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View Diary: Eliminate corporate tax, seriously (422 comments)

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  •  I wasn't aware Corporations were being taxed (35+ / 0-)

    I would be happy if we just ended the tax breaks they are currently receiving.

    "We cannot solve our problems with the same thinking we used when we created them." -- Albert Einstein

    by lynn47 on Mon Aug 25, 2014 at 11:32:59 AM PDT

      •  And companies like Google would never get taxed .. (12+ / 0-)

        Any company can choose to pay dividends or not. They can choose to reinvest the money in new products, or simply buy back stock from the market.

        In a world without dividends, the only time you would tax gains would be when someone sold their stock.

        The middle class would have to sooner or later sell some stock because they need the profits to live on -- and thus subject to tax. But the super-rich -- not so much?

        So if I were a Billionaire, I'd simply put my money in a ETF of companies that never paid dividends. I'd need to "cash in" a much smaller portion of my wealth.

        Why is this fair?  Am I missing something?

        •  If you tax the trade at sale (10+ / 0-)

          When you purchase the stock or receive it as payout of the dividend at the rate that RR, that would in fact get revenue into the Treasury Department.  Then tax the capital gains, yes I do know that it is a double edge sword, but that will catch the people who dump 100,000 shares in one day and buy them back the next.

          The only thing I would exempt is the sale from 401(k).

          "Death is the winner in any war." - Nightwish/Imaginareum/Song of myself.

          by doingbusinessas on Mon Aug 25, 2014 at 01:00:14 PM PDT

          [ Parent ]

          •  IRAs too. (9+ / 0-)

            Otherwise, you're preferring workers who work for certain companies ( corporations) over others (mostly very small businesses). Workers who have 401ks are already preferred because they can contribute more to their funds than workers who hold only IRAs.

            Short term traders (people who hold stocks less than one year) usually get dinged with higher taxes:

            For the purposes of determining tax rates on an investment, an investment can be held for one of two time periods: the short term (one year or less) and the long term (more than one year and less than five years). The tax system in the U.S. is set up to benefit the long-term investor. Short-term investments are almost always taxed at a higher rate than long-term investments.
            Generally speaking, if you held the position less than a year (365 days), that would be considered a short-term capital gain, which is  taxed at the same rate as ordinary income.

            So that should catch many boomerang-type traders, unless of course, they held a stock for years, sold, then the market dropped dramatically, and they bought it all back up the next day.

            In which case, I would ask 1. what's their secret? and 2. are they being investigated for insider trading?

            The issue for me is this:

            Positions held for longer than a year would be considered long-term capital gains and get taxed at a lower rate – usually around 15% but, depending on your income, it could go as low as 5%.

            and that is where, as kos says,  we have lot of room for improvement.

            © grover

            So if you get hit by a bus tonight, would you be satisfied with how you spent today, your last day on earth? Live like tomorrow is never guaranteed, because it's not. -- Me.

            by grover on Mon Aug 25, 2014 at 02:11:22 PM PDT

            [ Parent ]

            •  I agree, if it was specifically for retirement (2+ / 0-)
              Recommended by:
              charliehall2, ivote2004

              like IRA's, 40k(k) and the like.  The people who, like a few of my co-workers who lost half of their investment in 2001 and 2008 in the crashes, they will never be able to retire.

              "Death is the winner in any war." - Nightwish/Imaginareum/Song of myself.

              by doingbusinessas on Mon Aug 25, 2014 at 04:09:51 PM PDT

              [ Parent ]

            •  long-term gains should be taxed (2+ / 0-)
              Recommended by:
              rabrock, dcnblues

              as regular income.  Short term gains should be taxed as regular income at the next higher income bracket  (or with an additional 2% penalty, if the trader is in the highest income bracket.)  

              Slowing down the traders would allow corporations to look beyond the next quarterly report and regain concern for developing physical and employee assets, rather than the current mania for cutting costs.  It would have a positive, possibly quite large, effect on the economy that would benefit all classes.

              We've got to get out of this Al Quaeda funk.  We've let bin Laden win by finishing his mission to destroy the things that ever made the country great . . . our sense of optimism. our devotion to justice, and  our commitment to improving the lives of both ourselves AND our fellow citizens.  

              All day, every day, I just want to shout "Stop being afraid of the boogeman and start honouring and respecting all of your neighbors.  We don't have the time to deal with cowards.  Put down your damn gun belt and put on a tool belt.  There's a lot of stuff we need to build."

          •  Traders usually Mark to market (6+ / 0-)

            They don't pay taxes on each individual sale like ordinary people.  (Btw only long-term capital gains, on assets held for more than a year, are taxed at 15% so short-term sales aren't covered anyway.).  They specify the beginning value of the account at the beginning of the year and pay taxes on the total gain at the end.  That's why a transaction tax is needed.

            Don't bet your future on 97% of climate scientists being wrong. Take action on climate now!

            by Mimikatz on Mon Aug 25, 2014 at 04:20:55 PM PDT

            [ Parent ]

            •  Mimi - the new capital gains tax rate is 23.8% (0+ / 0-)

              The 15% rate expired at the end of 2012. The new rate is a more than 50% increase.

              "let's talk about that" uid 92953

              by VClib on Mon Aug 25, 2014 at 09:33:36 PM PDT

              [ Parent ]

              •  the new capital gains tax rate is 23.8% (1+ / 0-)
                Recommended by:

                Any new tax laws should include a discount of a capital gain equal to the inflation rate over the years the item's time of ownership at least for real things as opposed to securities and the like.
                What we do now is viciously unfair for assets held for a long time.  An example is my antique Ford car which I paid $3000 for 40 years ago.  Today's market value is around 8 times that.  About the rate of inflation since then.  So if I sell it today I will about break even in terms of purchasing power.  But I will take a painful loss of $6900 in capital gains tax on a transaction that will be hard to hide.

            •  Yes they do (0+ / 0-)
              Traders usually Mark to market
              They don't pay taxes on each individual sale like ordinary people.
              Marking to market is for financial reporting, not tax.
        •  Corporations can't deduct dividends (2+ / 0-)
          Recommended by:
          thanatokephaloides, charliehall2

          so whether or not they pay dividends has no impact on whether they pay taxes.

          "If one cannot enjoy reading a book over and over again, there is no use in reading it at all." — Oscar Wilde

          by chicagobama on Mon Aug 25, 2014 at 02:00:49 PM PDT

          [ Parent ]

          •  But management and directors hold lots of shares (0+ / 0-)

            And they who get the dividends really do care.  When top rates came down under Reagan and then Bush it made more sense to pay out huge sums in dividends because the tax was comparatively overly so low.  Before earnings were plowed back into the company.

            Don't bet your future on 97% of climate scientists being wrong. Take action on climate now!

            by Mimikatz on Mon Aug 25, 2014 at 04:24:26 PM PDT

            [ Parent ]

            •  That makes no sense unless people anticipated (0+ / 0-)

              a tax cut.

