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

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  •  The root of the problem is in business ethics (11+ / 0-)

    These corpoations today will get around any kind of tax--you tax capital gains?  They'll manipulate the system to report those gains as something else.  And they'll act as if they were just looking out for the best interests of their shareholders.

    Once upon a time, FDR relied on the likes of Goldman Sachs, GE, GM, etc. which he believed were being led by patriotic CEOs who gave a damn about what happened in the US beyond profits.  He talked about ethics in business, not minding someone who wanted to make a profit, but loathed those seeking profits at all costs (this according to Frances Perkins).  He believed in a concept of decency in business and government that would be scorned as naive do-gooderism today.

    I'm not sure how to fix this.  We can imagine all of the punitive ways in which to beat up the bad guys, but how do you create more good guys in the business world?  

    Perhaps starting with a reform of the business schools would be a beginning.  

    Also, ending the quarterly reports might help in generating more long-term thinking/planning.

    To be free and just depends on us. Victor Hugo.

    by dizzydean on Mon Aug 25, 2014 at 11:56:51 AM PDT

    •  Corporations (18+ / 0-)

      wouldn't have to get around any taxes, because they'd have none to pay. That's kinda the point. Put the burden on individuals.

      And by the way, the corporate tax was only 9 percent of US revenue in 2010. So the burden is already on individuals. Let's just shift it on to the individuals who are most profiting from the system.

      •  I'm guessing then that the individuals impacted (8+ / 0-)

        by this would go along with it?

        BTW, have you read this from the EPI?  http://www.epi.org/...

        Gravelle and Hungerford (2008, 422) note that if there were no corporate tax, “high-income individuals could channel funds into corporations and, with a large part of earnings retained, obtain lower tax rates than if they operated in partnership or proprietorship form.”

        To be free and just depends on us. Victor Hugo.

        by dizzydean on Mon Aug 25, 2014 at 12:16:16 PM PDT

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        •  We should encourage investing in business (4+ / 0-)

          If a high income CEO wants to, instead of taking cash out at a high tax rate, invest in his business (channel funds into the corp), then yes he will get a lower tax rate.  Because he's getting a lower salary.

          But that money invested in the business can pay for a new round of R&D.  Engineers, manufacturing, a new product, a new invention.

          Do you want wind turbines and solar panels?  Do you want clean energy, clean tech?  Then you do want high-income individuals channeling their funds into corporations, investing.

          Instead of taking the cash out and stashing it in the Caymans, where it does nothing to grow the economy.

        •  The difference (0+ / 0-)

          with these ideas is that it taxes financial investment while encouraging economic investment. (Understanding the differences in the financial and economic investment is crucial to seeing how this is a benefit for everyone. You can use the google to find a very good explanation from Krugman.) It both taxes hording and encourages spending which grows the economy. kos has already shown the tax revenue rational for this idea in his update. That is only one side of the equation. Increased business spending, whether for equipment or by hiring more staff,  generally creates a taxable event for someone, many someone usually, downstream. On the contrary, taxing business income gets one bite at income that isn't hidden through game playing with tax avoidance schemes.

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

          by VTCC73 on Mon Aug 25, 2014 at 01:26:12 PM PDT

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        •  They might not go along with it... (0+ / 0-)

          but we do outnumber them.  

          Nobody deserves poverty.

          by nominalize on Mon Aug 25, 2014 at 02:42:37 PM PDT

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      •  this also affects "corporate personhood." (6+ / 0-)

        By locating the profit and taxation in the natural persons who are the owners, this takes away a piece of the set of conditions that combine to create the kind of "corporate personhood" that has been the subject of much abuse including "corporate religion."  

        The corporation should be thought of as a vehicle through which a group of owners conduct business.  Doing so would also subtly shift the "corporate religion" debate to the question of whether an owner's freedom of religion rights trump those of an employee.  

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

        by G2geek on Mon Aug 25, 2014 at 12:25:01 PM PDT

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        •  How so? (3+ / 0-)
          Recommended by:
          FG, Square Knot, G2geek

          The corporate identity and its functioning wouldn't change in the least.  What is the analysis to support the claim that eliminating corporate taxes would change the character of the corporation?

