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This photo of the illuminated General Electric sign on top of the company's headquarters in Schenectady, N.Y., was taken on May 30, 2009.
GE is sitting on over $100 billion in profits overseas, afraid to pay US taxes on that haul.
I'll let Robert Reich make the argument.
It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America.

Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices.

Pretty simple. Right now, large American companies are slow to repatriate profits made overseas, because they are not taxed on those profits until they do so. As a result, you have companies like GE and Apple with over $100 billion parked offshore. Overall, U.S. companies are sitting on an estimated $2.1 trillion in offshored profits.

Eliminating the corporate tax would remove the disincentive for those companies to bring that money home, creating one hell of a stimulus package for the country.

However, this isn't about free money for the corporatists. Fact is, the big companies are good at avoiding taxes by playing offshore finance games, while small businesses end up paying higher tax rates. Aside from the matter of fairness, it's poor economics, as those small businesses—the driver of most job creation in our economy—could use that tax money to invest in new employees and equipment.

But of course, this isn't an effort to starve government, it's to move the tax burden on those who can actually afford it—tax capital gains at the same levels (if not higher!) than regular income. Tax financial transactions, such as stock trades. Put the burden on the shareholders, not on the companies themselves. If those shareholders want to avoid the extra tax burden, then they can spend excess profits on new staff, on new equipment, on higher salaries for their employees. And if they'd rather bleed their employees dry with substandard wages to hoard profits, well then, they can pay for it on the capital gains side.

The real job creators get to create jobs, those sitting pretty on profits get to pay the taxes. Seems like a great deal to me.

Update: More:

For example, a tax of $1 on every $400 of stocks traded (0.25%; one-quarter of one percent) and $1 on every $800 of currency and debt trading including derivatives (0.125%, one-eighth of one percent). This fee (tax) would have raised between $750 billion and $1.2 trillion during each of the past five years (2005 – 2009).
The entire amount raised by the federal corporate income tax, in 2010, was $198 billion. A financial transaction tax, even a tiny one, wouldn't just make up the lost revenue from lost business taxes, it would dramatically surpass them.

Originally posted to kos on Mon Aug 25, 2014 at 11:28 AM PDT.

Also republished by Daily Kos.

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  •  Tip Jar (209+ / 0-)
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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.

  •  This is a Popular Opinion Among Economists (31+ / 0-)

    ...on both ends of the political Spectrum... though it's a tough sell here.  When I heard BK was moving to Canada I actually thought about eliminating the corporate tax...  mainly because NOBODY moves to CANADA to save money on their Taxes, and if BK is, then there must be something broken on our end.

    •  It's all about leverage (3+ / 0-)

      And corporations have options, so the government has lost it's ability to collect taxes from corporations.  It's only option is to tax individuals (more the European approach).

      West. No further west. All sea. --Robert Grenier

      by Nicolas Fouquet on Mon Aug 25, 2014 at 12:29:29 PM PDT

      [ Parent ]

      •  The government hasn't lost it's ability to tax (1+ / 0-)
        Recommended by:

        corporations. The government give it away.

        That said, if we can design a system that is at least revenue neutral, perhaps we can leverage a couple of other things.

        Since corporations wouldn't be paying any tax, there should be an absolute prohibition on lobbying and any and all political activity.

        We're also going to need to narrow our definition of corporate personhood.

        No representation without taxation!

        I'm a Vietnam Era vet. I'm also an Erma Bombeck Era vet. When cussing me out and calling me names please indicate which vet you would like to respond to your world changing thoughts.

        by Just Bob on Mon Aug 25, 2014 at 01:24:37 PM PDT

        [ Parent ]

  •  O.o (13+ / 0-)
    Eliminating the corporate tax would remove the disincentive for those companies to bring that money home, creating one hell of a stimulus package for the country.
    Is that how that works?

    Dawkins is to atheism as Rand is to personal responsibility. Russia Today=FoxNews, Seralini=Wakefield. yadda yadda.

    by terrypinder on Mon Aug 25, 2014 at 11:34:14 AM PDT

  •  There'd be quite a bit of base erosion, I'd thi... (22+ / 0-)

    There'd be quite a bit of base erosion, I'd think, since so many shareholdes are exempt pensions and retirement plans. It'd be interesting to see the math on that.