              At the end of the day, when you buy a stock you are buying its cash flow.  Unless you expect a tax cut there is no additional value to leaving money in the company to compound and be taxed later at higher tax rates than at lower tax rates.

        •  I think you raise a good point -- (10+ / 0-)

          the one thing we can't reliably estimate from proposals to eliminate the corporate tax and make it back on dividends is  timing.  In the short run, it'd make budgeting rather difficult because it would be difficult to estimate the year-to-year changes in taxes paid.  Of course, the same can be said about the impact of corporate inversion.  And it seems that taxing the transaction, rather than the realized gain, more than account for this.

          One big change, however, is the mechanism by which Congress disburses funds through tax credits and tax expenditures.  Now, it's tempting to say this is corporate welfare, and it is, but much of the tax credits available to business represent socially productive investments (like green technology credits, veterans hiring credits, or whatever) that Congress would have to rethink how to disburse.  This could raise liquidity issues.

          Secondly, many of the capital gains that would be paid wouldn't necessarily reflect the performance of the company but overall market trends.  This could have the result of decreasing price transparency.  A company can lose money in the short term and have its stock rise based on expectations of future growth.  If you sell the stock, you're not really paying taxes on this year's income (as there is a loss), but on future income of a company you no longer own.  A higher cap gains tax provides a disincentive to sell, which in turn, makes the stock itself less attractive.  Taxing corporations annually is on the other hand, more conceptually elegant, and avoids the sorts of problems that arise in treating a corporation like a pass through -- do we do the same for the liability shield?  (Here I note the problem with Citizens United and Hobby Lobby isn't that they treat corporations as people, but that they DON'T - they treat corporations as extensions of the owners.)

          The issue here is there are really two arguments.  One is that large corporations have access to all sorts of tax avoidance strategies that small businesses do not.  Our current system favors the large corporation.  Secondly, any income recognized and tax by a corporation can ultimately be imputed to its shareholders, and to the extent there's a windfall from tax avoidance, it the loss in taxable revenue can be recaptured.  The idea that eliminating the corporate tax can solve both problems is simplistic.

          I think it justifies a deal to lower the corporate tax rate, remove certain deductions, and do things like tax carried interest as ordinary income and introduce a Tobin tax particularly on illiquid investments.  But I think we don't want to quite go to zero, as that rewards bad behavior.  It's again simplisitc and also unnecessary.  I'd like to find a way to make up losses for corporate inversions by a specific merger or special cap gains tax, but I can't come up with a way to tax capital gains deferentially based on U.S. based activity without running into equal protection problems or creating an even bigger loophole.  Once you throw transfer pricing into the mix, it's impossible to get an accurate modeling of income by nationality.

          Difficult, difficult, lemon difficult.

          by Loge on Mon Aug 25, 2014 at 02:04:59 PM PDT

          [ Parent ]

          •  I don't think I got all of what you said .... (2+ / 0-)
            Recommended by:
            Loge, RogueOkie

            But thanks for a thought provoking response!

          •  How would this work IYO (1+ / 0-)
            Recommended by:

            "Our current system favors the large corporation."  and lets the owners off the hook in more ways than one.  So yes, tax everyone who makes a profit off of the corporation, and double the tax on people who care little about the corporation and simply play the market.  If they skim the cream, let them pay extra for it.

            But, Loge, while I agree with much of what you said, I have felt for many years that it would help a lot if we changed a few things in how we deal with businesses.  I'm curious to see what flaws you would find in the following:

            1 - Tax small business (under $xx) at a lower rate that businesses >$xx, and to encourage entrepreneurship, don't tax a new business for the first five years.  Reasoning - small businesses are the engine in the economy and they should have most favored status, however dealing with taxes is one of the major headaches in beginning a new business.  Just the form filling alone takes a huge amount of time away from the rigors of getting a business off the ground.  Give the entrepreneur an added incentive.

            2 - Get rid of the burden of health care on businesses. Period.  While single payer would solve the problem, businesses have only been saddled with HC because it began as a perk.  No other country ties HC to the employer except as a line in how the employee's paycheck should be disbursed.  (European countries have a GIRO account where one can have one's utilities, and other monthly payments deposited for withdrawal by the utility and insurance companies, much like "Bill Pay" at your bank.)

            3 - Change the way tax incentives to businesses are paid.  If you want a business to hire veterans, then let the business hire the vet at a lower wage, and give the "incentive" to the veteran to make up a decent living wage.  Businesses would still have to compete with each other for the employee, thus they would not profit by making the wage too low, but they would gain for a while by paying less.

            Limit the incentive to X years, by which time the employer would have to give the employee a decent wage or risk losing them to another business.  This would limit the risk inherent in hiring a vet who might have problems getting back into civilian society.

            Using this approach would also work with other incentives.  Give an incentive to the corporation to open a supermarket in a food desert by offsetting its local taxes with a credit to the local government.  Etc.

            Not being as well versed on taxes as you appear, I'd appreciate your thoughts or anyone else's.

            •  I agree with two and three - (0+ / 0-)

              Three could work like a matching credit, but not one.  I think as long as they have the same corporate structure, the rates have to be similar.  Now, you could do it like marginal rates on income, but I'm pretty sure that will just result in more complex corporate structures to make sure there are no big businesses, just a lot of limited partnerships who turn out to owe a lot of money to major shareholders.

              Difficult, difficult, lemon difficult.

              by Loge on Wed Aug 27, 2014 at 07:11:55 PM PDT

              [ Parent ]

        •  The profits still gets taxed in the end. (5+ / 0-)
          Recommended by:
          thanatokephaloides, lcrp, magsview, Chi, ozsea1

          Dividends, as chicagobama already pointed out, don't affect corporate taxes anyway. It's the other scenarios we'd like to have happen.

          Investing in new things is just fine, since that (at least in theory) puts money back into the economy in productive ways (paying new workforce and buying new machinery, for example.) Much of what's generated as a result will in turn generate tax revenue that otherwise wouldn't have existed (from income and sales taxes.)

          If they try to go the other routes, stock buy-backs or acquisitions, then the profits get hit twice: first by corporation paying the financial transaction tax, then by the shareholders (those who sold stock back or had stock in the acquired company) paying capital gains on the sale.

          Basically, the rich live by their capital gains income, mostly from the sale of stocks, bonds, and other financial instruments, so this is exactly the way to ensure that they pay their fair share. It also eliminates the carping about "double dipping", since now corporate profits that do anything other than return to the economy as a whole get taxed once (when they're cashed in by dividends or the sale of stock) but at a proper rate rather than the greatly reduced rates that large corporations can manage now.

          Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat. Sun Tzu The Art of War

          by Stwriley on Mon Aug 25, 2014 at 02:18:44 PM PDT

          [ Parent ]

        •  ETF wiki says: (2+ / 0-)
          Recommended by:
          roadbear, Chi
          An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, ..
          Had to look it up. Thought would share with others also not into financial jargon.

          ------T'is a take-off from a Dixie Chicks song. I'm a fan------

          by Notreadytobenice on Mon Aug 25, 2014 at 03:32:46 PM PDT

          [ Parent ]

        •  Tax dividend income at ordinary income rates (2+ / 0-)
          Recommended by:
          OldDragon, Chi

          It isn't just the capital gains rate that is unfair.  In addition, dividends from US companies are also taxed at 15% for someone who is in the 25% bracket or higher.  ("Bracket" refers to the rate at which income above the set level is taxed.  Not all income, as some think, but only income above the specified level.).  It is part of the Bush tax cut #2  and a major way rich people lower their taxes.  It needs to go so shareholders pay their fair share.  With no corporate tax the bogus "double taxation" argument disappears.

          Don't bet your future on 97% of climate scientists being wrong. Take action on climate now!

          by Mimikatz on Mon Aug 25, 2014 at 04:17:07 PM PDT

          [ Parent ]

          •  Income Is Income (1+ / 0-)
            Recommended by:

            Just tax it all according to the same schedule.  The discount for capital gains penalizes labor, which is intensifying the long-term slide in wages.  Just get rid of the separate treatment for capital gains, and yes, dividends.

        •  Then as a billionaire how would you live? (0+ / 0-)

          Clipping coupons?

        •  dividends (0+ / 0-)

          The problem now is that instead of paying dividends, the management of many companies (Google, Apple, etc.) are holding on to the cash and buying smaller companies. The shareholders are not benefiting from the companies' profits and have no control over how the profits are spent.

          Thus, they are keeping enormous amounts of money out of the economy and eliminating possible future competition. At the same time, their reinvestments in improving their products are limited.

          Maybe the first $100,000 of dividends to individuals should not be taxed for the next two years to draw down the enormous amounts of cash from these companies. This would start putting pressure on them to get rid of the cash and not enable them to keep buying up possible competition.

      •  You know.... (4+ / 0-)
        Recommended by:
        bobinson, twigg, thanatokephaloides, Chi

        We had a revolution over something like this once.


        © grover

        So if you get hit by a bus tonight, would you be satisfied with how you spent today, your last day on earth? Live like tomorrow is never guaranteed, because it's not. -- Me.

        by grover on Mon Aug 25, 2014 at 01:53:46 PM PDT

        [ Parent ]

      •  winning issue for Democrats. (35+ / 0-)

        If we put this in the platform it will attract an enormous number of small business owners who are presently voting R.

        It'll piss off speculators but we aren't going to win them anyway.  They will have to argue in favor of taxing corporations, which will be a real hoot and a half.

        GOTV as if your life depends on it, because somebody's life does.

        by G2geek on Mon Aug 25, 2014 at 12:13:30 PM PDT

        [ Parent ]

        •  You really think (7+ / 0-)

          eliminating corporate taxes and shifting an additional tax burden to individuals would be a winning position?

          •  Um YES (17+ / 0-)

            especially since the burden would be shifted to the entitled 1% like Mitt Rmoneys who piss on the 99% anyway.  Or did you really think 'trickle down' meant something else.  

            This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

            by DisNoir36 on Mon Aug 25, 2014 at 12:37:46 PM PDT

            [ Parent ]

            •  How about pension plans (2+ / 0-)
              Recommended by:
              thanatokephaloides, G2geek

              IRAs, etc.?  I understand your position if you under the impression that only the 1% would suffer this additional tax burden.

              •  Pensions and retirement accounts (7+ / 0-)

                are already tax advantaged which I can't imagine not continuing under such a plan. I don't know if a financial transaction tax would apply. It seems unlikely and would amount to a relatively small expense increase if it did. 401k accounts might be affected more than pensions due to the transaction tax but that could be fixed by using a lower or zero rate on retirement accounts. How this would work is completely dependent on how the bill is written.

                Time makes more converts than reason. Thomas Paine, Common Sense

                by VTCC73 on Mon Aug 25, 2014 at 12:54:34 PM PDT

                [ Parent ]

                •  OK (2+ / 0-)
                  Recommended by:
                  Loge, JesseCW

                  If it turns out this way (no pension tax, no IRA, etc. tax), it appears there will be much less of a revenue stream from these new taxes than Markos assumes.  Furthermore, the wealthier citizens have means to avoid falling prey to this tax except when absolutely necessary (ie, liquidity problem).  I don't see how it would work.  

                  •  Please illuminate: (1+ / 0-)
                    Recommended by:
                    Furthermore, the wealthier citizens have means to avoid falling prey to this tax except when absolutely necessary (ie, liquidity problem).
                    What means? There is a record of every trade that a broker/custodian provides to the IRS. Other than failing to claim the income (which makes one vulnerable to a tax evasion charge) I have no idea how you avoid eventually paying the capital gain. I'd ask how but I don't care because it is not worthy of the risk to me.

                    Buying and holding a stock does delay the transaction and thus the tax, capital gain or FTT, but does absolutely nothing to prevent losses through falling stock prices. The kind of wealth I think that you allude to makes far more trading and paying the tax than buying and holding. Buy and hold is for those who don't mind huge losses. I've never met that person.

                    I really think you have a basic misunderstanding of how financial investing works for those who make a living, or grow wealth, from stock and bond trading. I hear the same sort of silliness form people all the time with "I'm not working overtime. It will only make me pay more tax!" or "...put me in a higher tax bracket!" I've watched guys lose some serious money because they were afraid to part with a minor portion of their gains or worse forgo larger gains due over fear of a relatively small tax. A tax on earnings, not all of their capital!

                    Time makes more converts than reason. Thomas Paine, Common Sense

                    by VTCC73 on Mon Aug 25, 2014 at 03:12:04 PM PDT

                    [ Parent ]

                    •  "Eventually" can be a very long time. (0+ / 0-)
                      Other than failing to claim the income (which makes one vulnerable to a tax evasion charge) I have no idea how you avoid eventually paying the capital gain.
                      There's no need for outright tax evasion, you just stop making transactions.  Stock market volume could drop off a cliff.

                      And we might need another round of Teddy Roosevelt style trust busting.

                      n the past four years, the amount of money administered by South Dakota trust companies like these has tripled to $121 billion, almost all of it from out of state. The families needn’t actually move to South Dakota, or deposit their money at a local bank, or even touch down in the private jet. Little more than renting an address in Sioux Falls is required to take advantage of South Dakota’s tax-friendly trust laws.

                      -7.75 -4.67

                      "Freedom's just another word for nothing left to lose."

