pay 15% on it. We let them bring it back for 5% in 2004 and the result was a net loss to the taxpayer, if I remember correctly. https://www.wsj.com/articles/SB10001424052970203633104576623..…

Had it not happened, the US government would have gotten 0% of the money and their US operations would have been even more cash-starved.

The US operations aren't cash starved; they can repatriate unlimited funds for operations with no problem, since operations are all deductible expenses which would result in no tax hit from bringing the money back.
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