  •  Yus, all in on that! (8+ / 0-)

    Tax on transactions!

    Move Single Payer Forward? Join 18,000 Doctors of PNHP and 185,000 member National Nurses United

    by divineorder on Mon Aug 25, 2014 at 11:35:37 AM PDT

  •  So instead of having $100B in offshore accounts (16+ / 0-)

    not distributed to their shareholders Apple would have $100B in US accounts sitting there not distributed to their shareholders.

    Nothing really changes at one level.

  •  I understand the reasoning here... (20+ / 0-)

    Also, we need corporate tax reform that reflects the reality of an international economy. I have a lot of respect for Robert Reich...

    I still favor Ralph Gomory's corporate tax reform plan to tax corporations by value added per U.S. employee. A company that puts jobs in the U.S. and pays a fair wage and health benefits would pay little or no tax. A company that doesn't and sends jobs offshore would pay a very high tax.

    This can be found - here.  

    •  Gomory's plan sounds good if (2+ / 0-)
      Recommended by:
      joedemocrat, ceebee7

      We could keep the legislation from being manipulated by those with the most influence (big corporations and their lobbyists).  Our current system seems to always end up, over time, distorting legislation to benefit those who can buy influence - and this is typically done with very little public knowledge or oversight.

      Anyway, it definitely sounds like an even better approach if we could get there.  If not, the simpler solution proposed in this diary is probably more likely to be effective.

      Still trying to figure it all out

      by CindyV on Mon Aug 25, 2014 at 12:59:38 PM PDT

      [ Parent ]

  •  No (11+ / 0-)

    Among other things, taxing capital gains and dividends of shareholders would put the portion of corporate income that is attributable to tax-exempt shareholders beyond taxation.  In addition, the tax rate of non-exempt shareholders varies, so it doesn't tax the footprint of the corporation--it taxes the footprint of the shareholder.

    "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

    by Old Left Good Left on Mon Aug 25, 2014 at 11:38:02 AM PDT

    •  tax-exempt shareholders? (3+ / 0-)

      Elaborate, please.

      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals."—Barack Obama

      by HeyMikey on Mon Aug 25, 2014 at 11:53:31 AM PDT

      [ Parent ]

      •  Maybe if you held shares of stock within (3+ / 0-)
        Recommended by:
        Smoh, kharma, maybeeso in michigan

        Roth IRA?  

         ? ? ?   I dunno, I'm thinking...

        "The law is meant to be my servant and not my master, still less my torturer and my murderer." -- James Baldwin. July 11, 1966.

        by YucatanMan on Mon Aug 25, 2014 at 11:57:50 AM PDT

        [ Parent ]

        •  You'd be taxed (12+ / 0-)

          on the transaction themselves. They'd be as exempt as they would be from paying sales taxes, which is to say, not exempt at all.

          •  Please explain (3+ / 0-)
            Recommended by:
            Betty Pinson, JesseCW, Square Knot

            Your diary advocates for the elimination of the corporate income tax and an increase in capital gains taxes.  Tax-exempts don't pay capital gains taxes.

            "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

            by Old Left Good Left on Mon Aug 25, 2014 at 12:55:13 PM PDT

            [ Parent ]

            •  They instead pay income tax (0+ / 0-)

              upon withdrawal. Pay it now or pay it later but it would be more likely to be paid at all under this idea.

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

              by VTCC73 on Mon Aug 25, 2014 at 01:02:36 PM PDT

              [ Parent ]

              •  So (3+ / 0-)

                We'll replace current corporate taxation of say, Exxon, with future taxation of retirees--say, teachers.  Deferral and lower rates--anyone else see a problem with that?

                "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

                by Old Left Good Left on Mon Aug 25, 2014 at 01:12:15 PM PDT

                [ Parent ]

                •  There is no added taxation for the average person. (2+ / 0-)
                  Recommended by:
                  OCLefty, Alumbrados

                  Please explain how you see one.