                      There are no Christians in foxholes.

                      by Odysseus on Mon Aug 25, 2014 at 05:42:28 PM PDT

                      [ Parent ]

                    •  Those with sufficient means (0+ / 0-)

                      could hold onto their shares until they have a liquidity problem.  No shenanigans.  

                •  Let's be clear on that point. (5+ / 0-)

                  Pensions and retirement accounts (excepting Roth IRAs) are tax-deferred accounts.  When they are drawn on or inherited, they are taxed at ordinary income rates, not capital gains rates.  

                  It would make great sense to exempt retirement accounts from a financial transaction tax.

                  "Get over it...and get out of the way." -- Gov. Steve Beshear (D-KY)

                  by mspicata on Mon Aug 25, 2014 at 01:13:41 PM PDT

                  [ Parent ]

                  •  I was addressing the additional taxes (0+ / 0-)

                    owing due to the funds' activities.  If the pensions and retirement accounts are taxed at a higher rate for their trading activities (capital gains), that would reflect an additional cost to the beneficiaries.  If pensions and retirement accounts are exempted, the pool of taxpayers would be reduced to over-the-counter and personal investment accounts.  I keep hearing that trickling sound, but I haven't quite found the exact source yet.  

                    •  Pensions and retirement accounts are exempt now. (2+ / 0-)
                      Recommended by:
                      orestes1963, ozsea1

                      Neither pays capital gains. An FTT would be a drag on growth and makes little sense for either, IMHO, although the added expense is very small to accounts that already experience very small expenses if they are properly managed.

                      I'm making an assumption here that may not be correct. Forgive me if I am wrong. I sense a knee jerk reaction to what looks to be a give away to business in general and big corporations in particular. (I'm also not sure thatyou have a solid an understanding of the elements of taxation, investment, and economic inter-workings but, again, I may be wrong.) That was my initial reaction to the post. Eliminating corporate income taxes alone would be a huge windfall to big business but this has the FTT to not only offset but increase tax revenue. It is a give and take that I think is a winner that might even be politically doable.

                      Robert Reich generally has good ideas although I am skeptical that his loyalties lie with the ordinary citizen. He does seem to strike a balance which I think this works. That is why I paused after reading this to think through how his proposal would work. My closer reading and initial analysis of it is that it is almost certainly far better for us all than the current system of corporate taxation.

                      It does several things. Repatriation of foreign earned income will likely have a considerable impact on economic growth in the US. An added benefit is it lowers the benefit large corporations have for offshoring. I don't know how much but it is probably just enough to reduce the incentives to offshore to a level where it is more cost effective for most companies to stay in the US. kos has already shown one estimate of the tax revenue benefits to a transfer to capital gains taxation instead of corporate income taxes. I think they are accurate although I'd like to see further analysis by trusted economists. There are certainly economic and tax revenue benefits to increased economic growth in the US. I think these two proposals, together, will make that possible.

                      Two points:
                      1. Both elements of the proposal must happen for this to work. The loss of either makes this a non starter economically. Politically I doubt there is any chance of getting an FTT without eliminating corporate income taxes and without the FTT the tax revenue loss is unmanageable.
                      2. This proposal needs more study and further comment by all parties.

                      Time makes more converts than reason. Thomas Paine, Common Sense

                      by VTCC73 on Mon Aug 25, 2014 at 02:17:42 PM PDT

                      [ Parent ]

                      •  I think Orestes has a different issue (2+ / 0-)
                        Recommended by:
                        orestes1963, Odysseus

                        If my 401(k) and IRA consist of individual stocks, what you're saying is largely true. I am going to mostly be buying and holding, and the transaction fees won't bite into me much at all.  Then I pay (again a small amount) when I actually draw down the funds.

                        But suppose I don't want the tsouris of picking individual stocks. I invest my retirement accounts in some managed fund - an index or a sector fund. That fund is going to be actively managed, doing very frequent trades. Now my annual returns - even though I pay nothing on them until I actually withdraw funds - stand a good chance of being decimated by transaction fees. (I am using "decimated" here in the original sense of taking a 10% haircut.)  

                        To guard against that, some sort of exception would have to be carved out. What percentage of trades on any given day are carried out by pension and retirement fund managers?

                        The real USA Patriot Act was written in 1789. It's called the Bill of Rights.

                        by nicteis on Mon Aug 25, 2014 at 02:45:09 PM PDT

                        [ Parent ]

                        •  Thanks (0+ / 0-)

                          That is the point I was trying to address- the additional taxes incurred by funds in which one is invested from investment activities.  If the funds' activities are taxed at a higher rate, that cost is ultimately borne by the investor.  If I understand VTCC73 correctly, these activities are not presently taxed, so the assumption is they would remain exempt (which makes sense).  

                          Of course, the issue extends further if, for example, a pension fund invests in a PE fund and that PE fund's capital gains are taxed at a higher rate, but I didn't want to complicate the point.  

                        •  We are saying the same thing here. (2+ / 0-)
                          Recommended by:
                          ozsea1, delver

                          The elimination of corporate taxes is dependent on a transfer to capital gains (and I strongly support an increase of capital gains rate to marginal tax rate) and implementing a FTT. Package deal or nothing.

                          I strongly support, and don't see any sane politician (OK I may have found a flaw) not supporting, an exemption to the FTT for retirement funds. That is pensions and 401k accounts. I do not really have any problem with the FTT applying to Roth IRAs but in fairness maybe they should be exempted.

                          For clarity, there are no capital gains involved in pensions and 401k funds. All of these retirement funds grow tax free until withdrawn. Pensions are taxed as ordinary (considered deferred compensation) income. Traditional IRAs are taxed as ordinary income. Roth IRAs are not taxed at all. (There are some other forms of retirement savings/accounts with which I am only passingly familiar and I can't address them.) Perhaps this is the misunderstanding, I don't know.

                          The FTT proposed is .25% of the value of the transaction. The math question of the day is how many transactions do you have to make to reduce the value of you position by, say, a 10% threshold of "decimated" that you mention? I sincerely hope the answer doesn't start a helmet fire for anyone.

                          This is a very complex subject full of misconceptions and misunderstandings. I sincerely think that is why this part of the thread has grown so long. Is it possible that the thought of someone getting something at my expense an issue because they do not fully understand the elements of the subject? I do. And I fully understand why and how this could be so.

                          Time makes more converts than reason. Thomas Paine, Common Sense

                          by VTCC73 on Mon Aug 25, 2014 at 03:33:31 PM PDT

                          [ Parent ]

                      •  Thanks (0+ / 0-)

                        I was not sure whether pension funds and retirement accounts pay capital gains on their investment activities.  That is helpful information.  Are there data to show that eliminating corporate taxes in favor of increased capital gains tax would yield higher revenues for the government?  I understand it's your position that this would have to be done in tandem with an FTT to work, but I am curious to know whether CGT alone would work.  

