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View Diary: Rep. Paul Broun: "Corporate tax rates should be zero" (42 comments)

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  •  I"ll grant them a zero tax rate (6+ / 0-)

    if they can have no accumulated earnings, executive pay is capped, shareholder dividends can't be more than 3% of gross earnings, they pay 100% of all worker's and families medical care, they pay into pension funds that can't own their own stocks and cannot be lent or used by the corporation, they pay into unemployment funds that cover full cost of a worker's salary until the worker obtains full time work at or above the salary paid at the company, they provide full salary disability to all workers who can no longer work for medical reasons prior to retirement age when they get their company funded pension, they pay to local government 100% of the cost of all road, sewer, water, police, fire protection, etc. as an annual user fee in addition to property taxes, etc., they pay into public victim funds for environmental pollution caused by their operations, product liability funds for victims of product misdesign, manufacturing deficiencies, etc., they aren't allowed to offshore jobs wihtout lifetime compensation to affected employees, they pay a security excise fee to fund the military that protects their resources, shipping, overseas markets, etc..

    In other words, when they cover their costs to society, they can avoid taxes.  Until then, they need to pay for their government benefits by that little thing called taxes.

    •  What's wrong with accumulated earnings? (0+ / 0-)

      So you're saying that GM for example, shouldn't be able to save up the profits from selling this year's cars to pay for the R&D for the next gen of hybrids?

      Where do expect engineering and new product development budgets to come from if corporations aren't allowed to save?  You're asking for zero investment in the future.

      •  because it can cause cash hoarding (2+ / 0-)
        Recommended by:
        JeffW, Larsstephens

        if they want to have capital savings accounts, subject to strict rules about withdrawal, required withdrawals if they reach a certain percentage of earnings or net worth, etc.

        We want to encourage money spent on growth and production, sitting on cash is happening right now, tying up about a trillion that isn't growing production, investment in new production capability, being paid to workers or paid to shareholders, but is fueling another bubble in financial assets and speculaton in markets as they seek to make money with their cash that has no useful place to go.

        So no accumulated earnings that escape being useful.  Plus what they will be socking away to actually pay workers and provide benefits will probably provide a much more useful place for their cash and they won't have such big profits.  Its time government stops subsidizing profits to business that don't flow back to society at large.

        A large portion of American business lives this way, most small enterprises, ie, real small businesses, are set up on some form of flow through taxation, so the company is taxed on any earnings over deductible costs, as it is now.  The C corporation accumulated earnings in big companies is different than how most enterprises actually work.  The big guys get treated like the rest of us for a change.

        •  Then reform the financial rules (1+ / 0-)
          Recommended by:
          DaleA

          Raise capital gains taxes on the speculative trading to reign in those parasitic activities.  Fix the disease, not the symptom.

          But I'm telling you, if you start passing legislation stating that a company can't save money because they're "hoarding cash", then #1 you will see zero investment in new technologies, and #2 you will see companies fleeing this country for somewhere else.

          You want green energy?  Well sometimes it takes close to a Billion dollars to do a successful project.  That money has to be saved first.  So who decides how much is hording, and how much is saving for a big project?

          •  companies (0+ / 0-)

            frequently go to the bond market for really big projects, so projects will get done.

            If you're actually saving for a big project, you've already done the work, you'll have identified a project, put together some costing numbers, identified interim goals, acquisitions, hiring, professional fees, etc., and you can save based on that, and have a penalty if you don't spend the money as planned, never begin the project, etc.

            And again, lots of people grow companies without being able to shelter income if they don't spend it currently, we always talk about small business being an economic engine, is that a lie?

            Use it or lose it.  If a company can't find something productive to do currently with money, it probably doesn't need the money and someone else will use it more productively.  There are actually accumulated earnings tax penalities in current law.  It makes no sense to allow a corporation being given a tax break to produce economic activity that increase GDP and employment to shelter cash in excessive retained profits.

          •  Companies in the business of stock trading (0+ / 0-)

            don't get CG treatment on gains because the stock is deemed inventory, and thus not qualifying as a capital asset.

            My Karma just ran over your Dogma

            by FoundingFatherDAR on Wed Jan 26, 2011 at 03:05:33 PM PST

            [ Parent ]

        •  Tax law already has Accumulated Earnings Tax. (0+ / 0-)

          How much that is enforced is a question.  And cash on hand could be from borrowing, not all profit.

          My Karma just ran over your Dogma

          by FoundingFatherDAR on Wed Jan 26, 2011 at 03:07:23 PM PST

          [ Parent ]

    •  And property taxes would never go to zero (2+ / 0-)
      Recommended by:
      DaleA, JeffW

      The conversation is about an income tax rate for corporations.  They will still have to pay a property tax for the land they sit on, to cover local infrastructure.

      But if it was done right, trading corporate income taxes for executive income taxes would encourage companies to hire and invest in new products, to produce new wealth with their profits instead of just giving it to the executives to be taxed and pissed away on private jets and such.

    •  Agree but we also need elimination (0+ / 0-)

      of the capital gains preference and raising the individual income tax rates to what they were in 1965 ajusted for inflation. Haven't run all the numbers yet but we would recoup all the lost revenue from the corporate tax elimination plus a whole lot more.

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