                  I have been very fortunate to be one of those who earned a very generous pension and built a significant 401k as an airline pilot at a unionized airline. Corporate fucks stole a decent part of my pension and reduced my ability to fund my 401k in the later years of my working life. The same fucks took damn near everything from many of my peers at my and other airlines. I wouldn't piss on any of them if they were on fire. I sure as hell won't support anything that gives them more.

                   Now that I have that out of the way, this proposal on first analysis seems to fix many of the problems in our tax code, increases tax revenue, and encourages economic growth. First analysis. I want business, government, and trusted economists  to study and weigh in on these proposals before I go all in on supporting it. The thing I do not see is any downside to how I continue to fund my continued retirement. Further, I don't see how it will affect future retirees whether they have as generous a pension or retirement savings or not. Instead I see a strong probability of increased economic growth that will benefit everyone although not equally. Regrettably, that is a feature of American capitalism. I will change my mind on the proposal if it was detrimental to securing a retirement for any of us. What I won't do is allow ideology or my distaste for corporations or my history get in the way of objectively analyzing a comprehensive proposal to help all of us.

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

                  by VTCC73 on Mon Aug 25, 2014 at 02:39:04 PM PDT

                  [ Parent ]

        •  Capital gains do not apply to IRAs (0+ / 0-)

          So there would be a some gains that would be exempt from this type of tax.  But when the IRA money is later used, it is taxed at the normal income rate already.

          Roth IRA funds are not taxed when they are withdrawn because the money put into them was taxed.  I've heard rumors that Roth IRAs may be killed off (supposedly being considered off and on for the past few years).

          Because IRA contributions are fairly limited (maximum contribution per person per year limits) this only affects a portion of investments.  So, shareholders with more money than they can tuck into an IRA due to limitations allowed per year will pay capital gains.  This means the folks with the most money invested will notice this most.  The small IRA investors will not.

          Still trying to figure it all out

          by CindyV on Mon Aug 25, 2014 at 01:12:24 PM PDT

          [ Parent ]

        •  There are limits on Roth IRAs. (1+ / 0-)
          Recommended by:

          You can't just load them up with as much untaxed money as you wish.

          If the GOP were to take the Senate this year, there may be a lot of pressure to increase those limits. But the GOP likes to spend money as much as it likes to cut taxes. So it's not going to raise those limits, because ultimately IRAs are still for the hoi polloi who don't have family money and funds stashed overseas, that is, the real Republican base.

          © 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 02:17:17 PM PDT

          [ Parent ]

      •  Pension plans, primarily (0+ / 0-)

        "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

        by Old Left Good Left on Mon Aug 25, 2014 at 12:49:31 PM PDT

        [ Parent ]

      •  They'll be tax exempt after Phase 2 (3+ / 0-)
        Recommended by:
        orestes1963, Nada Lemming, JesseCW

        Of this strategy, the second phase being bribing Congress and the WH to get rid of the capital gains tax.

        Oy. Think, people. Think.

        Money is property, not speech. Overturn Citizens United.

        by Betty Pinson on Mon Aug 25, 2014 at 01:47:13 PM PDT

        [ Parent ]

  •  Proposal makes a lot of sense! (14+ / 0-)

    Inversion is the new tax dodge for AMERICAN corps that made their money and now want to avoid paying fair share to sustain democracy. Small companies do bear the brunt of job creation, employment taxes and ultimately income taxes because they cannot offshore income easily. It burns me up every time I think about David C Johnston's revelation that utilities, famously are owned by foreign entities, who then  loan AM based businesses operating funds and then charge exorbitant high interest rates to reduce AMERICAN income taxes. Where ever there is a law to curtail criminality, there is a criminal that can outsmart the system for a little while. THE USA just has to keep making it harder for the criminals to bilk and cheat Am wkers/taxpayers.

    An EGG is not a person, A corporation is not a person!

    by CarmanK on Mon Aug 25, 2014 at 11:43:31 AM PDT

  •  Capitalism Doesn't Work (8+ / 0-)

    The few people who control the capital will keep rigging the system in their favor.

    "Things are not as they appear to be, nor are they otherwise." - Buddha

    by US Blues on Mon Aug 25, 2014 at 11:49:58 AM PDT

    •  It's a constant battle (2+ / 0-)

      But does no good to just give up.  There is no easy way to just jump to some other proven system.