                        I am not a tax expert by any means (dropped the subject in law school after three very tedious classes).  

                        I do oppose this proposal because I think it is foolhardy.  Better to correct the inequities in the current system than to dismantle it entirely in the vain hope that this proposal would not ultimately result in the same mess we have today re corporate taxation.  Note that no mention is made of fixing the system as a solution.  No, the only option is to dismantle the system and hope we can create something that works more effectively.  Nothing in this diary or Reich's proposal convinces me this is a wise move.  I'd liken the underlying rationale to arguing that there is fraud in the welfare system, so let's scrap it and have the government give funds to charities to provide for the poor.  

                        •  I think we have a breakthrough. YAY! (0+ / 0-)

                          As I stated just now above:

                          For clarity, there are no capital gains involved in pensions and 401k funds. All of these retirement funds grow tax free until withdrawn. Pensions are taxed as ordinary (considered deferred compensation) income. Traditional IRAs are taxed as ordinary income. Roth IRAs are not taxed at all. (There are some other forms of retirement savings/accounts with which I am only passingly familiar and I can't address them.) Perhaps this is the misunderstanding, I don't know.
                          Again I think this thing is only workable as a package deal. Capital gains alone, even with the rate indexed to marginal tax rate, is insufficient to make up the revenue loss due to the elimination of a corporate income tax. I'm almost positive someone has or will study this if the proposal gets traction.

                          The FTT is a good idea for several reasons not the least of which is increased tax revenue. One, off the top of my head, has to do with high speed trading and the often claimed rigging of the market. Front running trades of their customers by large financial institutions has been claimed (with strong evidence of accuracy to the charge) in HST systems. I support an FTT because of the complaints of HST traders whenever an FTT discussion breaks out. They claim their margins are so thin that the FTT would eliminate any profit from HST. I see decreased opportunities for shinanigans and increased market stability as a valid reasons for an FTT all by themselves. Let me put it this way I'll gladly pay the tax as proposed.

                          Time makes more converts than reason. Thomas Paine, Common Sense

                          by VTCC73 on Mon Aug 25, 2014 at 03:48:09 PM PDT

                          [ Parent ]

                      •  An FTT is silly (0+ / 0-)

                        All it will do is dramatically reduce transaction volume by eliminating high frequency trading.  But why is that a benefit?

                        The way to offset the elimination of corporate income taxes is to tax dividends and capital gains like ordinary income.  That would be justified because they would no longer be double taxed.

                  •  Absolutely. (0+ / 0-)

                    Roth IRAs are tax exempt. They are purchased with after tax money subject to annual limits. Regardless, pensions and traditional IRAs should be exempt from the FTT to further encourage retirement saving. I can see a counterargument that a lower rate FTT on Roth IRAs to both encourage retirement investment and to dampen excessive trading. The proposed rates are so low as to be insignificant in the larger scheme of things either way.

                    Time makes more converts than reason. Thomas Paine, Common Sense

                    by VTCC73 on Mon Aug 25, 2014 at 01:41:18 PM PDT

                    [ Parent ]

              •  Do you know how 401(k)s work? (5+ / 0-)

                When I invest money in a 401(k), that money is not taxed like the rest of my paycheck.  It's a tax free investment.  But when I retire and start to pull money out, I will pay regular income tax rates. And none of those tax rates are changing.  Pensions and IRAs work the same.

                As for the extra burden, Kos said the tax would be $1 on every $400 traded.  $400 happens to be what I put into my 401(k) every two weeks, so I get taxed an extra $2 per month.  Big freakin' deal.  I'd get a raise way more than that if my corporation stopped being taxed.

                And P.S., my 401(k) manager takes $2.50 every two weeks for "record keeping".  I'm supposed to complain about $1 more?

            •  And the burden will be shifted now. Right away. (0+ / 0-)

              That would be satisfying to a lot of citizens on both sides of the aisle. I think Republicans would have a hard time not passing it. They'd get pressure from most of their constituents. Including small business owners who usually would stand to gain more than what they lose.


          •  Yep. Look at Walker's Wisconsin (5+ / 0-)

            Take Scott Walker, who is promising companies massive tax breaks in exchange for campaign contributions.  Then you get the CEOs of those companies telling the workers they have to vote Republican or they all get fired.  Or companies threatening to move to other states or other countries to get lower tax rates.

            Now look at the same situation without any corporate taxes.  There's nothing for the politicians to give away anymore.  No benefit to changing states.  The CEO was always going to vote Republican, nothing changes there.  But the workers will see a more stable economic environment, a level playing table.  And they'll also be able to vote Dem for social issues without worrying that they're taxing their own jobs.

            Plus, the tax burden has ALWAYS been on individuals.  It's individuals that support corporations by working for them and buying goods.  All the taxes a corporation pays, ALL of them, either come from paying workers less, or charging customers more.  It doesn't come out of thin air.

            •  That's just wrong (6+ / 0-)

              Of course there is more to give away.  

              We see it happen all of the time.

              They will just give them money. The corp will say that they are operating at the closest margins they can.  

              They'll say that the thin margins they operate at are so dangerous that they need subsidies to remain.  


              by otto on Mon Aug 25, 2014 at 01:06:06 PM PDT

              [ Parent ]

              •  Then it's true corporate welfare (0+ / 0-)

                You think Dems can't run on tax dollars being just given to unprofitable corporations that pay zero taxes?

                No taxes, no subsidies.  It's very simple, and capitalism takes care of the rest.

                The most government should do is provide low interest development loans.  If even that.

                Walker today can run quite effectively by campaigning to offer tax breaks.  He won't be elected dog catcher if he's promising to take the taxes collected from the people of Wisconsin and just hand it over to businesses going broke.

                •  RIght (1+ / 0-)
                  Recommended by:
                  Betty Pinson

                  You will not be able to make governments stop giving money to corps.

                  They'll say the same stuff they say now, people will buy it.


                  by otto on Mon Aug 25, 2014 at 01:17:22 PM PDT

                  [ Parent ]

                  •  Then what's the point of having taxes? (0+ / 0-)

                    What are you arguing for?  You're saying that gov't is hopelessly corrupt.  Okay, let's run with that and I'll break it down for you.

                    With a tax, all corporations are taxed.  Government takes the revenue and then the politicians dole that money out to those with the best lobbyists or those that give the politicians the most kick backs.

                    Without a tax, government takes in less revenue, and doesn't have money to give away.

                    If it's hopeless, then you should be advocating to make government as small as possible, to limit the damage it can do.

                    But I think you're wrong.  Welfare, corporate or otherwise, it highly unpopular.  No one likes giving their hard earned money away, and any corporate welfare programs will have giant bulls eyes painted on them.  Ending corporate welfare will not be the challenge you think it is.

            •  This assumes that states would also (2+ / 0-)
              Recommended by:
              Betty Pinson, VClib

              do away with their corporate taxes.  That seems unlikely.  