          •  two things: (0+ / 0-)

            1)  It would contribute to a cultural effect, indirectly and in the background.

            Right now, "corporations pay taxes just like people do."

            Culturally, paying taxes is associated with voting and political participation.  "I'm a taxpayer, so...."

            Culturally, we associate non-taxable status with nonprofits (churches, universities, charitable groups, scientific institutes, etc.) that are also forbidden to engage in overt political activity.  The fact that certain rightwing religious organizations claim tax exemption and engage in politics does not change this: they are largely seen as cheating, if people pay attention to what they're doing.

            Therefore:

            2)  We can legitimately tie non-politicking to eliminating taxes.  In fact we can do it with a voluntary provision:  the Board of Directors of a corporation can choose to a) continue to pay taxes and engage in political activity as a corporation, or b) get tax exempt status in exchange for not engaging in political activity.  

            You can be quite sure that the vast majority of Boards will choose (b) and thereby take themselves out of the political arena.  Their owners would still be free to politic around as individuals, but there would not be concentrated corporate money as such going into politics.

            And:

            3)  Individuals and corporations could still make pre-tax (tax exempt) donations to nonprofit organizations of whatever kind, so this would not affect universities, charities, etc.

            4)  Also as a cultural effect, contributes to the idea that the corporation is a vehicle for the owners to do business, and the locus of agency is with the owners as a collectivity of natural persons.  

            I'll admit I'm not doing a very good job of expressing this at the moment, but all of this is new and will take a while to work out the reasoning in detail (and discover if some of it is fatally flawed in some way, or not).

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

            by G2geek on Mon Aug 25, 2014 at 07:50:44 PM PDT

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    •  dizzy - you don't seem to understand the proposal (1+ / 0-)
      Recommended by:
      OCLefty

      corporations don't routinely pay capital gains taxes because they are operating entities, not holders of assets for sale. From time to time corporations do sell assets and if there was a gain they would owe capital gains taxes, but the elimination of the corporate income tax would end the practice of being creative to escape US corporate income taxes. There would be none.

      "let's talk about that" uid 92953

      by VClib on Mon Aug 25, 2014 at 01:09:44 PM PDT

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      •  No, I get it. Re-read what I said in my two (0+ / 0-)

        posts.  There are too many loopholes for high income individuals who would be affected by the capital gains tax increase to make up for the loss of revenue.  Meanwhile, we'd be greasing the skids for the corporations....

        I also have a problem with resolving an issue of avoidance/malfeasance by getting rid of the rules by which said avoidance/malfeasance was taking place....

        To be free and just depends on us. Victor Hugo.

        by dizzydean on Mon Aug 25, 2014 at 04:03:10 PM PDT

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        •  Post the Tax Reform Act of 1986 there are (1+ / 0-)
          Recommended by:
          Odysseus

          few "loopholes" for high income individuals. People like Mitt Romney and Warren Buffet are unusual cases regarding their ability to pay very low effective federal income tax rates and they pay capital gains taxes. What we will see is people borrowing using appreciated capital assets as collateral. That allows you to escape high capital gains tax rates while you are alive, however, Uncle comes calling at estate tax time.

          "let's talk about that" uid 92953

          by VClib on Mon Aug 25, 2014 at 04:08:57 PM PDT

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      •  Actually (1+ / 0-)
        Recommended by:
        VClib

        C Corporations don't actually pay the capital gains tax rate.  It only applies to individuals.  C Corps pay the ordinary income tax for corporations on their capital gains, just to be clear.

    •  Also Citizens United and underground lobbying (1+ / 0-)
      Recommended by:
      dizzydean

      Which both have resulted in massive government corruption and the near-complete undermining of average citizens to influence their government.

      We're living with widespread corruption in the US, the likes of whivh we haven't seen since the post Civil War era.

      Sorry, no, I'm not going to grease the skids for the race to the bottom.

      Money is property, not speech. Overturn Citizens United.

      by Betty Pinson on Mon Aug 25, 2014 at 02:16:02 PM PDT

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