      We need to all keep our oars in the water and not just give up and let the current take us wherever it will.  Best to keep trying to right the only boat we have.

      Still trying to figure it all out

      by CindyV on Mon Aug 25, 2014 at 01:22:28 PM PDT

      [ Parent ]

  •  Once You Accept the Conservative Worldview That (5+ / 0-)

    taxes are purely to raise revenue, sure, numerically this makes great sense.

    I have no doubt that it will meet approval of our developing leadership, the youngest 3 generations who have never seen an American people not-in-decline.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Aug 25, 2014 at 11:50:17 AM PDT

  •  Sure, because nobody has ever managed to avoid (8+ / 0-)

    the capital gains tax.

    If it were stupid people writing this drek, who would care? But when the people making these proposals are neither stupid, nor ignorant of how things actually work, it causes me to question their motives.

    You really want to eliminate taxing profits? Scraping the whole tax code and replacing it with a financial transaction tax/fee would work, but we all know that isn't going to happen just as we all know why it won't.

    "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

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

    •  Kos Kind of Does a Pivot at the End There (19+ / 0-)

      I agree that the "capital gains" portion of this is kind of an eye-roller.  But a .25% financial transactions tax (FTT) is another story.  It would be like a Sales Tax on stocks... the only way to get around paying it would be to never buy or sell one.

      •  Yes, thank you. I missed that. n/t (0+ / 0-)

        "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

        by Greyhound on Mon Aug 25, 2014 at 12:46:08 PM PDT

        [ Parent ]

      •  Unless (0+ / 0-)

        The corporation took their savings and invested it in the proper congress, then they could just cut that tax.

        They'll just start whittling it down.


        by otto on Mon Aug 25, 2014 at 01:14:08 PM PDT

        [ Parent ]

      •  It's a blatant False Choice. One in no way leads (1+ / 0-)
        Recommended by:

        logically to the other.

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

        by JesseCW on Mon Aug 25, 2014 at 05:48:59 PM PDT

        [ Parent ]

        •  It Would Be a False Choice (0+ / 0-)

          If anyone here were suggesting you must have one or the other... which is sort of the dictionary definition of what a "false choice" is.

          I have not seen anyone say that, however.

          What I have seen is several people suggesting that they think revenues would increase if the current corporate income tax structure were replaced with either a higher capital gains tax with fewer loopholes (which Kos suggests at the beginning of the diary) OR a financial transactions tax (which he suggests at the end).

          Having an opinion that raising money through one form of tax is superior to raising it through another isn't a false choice at all... it's just an opinion.  :)

    •  Kos's & Robert Reich's motives? Compared to what? (15+ / 0-)

      If you're so easily ready to question Kos's & Robert Reich's motives, well … your tinfoil hat is leaking.

      The proposal isn't to replace the corporate tax with just a financial transaction tax. It's to replace it with both a financial transaction tax and increasing taxes on capital gains. (I was hoping for elimination of any special tax rate for capital gains, but the diary doesn't exactly say that.)

      Worry about rich people manipulating the system: yes, absolutely. But that can't be a reason not to make any changes, ever. The current system is painfully vulnerable to manipulation by the rich; why do you think a change would make things even worse?

      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals."—Barack Obama

      by HeyMikey on Mon Aug 25, 2014 at 12:00:07 PM PDT

      [ Parent ]

    •  Actually (22+ / 0-)

      the capital gains tax isn't easy to avoid. In fact, of all taxes, that's the one that I've seen LEAST avoided.

      Of course, why would people avoid it? It was 15% for all capital gains until recently, and still remains below the rate for actual work.

      Of course, if you give that tax teeth, then sure, people will get more creative. But that alone is no reason not to consider it as an idea for a corporate tax that is ALREADY broken, and disproportionately hurts small businesses who can least afford it (and create the most jobs).

      A financial transaction tax would be as easy to avoid as sales tax, that is, virtually impossible. And it would hopefully kill the high frequency trading that distorts the markets and bring absolutely nothing of value to the economy.