              •  State taxes should all be equal IMHO (1+ / 0-)
                Recommended by:

                There should be one state tax rate nationwide.  And if that rate is zero, fine by me.  Unless you enjoy having states poach jobs from one another.

                Corporations don't pay taxes.  Workers and customers do.  Robbing Peter to pay Paul doesn't get you anywhere.

                •  Well, you have a huge constitutional issue (3+ / 0-)
                  Recommended by:
                  Loge, Square Knot, VClib

                  on your hands there.  There's this little principle called federalism.  Of course, congress can do away with state taxes under the commerce clause, but that's an even bigger stretch than expecting Reich's proposal to pass.  It would be a huge upheaval for the states to have to try to find those tax revenues elsewhere.  Wonder where they'd make up the loss?  

                •  Norm - Congress can't dictate state and local (1+ / 0-)
                  Recommended by:

                  taxes. They have no constitutional authority.

                  "let's talk about that" uid 92953

                  by VClib on Tue Aug 26, 2014 at 04:39:03 AM PDT

                  [ Parent ]

                •  the problem with this idea: (0+ / 0-)

                  ... it impinges on state rights to tax their own citizens, according to their respective constitutions.

                  States will 'poach' jobs with a variety of methods, taxation forgiveness being only one.  Other methods will be Right to Work (ergo, less or no troublesome union issues), incentives to build in developing communities, access to resources at reduced rates or with less regulatory oversight, all the way down to the company logo on a brand new public venue.

                  Sadly, the companies offering these jobs are always looking for the Bigger Better Deal, and will gladly move operations to another state (or overseas) if it means they get a reduction in expenses to the tune of several million per year or more.  They don't pay their workers to relocate (that's crazy talk!) but they can move offices and associated services for less than they stand to pay by staying.

                  And yes, I had to move from a state I loved to a state I despise because my employer didn't like paying higher wages and state taxes in California.  I pay less in costs of living, and no longer have to pay state taxes.  However, I now live in a worse climate, there's less opportunity for my fave leisure activities, and the political climate is much more tarnished and biased.  I've told Mrs. Blues that we are leaving a long set of tire skidmarks as soon as I retire, back to countryside, scenery, and politics I can actually live with.

                  If your sole and entire rationale for doing something is "It's not illegal." then perhaps you should rethink doing it.

                  by dcnblues on Wed Aug 27, 2014 at 04:04:21 PM PDT

                  [ Parent ]

          •  Yes, every bit as crazy as it sounds (5+ / 0-)

            DLC, Third Way must have come up with this one.  SMH.

            Money is property, not speech. Overturn Citizens United.

            by Betty Pinson on Mon Aug 25, 2014 at 01:22:10 PM PDT

            [ Parent ]

            •  I wondered whether this was a trial balloon (2+ / 0-)
              Recommended by:
              Shahryar, Betty Pinson

              being floated by Reich.  I don't see why he would do it, but the thought crossed my mind, especially given the lack of specifics.  It seems the capital-owning class if all for it here.

            •  Third Way has been pushing for another tax holiday (5+ / 0-)

              the last tax holiday, or 'repatriation' (that term always cracks me up when used in this context), was in 2004.

              Proponents of the tax holiday, including 'centrist' Third Way and most, if not all, of the Republican politicians, tout it as a job creating event:

              Speaking at the Third Way event, Jim Rogers, the president and chief executive of Duke Energy Corp. (DUK), said the $1.3 billion his company would return to the U.S. in repatriated profits would help it to build its workforce. Rogers said Duke Energy would use repatriated funds to modernize its power generation fleet, which would create 15,000 to 20,000 jobs at his company and across the broader economy.

              But the CBPP reports that jobs are not what happens.

              ◾A tax holiday enacted in 2004 failed to produce the promised economic benefits. The evidence shows that firms mostly used the repatriated earnings not to invest in U.S. jobs or growth but for purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to their shareholders. Moreover, many firms actually laid off large numbers of U.S. workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders.
              It does sound, after reading all your comments, that increasing the tax on dividends might be an important piece of this puzzle. But any plan Eric Cantor would approve of sounds like something that needs to be very carefully considered for unintended consequences...
            •  It's New Democrat bullshit all the way, but then, (4+ / 0-)
              Recommended by:
              triv33, Nada Lemming, ozsea1, angel d

              the guy selling it endorsed a New Democrat for the Presidency three years before the contest.

              The UN should give Iraq a restraining order against the US.

              by JesseCW on Mon Aug 25, 2014 at 05:31:17 PM PDT

              [ Parent ]

          •  Yes. The rightward fringe of this site, (2+ / 0-)
            Recommended by:
            triv33, Nada Lemming

            which includes the owner, believe businesses have a right to unlimited untaxed growth, provided that profits aren't taken out of the increasing stack of wealth produced by workers.

            The UN should give Iraq a restraining order against the US.

            by JesseCW on Mon Aug 25, 2014 at 05:29:56 PM PDT

            [ Parent ]

        •  Or they, you know, (1+ / 0-)
          Recommended by:

          keep voting republican anyway.  

          The notion of reducing, but not eliminating corporate taxes, as part of a plan to close loopholes, including carried interest, is already what we're for.   But we don't get the votes unless our position becomes that small business people built the roads to their stores ("you didn't build that").

          Difficult, difficult, lemon difficult.

          by Loge on Mon Aug 25, 2014 at 02:14:16 PM PDT

          [ Parent ]

          •  Isn't 'carried interest' how Romney managed to (1+ / 0-)
            Recommended by:

            amass over $100,000,000.00 in his IRA?? Oh, silly me, that was way back in 2012, it's probably worth at least 150million now.

            Srsly, I still can't believe we all learned (some of) the dirty details of Mitt Romney's clever tax-avoidance schemes during the last election and nothing happened to stop such trickery!

            •  That's not carried interest, (2+ / 0-)
              Recommended by:
              magsview, ozsea1

              but i agree it's pretty inexplicable. It's not like he values stock for a living . ..

              He released something like the last two years of his tax returns before the election where he was aware he'd be a candidate and needed to get the rate up to a respectable, um, 13.9%.  I wanted his returns from 2008, because I'm sure he had huge losses from the crash that he used to offset income he deferred in the Caymans.  So, when Reid said there were years for which he paid no taxes, it's partly true depending on what "years" means - the years he could have paid the taxes or the years he actually did?  Let's say he paid taxes in 2006, but the income offset by deferring until he could offset them by paper losses was greater.  Did he pay taxes for 2006 or not?

              I talked to a Dem politico who thinks the big issue why he held out wasn't his tax avoidance  - a lot of voters would be like, good for him - but that his taxes would show he's a billionaire if you included the money he controls in trusts.  And if we could have hung the "B" word on him, he'd be toast.  Something about him being out of touch would have been totally automatic if you could sum it up in one word.  