      •  You should talk to my accountant. (1+ / 0-)
        Recommended by:

        Apparently, it isn't nearly as hard as you claim.

        "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

        by Greyhound on Mon Aug 25, 2014 at 12:06:13 PM PDT

        [ Parent ]

        •  I don't believe you (0+ / 0-)

          please explain so the rest of us can take advantage

        •  You should talk to your accountant. (1+ / 0-)
          Recommended by:

          It sounds like he or she doesn't know what they're talking about and is going to get you in a shitload of trouble.

        •  "Avoiding capital gains tax probably isn't exactly (2+ / 0-)
          Recommended by:
          JesseCW, Alumbrados

          what he means.

          What he's likely referring to is reducing the taxpayer's effective tax rate overall.  If a taxpayer is earning income, capital gains, or heck, social security, a smart CPA, taxpayer, or simply Turbo Tax is going to take deductions that help offset income/gains.

          So someone with a lot of gains that would be taxed at 15% ultimately pays 10%.  But I know lots of people with ordinary income who pay around 10% after deductions.

          I don't think they're doing anything shifty. They're just taking advantage of current tax law.

          The question is, do we want to subsidize having kids, giving to charity, saving for retirement, investing in alternate energy, and owning a home?

          These are policy questions.

          But they're not really tax dodges, assuming you're honest and have an honest competent tax preparer.


          © 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 02:28:49 PM PDT

          [ Parent ]

      •  rationale for higher capital gains rate: (9+ / 0-)

        The capital gains rate was originally set lower than the earned income rate, on the basis that investors were taking significant risks whereas regular workers had a safe thing going.

        That situation has now become reversed.

        Investors can spread their eggs across multiple baskets including hedges in case their main investments drop.  Workers have all their eggs in the single basket of their jobs, with no backup and no hedge.  

        Thus investors have lower risk than workers.  

        Per the original logic of taxing investment at a lower rate, now investment income should be taxed at a higher rate because it's safer than earned income.

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

        by G2geek on Mon Aug 25, 2014 at 12:19:56 PM PDT

        [ Parent ]

      •  Until it's eliminated, too (1+ / 0-)
        Recommended by:
        Nada Lemming

        If the wealthiest corporate execs in the US can manage a successful PR and bribery campaign to eliminate corporate taxes, they wont even break a sweat when they get the DC crew to eliminate capital gains taxes.

        Who will stop them? They own the federal government and the news media.  

        Money is property, not speech. Overturn Citizens United.

        by Betty Pinson on Mon Aug 25, 2014 at 02:09:15 PM PDT

        [ Parent ]

      •  Every death avoids capital gains taxes. (1+ / 0-)
        Recommended by:

        Heirs get a basis step-up.

        "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

        by Old Left Good Left on Mon Aug 25, 2014 at 02:35:46 PM PDT

        [ Parent ]

      •  You avoid it (0+ / 0-)

        by not triggering it.   That's the reason why the capital gains tax is less than the ordinary income rate.   The capital gains tax can be avoided, timed or mitigated because the transactions what really generate the big bang for the buck, like business sales, can be controlled in the way wages can't.

        When you increase the capital gains tax, it becomes another cost of a transaction.   Increase the cost of the transaction enough, and it doesn't happen.  Then there is no capital gains tax.

        I'm recalling a study, which of course I won't be able to find, that somewhere in the mid twenties is the point where the rate is high enough to actually produce lower revenues.   We aren't quite there but we don't have too far to go when you factor in the 3.8% NII tax, which applies to capital gains

        •  I'd be highly interested in that. (0+ / 0-)
          I'm recalling a study, which of course I won't be able to find, that somewhere in the mid twenties is the point where the rate is high enough to actually produce lower revenues.
          For several reasons.

          1) I don't believe that there are eternal hard numerical boundaries where such effects take place - this is almost certainly relative to some other tax rate.

          2) We have had wildly varying capital gains tax rates for nearly a century.  There should be plenty of evidence if any such effect is found and large.

          -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 06:02:09 PM PDT

          [ Parent ]

    •  Post update: That reply was based on this, (0+ / 0-)

      "...eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes", from Reich's piece.

      I'm glad to see a transtax instead of capital gains as this would actually work, but it will still never happen.

      We can't even get Democrats unified on this, the leadership represents the people that benefit from the way it is and are personally profiting from maintaining the status quo.

      "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

      by Greyhound on Mon Aug 25, 2014 at 12:03:33 PM PDT

      [ Parent ]

    •  Capital gains tax (0+ / 0-)

      is based on the value of stock, not on profit, no?

      And it is only charged when there is a transaction, ie if one holds stock, there is no capital gains tax?

      Dividends are a corporate decision, no?

      "Gentlemen, let's get the thing straight, once and for all. The policeman isn't there to create disorder; the policeman is there to preserve disorder." Richard J. Daley.

      by Publius2008 on Mon Aug 25, 2014 at 12:32:12 PM PDT

      [ Parent ]

      •  Publius - there is no capital gains tax until the (1+ / 0-)
        Recommended by:

        appreciated capital asset is sold. The tax is based on the gain which is the amount realized after fees and commissions on the sale less the cost of the asset. The net difference is the long term (if held one year or more) capital gain to which the tax is then applied. The current rate is 23.8% for high income earners.

        "let's talk about that" uid 92953

        by VClib on Mon Aug 25, 2014 at 01:06:07 PM PDT

        [ Parent ]

    •  Most people, most of the time, pursue their (1+ / 0-)
      Recommended by:

      own economic interest first and foremost.

      Why would Kos be any different?

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

      by JesseCW on Mon Aug 25, 2014 at 05:48:15 PM PDT

      [ Parent ]

  •  And tax dividends at ord income rates. nt (8+ / 0-)

    Someone actually admitted on DK, "Yes. If it pisses you and the other Greenwald-Tweet-pearl-clutchers off, it's smart." Wow.

    by Inland on Mon Aug 25, 2014 at 11:54:37 AM PDT

  •  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?

        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

        [ Parent ]

        •  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

          [ Parent ]

        •  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

          [ Parent ]

      •  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

        [ Parent ]

        •  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.


            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.


            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

            [ Parent ]

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

      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

      [ Parent ]

      •  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

        [ Parent ]

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

          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

          [ Parent ]

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

        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:

      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

      [ Parent ]

  •  See! Repubs and Dems are all corporatists! (3+ / 0-)

    Snark of course, but that's the cry you'll here from many on the left as you try and get something through congress.  It would really expose the Republicans as the hypocritical stooges for the Oligarchs that they are.

    Another rational proposal that can't get by an irrational public.

    •  Yeah, actually its pretty accurate (0+ / 0-)

      I'm not sure where Reich is coming from with this argument, or how much his words and ideas are being distorted, but I know a bad idea when I see it.

      Money is property, not speech. Overturn Citizens United.

      by Betty Pinson on Mon Aug 25, 2014 at 02:18:16 PM PDT

      [ Parent ]

  •  Don't like it (0+ / 0-)

    "When dealing with terrorism, civil and human rights are not applicable." Egyptian military spokesman.

    by Paleo on Mon Aug 25, 2014 at 11:59:12 AM PDT

    •  Corporations are like soylent green (5+ / 0-)

      As in:  they're made of people.

      I'm not saying they are people.  Or persons.  No; they're made of people.  Workers.  Managers.  Shareholders.  The latter two groups getting most of the money out of the deal.

      So Kos is right here.  We shouldn't sweat whether the fictional entity gets taxed, as long as the rich owners pay for what they're getting out of the deal.  That way, if the profits really do get plowed into creating real economic investment, fine.  But if it's only making the owners richer, at least we have a point in the process where they really do get taxed.

      Think of a corporation as the castles our feudal overlords live in.  You don't ultimately tax the castle.  You tax the folks that own them.

      To be on the wrong side of Dick Cheney is to be on the right side of history.

      by mbayrob on Mon Aug 25, 2014 at 12:54:09 PM PDT

      [ Parent ]

      •  Re: the "Corporations are people" myth. (2+ / 0-)
        Recommended by:
        orestes1963, Nada Lemming

        The U.S. was initially a state, an organized political community, living under a government.

        Corporations did not exist.