              Difficult, difficult, lemon difficult.

              by Loge on Mon Aug 25, 2014 at 02:54:38 PM PDT

              [ Parent ]

            •  magsview - No, it was because of carried (0+ / 0-)

              interest, allowing the overwhelming majority of Romney's income to be taxed at long term capital gains rates, that he had such a low effective tax rate. Assets within an IRA don't pay any tax until they are distributed. My understanding is that Romney placed low cost founders shares in his IRA, and that's how it grew so substantially.

              "let's talk about that" uid 92953

              by VClib on Tue Aug 26, 2014 at 04:47:16 AM PDT

              [ Parent ]

      •  the problem now (4+ / 0-)
        Recommended by:
        orestes1963, codairem, Loge, JesseCW

        the problem is that captial gains taxes are at historic lows
        they should be increased outside of this proposal

        But what will happen is there will be a tradeoff
        No corporate taxes for capital gains back to levels of Reagan Administration.

        "Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative." - John Stuart Mill

        by smartone on Mon Aug 25, 2014 at 12:26:06 PM PDT

        [ Parent ]

        •  that's not exactly true (1+ / 0-)
          Recommended by:
          the problem is that captial gains taxes are at historic lows
          Actually, the long term capital gains tax was raised last year. For high earners it's now almost 60% higher than it was just 2 years ago. (It was slashed 25% under W's administration — but that was a smaller cut than the 29% reduction signed into law by Bill Clinton.)
          they should be increased outside of this proposal
          I agree.
        •  smartone - the current rate is 23.8% (0+ / 0-)

          for high income earners. The low was 15%, the new rate is nearly 60% higher and went into effect on 1/1/13.

          "let's talk about that" uid 92953

          by VClib on Tue Aug 26, 2014 at 04:49:23 AM PDT

          [ Parent ]

      •  Could? Or would? (2+ / 0-)
        Recommended by:
        Rex Freedom, decitect

        An if a capital gains tax were substituted for a corporate tax, would you be selling any stock this year to generate capital gains?

        Rhetorical questions, of course, but I'm detecting more than a bit of self-interest in this diary.  Can't agree with Reich that this is the best way to go forward.

        "Democrat" is a noun. "Democratic" is an adjective. "Republican" is an idiot. Illigitimi non carborundum. Regardless of Party. The license plate I want? OMG GOP WTF

        by TheOrchid on Mon Aug 25, 2014 at 12:45:26 PM PDT

        [ Parent ]

      •  I hear this from the Republicans all the time. (1+ / 0-)
        Recommended by:

        Oh well. To the victor goes the spoils.

        Money wins every time.

        This better be good. Because it is not going away.

        by DerAmi on Mon Aug 25, 2014 at 12:49:11 PM PDT

        [ Parent ]

      •  Or yu could pay yourself more ... (6+ / 0-)

        Kos: you may choose to hire more people. But the average corporation is not cash constrained in hiring -- they are demand constrained.

        I'll bet that executive pay goes up more if we implement this proposal.

      •  As a tax professor (7+ / 0-)

        I have been arguing this for years. The best thing we could do is eliminate the corporate tax, however that shortfall needs to be made up in capital gians and dividend taxes.

        One of the best aspects of this proposal is that it would drastically reduce the influence of corprations in politics. One of the main reason that they contribute is to buy tax breaks from politicians. If those taxes went away, so would the tax breaks and therefore the need to buy the politician.

        It would also free up a lot of money that corporations spend on compliance, of course the downside to this would be the loss of jobs for many accountants and support staffs.

        •  You don't think they would still lobby (1+ / 0-)
          Recommended by:

          to lower these new tax rates since the benefits would inure to their shareholders?  Or lobby to revise or do away with regulatory hurdles?  

          Wouldn't the increased capital of corporations give them greater influence over the functioning of the government?  

          Personally, I think it's silly to think that corporations would simply leave government to do its job simply because they no longer pay any taxes.  

      •   facetious (0+ / 0-)

        Does at mean I am a communist?

        I would ask though, for every punch per se, would there not be a counter punch?

        I guess what I am trying to say, will there ever be a way to make corporations pay there fair share?

        "We cannot solve our problems with the same thinking we used when we created them." -- Albert Einstein

        by lynn47 on Mon Aug 25, 2014 at 01:51:43 PM PDT

        [ Parent ]

        •  "Corporations" don't exist and aren't "people." (2+ / 0-)

          There is no such thing as a "corporation paying its fair share."  Corporations are a legal entity, but it's really people that pay the taxes.  As kos and Reich persuasively point out, the actual people who are being the burden of "corporations paying their fair share" is primarily workers, and not wealthy owners.
          There is nos some big bag rich game named "Exon" or "Halliburton" that we take taxes from.  Those entities are just collections of people.  We need to focus on which of those people actually bear the burden of the tax.  

      •  The tax on hoarding is in some respects (3+ / 0-)
        Recommended by:
        orestes1963, magsview, eltee

        the lower rate of return of cash versus whatever you'd invest it in.  It's not going to the treasury, but I think your formulation conflates "hoarding" with "stashing."  

        A good tax lawyer is no doubt one step ahead of this plan.  you don't own stocks in your name but through an offshore trust, and they create a paper loss through offshore holdings and then you have no capital gain, and no corporate tax.

        I don't see why a small rise in the cap gains tax and a transaction tax require total elimination of corporation tax.  I deal to lower nominal rate for closing a few loopholes is fine, and it's already in Obama's budgets.  

        Difficult, difficult, lemon difficult.

        by Loge on Mon Aug 25, 2014 at 02:10:40 PM PDT

        [ Parent ]

      •  We've seen this argument before (2+ / 0-)
        Recommended by:
        Nada Lemming, JesseCW
        But I could hire at least three additional people based on my expected tax burden at Daily Kos this year.
        This is an argument we've seen for cutting just about any and all taxes.  Has it really played out that way?

        If there's no demand for Kos Media's "products" beyond what there is now, you won't hire anyone no matter how much less you pay in taxes. You'll pocket it.

        Procrastination: Hard work often pays off after time, but laziness always pays off now.

        by Linnaeus on Mon Aug 25, 2014 at 03:12:39 PM PDT

        [ Parent ]

        •  that's not the way it usually works (2+ / 0-)
          Recommended by:
          VClib, Beelzebubs Brass Bs
          If there's no demand for Kos Media's "products" beyond what there is now, you won't hire anyone no matter how much less you pay in taxes. You'll pocket it.
          But what if there is demand? What if you could develop new products to attract new customers or charge existing customers more, if only you could afford to hire people to create them?

          I own a small but growing company. I could grow faster if I could hire people to work on developing new lines of business. But the more people I hire, the more cash cushion I need in the bank as a hedge against recessions and missteps (e.g., if I miscalculate how many new people I should have hired, or a new product turns out to be a giant failure, etc.). When the government takes 30%+ of the company's net profits, that makes it harder to build cash reserves, which means I can't hire as many people and I have to be more cautious in trying to grow the business than perhaps I'd like to be.

          I don't pay myself nearly as much as I could, but I pay myself more than I would otherwise because, hey, I might as well. My personal tax rate isn't significantly higher than my corporate tax rate; the money's going to the government either way. On the other hand, if I could leave the money in the company and not be taxed (right away), then I would do that, and I would feel more comfortable hiring new people and expanding, and I would do that too.

          There are other constraints on growth and hiring (e.g., it's not especially easy to find good candidates to hire), but for many small businesses lack of capital is the biggest one.

          For huge businesses with billions in cash already on hand that's not necessarily true. E.g., Apple's not going to go on a hiring spree or invest billions in new businesses if they're allowed to repatriate profits — they already have tens of billions in their domestic cash horde that they're not spending in that way. But, Apple and other megacorporations do spend tons of money on dividends, which are taxable, and on stock buybacks, which helps pensions, endowments, individual shareholders, etc., and when those entities sell stock and distribute proceeds there are taxes collected and there is money pumped into the domestic economy.


          •  being tax free is not a new math theory (0+ / 0-)

            You can still miscalculate demand. And you will. You will still need some cushioning. Being tax free will only help you in year'll be a one time bonanza. It's not a get out of planning card. You will still need a calculator. It's no guarantee of anything except more businesses will have more money in that first year. If they weren't big on hiring or reinvesting before I doubt very much they d suddenly start. However, I would predict a resurgence of what we used to call executive cars, clubs, vacations. They will find a way to consume the extra money without hiring more people and without increasing their personal tax liability. Bet on it. That was how they survived high tax rates in the 50s and 60s.

      •  Yes, cut taxes for "Job Creators" and let them (3+ / 0-)
        Recommended by:
        triv33, Nada Lemming, Hamlets Father

        amass more wealth tax-free.

        As if the labor provided by those workers won't increase your personal wealth?    As if their work won't add to value of your company?

        You're just arguing that you should be permitted to grow as big a stack as possible without ever actually having to pay anything back to the society that made that accumulation possible.

        Because you're a "Job Creator", or modern nobility, and your right to endlessly increase your holdings should never be infringed just to feed poor kids.

        The UN should give Iraq a restraining order against the US.

        by JesseCW on Mon Aug 25, 2014 at 05:28:29 PM PDT

        [ Parent ]

      •  sounds like a one shot deal then (0+ / 0-)

        When I owned a business I spent all my equipment and office supply money at the end of the year. If it looked like I was going to make a profit I would hire someone sometime in October, often part time. It helped having a dad who was an accountant. However, since I was always shoestringing it, I had to be careful and plan.

        What you're asking for is no tax liability this year at all so you can hire more people. What happens next year then? And the year after? At what point will you stop hiring? What would you do with your profits then? I'm thinking you would certainly never go public...

        Business owners, even small ones, can already limit their taxes by hiring and investing in equipment, supplies, etc. Sure they could use a year where they didn't have to plan ahead or predict their year-end profits...However, I don't see not taxing businesses as a long term motivation to do what they should already be doing. What am I missing here?

        We've made the argument, backed by evidence, that taxes big or small do not factor into a company's long term hiring strategies. Demand does. If you were making so much money that you could only increase and keep it coming by hiring another would do so. And you'd get to deduct that person's salary and benefits from your tax liability.

        Are you also by chance suggesting that businesses shouldn't have to pay their current portion of the payroll tax? If that double whammy has to be paid by individuals then that won't help demand at all. Nor would most here find favor with that. Personally I consider my employers contribution to my unemployment insurance and my medical premiums part of my compensation. So now you'd be talking about taking money away from your employees, not the government.

    •  Sounds like a much better idea (6+ / 0-)

      Its always easier to cut or eliminate a tax than to raise or reinstate it.

      Let's be realistic. If we switch to reliance on capital gains tax, corrupt corporations will simply spend money on Congress to create loopholes and cuts in that system.  We all know the majority of DC pols of both parties are willing to help tax avoiding corporations in any way they can.  Its happened before with capital gains taxes.

      So several years down the road, when that system is reduced to rubble, where do we turn? If you think any DC pol would vote to reinstate corporate income taxes, you're crazy.

      No doubt Reich has good intentions, but he's being incredibly naive here.

      Eliminate corporate taxes? Hell, no.  

      Money is property, not speech. Overturn Citizens United.

      by Betty Pinson on Mon Aug 25, 2014 at 01:20:09 PM PDT

      [ Parent ]

      •  Hell, all it would take (1+ / 0-)
        Recommended by:
        Betty Pinson

        is the constant drumbeat of lowering the capital gains tax.  Eventually the right confluence of events (a neoliberal Dem or any republican government) would grant their wish.  

        Since neither Reich nor Kos provide any data to show the increase in revenues under this plan (Kos claims, with nothing, that they "would dramatically surpass" current revenues- it's Christmas for everyone!), it's impossible to give it any credence.  

        •  They could do it tomorrow (2+ / 0-)
          Recommended by:
          orestes1963, charliehall2

          Or anytime. There's only a small handful of Dems in DC (none in the WH) who would try to stop it.

          They could introduce it and pass it under the media radar, as they already do with lots of corporate legislation.

          After Citizens United and media deregulation, they dont even have to wait for a lame duck session.

          Money is property, not speech. Overturn Citizens United.

          by Betty Pinson on Mon Aug 25, 2014 at 02:48:15 PM PDT

          [ Parent ]

    •  They would figure a way to get out of it (0+ / 0-)

      On one hand most large corporations pay nothing or almost nothing. The latest figure for average corporate tax is 12.6% though most business always cry and whine that it's the 35% that they should be paying.

      O.K. on the other hand. I worry that if we increase the capitol gains tax to compensate these bastards will figure out a way of dodging that and the tax burden will fall once again on the (disappearing) middle class and the poor like it always does. I say do this:

      1) Lower corporate taxes to 0 for the small and medium sized business.

      2) On paper set the tax for larger corporations at 5% which in reality would translate into 1 or 2% or less. They will still bitch and threaten to leave the country.

      3) Let them leave and then either put an extremely high tariff on their goods and services or just out and out ban their products. Why do this? It would cut down or completely eliminate the stranglehold large monopolistic corporations have on the smaller business thus letting the smaller businesses expand. That would increase employment here and give us more diversity.

    •  Well If "Corporationa are people too" (0+ / 0-)

      Then they should pay a tax on their earnings separate from the CEO"S, and the "Owners (CEO"S) should pay tax on their earnings separately as well, If not Then tell Corporations to stop Benin people if they do not want to pay taxes.

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