        The state consisted of people.  The state was a stable entity.

        Then we had corporations.  Eliminating for the sake of argument all the political and legal changes to "corporations," the state consisted of people (who could vote) and privately-owned businesses and corporations (which could not vote).

        Now, project that state devoid of people.  Does the state exist? I'd say, no.

        Project the same state, devoid of corporations.  Does the state exist?  I'd say, yes.  Because, for some time, it did, in fact, exist.

        The advent and proximate purpose of the corporation has been to enhance the power and control of the few over the many.  I.e., to create an oligarchy.  The U.S. Constitution, however, declares this state to be a democracy... actually, a republic governed by a democratically elected government.

        How children dance to the unlived lives of their parents. Rilke

        by ceebee7 on Mon Aug 25, 2014 at 01:40:32 PM PDT

        [ Parent ]

        •  Um, no. The purpose of corporation is to create (1+ / 0-)
          Recommended by:

          a vehicle for limited liability to encourage investment.

          •  Limited liability is an end to itself (2+ / 0-)
            Recommended by:
            Odysseus, ceebee7

            You can lose the "to encourage investment" bit.  Perhaps that was originally true.  But that's only been a small part of it for more than a century.  Mostly, it's become a way for rich people to protect themselves from accountability.

            We could get the limited liability part without most of the garbage that came afterwards.

            To be on the wrong side of Dick Cheney is to be on the right side of history.

            by mbayrob on Mon Aug 25, 2014 at 04:05:06 PM PDT

            [ Parent ]

        •  They are a feudal political community (1+ / 0-)
          Recommended by:

          Both "states" and "corporations" and "manors" (as in: Feudalism) are social and political communities.  None of them "exist" in the sense you're using.

          Corporations are abstract entities that tie up property rights.  They're puppets.  Don't get fixated on the damn puppets.  Lift your eyes up and see who is running the strings.

          If you're willing to say

          he advent and proximate purpose of the corporation has been to enhance the power and control of the few over the many.
          then note that the problem is the power and control by the few.

          Watch them.  The corporation is the latest in a long line of institutions used by the few to control the many.

          To be on the wrong side of Dick Cheney is to be on the right side of history.

          by mbayrob on Mon Aug 25, 2014 at 04:02:31 PM PDT

          [ Parent ]

          •  True. And the problem is as you state. (0+ / 0-)

            That is the underlying problem.  The corporation is merely the latest vehicle to accomplish and perpetuate that condition.

            My purpose was a simple semantic effort to thwart the growing idiocy -- promoted obviously by agents of the few -- of advancement of the idea that corporations are somehow human, promulgated by those agents in hopes of deflecting widespread and growing public disenchantment with the idea of corporations being deserving of public support.

            Colonel Green's reply was to try to state the academic purpose of corporations.  I was trying to state the actual true purpose.  And I did.

            Even further simplified: The purpose of the corporation is to transfer as much money as possible as quickly as possibe from the pockets of the workers to the pockets of the owners.

            How children dance to the unlived lives of their parents. Rilke

            by ceebee7 on Tue Aug 26, 2014 at 02:11:40 AM PDT

            [ Parent ]

  •  It certainly needs to be lowered, (3+ / 0-)
    Recommended by:
    SMWalt, Norm in Chicago, charliehall2

    if nothing else

    A media that reports issues fairly and intelligently, and that holds power accountable, is an inherently liberal institution.

    by Dinclusin on Mon Aug 25, 2014 at 12:02:24 PM PDT

    •  No it doesn't because evil big biz doesn't pay. (2+ / 0-)
      Recommended by:
      dizzydean, kharma

      We do.

      There won't be any change in the cap gains. This couldjne some sucker bet.

      I voted Tuesday, May 6, 2014 because it is my right, my responsibility and because my parents moved from Alabama to Ohio to vote. Unfortunately, the republicons want to turn Ohio into Alabama.

      by a2nite on Mon Aug 25, 2014 at 12:09:01 PM PDT

      [ Parent ]

      •  Yes we pay, so why continue the scam? (2+ / 0-)
        Recommended by:
        John in Cleveland, goodpractice

        You're right, big biz doesn't pay the tax.  The customers who buy the goods and services pay with higher prices.

        When you shop at Walgreens, does it make you happy that your bill is 10% higher than it should be, or that worker wages are 10% lower than they should be, so that Walgreens can pay its corporate tax with your money?

        What's the point of all that?  And then we have Walgreens trying to move to Europe.  Just get rid of the tax, and corporate inversion goes away.

  •  That could be a left-right deal (3+ / 0-)

    in the making if it included equalizing capital gains and income taxes, as well as an elimination of government subsidies for any Corporation that declared a profit in the previous financial year. With those two things in place, we could happily eliminate the corporate income tax, and I think it is something a significant portion of the GOP might go for. Maybe I am too optimistic, but there is no chance of getting such a change made without more than 60 Senators and a majority of the House signing on.

    Voting is the means by which the public is distracted from the realities of power and its exercise.

    by Anne Elk on Mon Aug 25, 2014 at 12:05:06 PM PDT

  •  Really Bad idea (4+ / 0-)
    Recommended by:
    kharma, hester, Betty Pinson, Square Knot

    eliminating corporate tax would mean companies would now claim everything is income.  

    You would now have a incentive to avoid capital gains as they are taxed.  same for other types of taxes.

    Companies would just change operations to pay less tax.

    You need a fair system where everything is taxed -  but at different rates where needed.  Thus would avoid all the problems you have now.

    "The only person sure of himself is the man who wishes to leave things as they are, and he dreams of an impossibility" -George M. Wrong.

    by statsone on Mon Aug 25, 2014 at 12:05:53 PM PDT

  •  Investors structure our tax code for their benefit (3+ / 0-)
    Recommended by:
    ranton, kharma, wayoutinthestix

    Given money's role in American politics and the fact that investors have oceans of money, it'll take much more than logic to raise taxes on the investor class.

    This might be a good idea but it has no chances of passing our thoroughly corrupted congress.  

    "The Democrats and the Republicans are equally corrupt where money is concerned. It's only in the amount where the Republicans excel." ~ Will Rogers

    by Lefty Coaster on Mon Aug 25, 2014 at 12:06:24 PM PDT

  •  It looks like a good idea on first glance, but (8+ / 0-)

    what will today's political climate do with an idea like this?

    Will it be whittled down to "drop the corporate tax" and then the lobbyists block "taxing financial transactions"?   I don't know, that's what I'm asking.

    The corporate share of the federal income tax burden has been falling for years and the individual taxpayers' share has been growing.  This would end the corporate share and push it all into the individual share, wouldn't it?

    Sounds like a boon for accountants, who would have hundreds or thousands of individual clients for every business which is no longer taxed on income.

    Regarding reform these days, the most worrisome thing is that Wall Street seems to have captured influence of federal government: Executive and Congressional.  What would be the outcome of opening up the negotiations?

    "The law is meant to be my servant and not my master, still less my torturer and my murderer." -- James Baldwin. July 11, 1966.

    by YucatanMan on Mon Aug 25, 2014 at 12:07:48 PM PDT

  •  If Robert Reich suggests this (4+ / 0-)

    I am inclined to agree.

    However, this needs to be combined with raising capital gain tax, and hopefully also a stock transaction fee (probably 0.1% or less would be fine for the fee).

    Certainly room to negotiate over this as part of a tx reform package. The problem is if Obama suggests this, the repubs will instinctively withdraw the idea, or they won't go along with increases in capital gains or transaction fees (remember, if you don't call it a tax, then it's okay).

  •  Wrong answer nt (0+ / 0-)

    I voted Tuesday, May 6, 2014 because it is my right, my responsibility and because my parents moved from Alabama to Ohio to vote. Unfortunately, the republicons want to turn Ohio into Alabama.

    by a2nite on Mon Aug 25, 2014 at 12:14:48 PM PDT

  •  Lower tax + low energy cost (nat gas) = most (1+ / 0-)
    Recommended by:

    favorable business climate in developed world, probably.

    There has already been a ton of natural gas recovered and prices in the U.S. are far less than elsewhere - low energy cost + low tax rates = competitive edge for U.S. business ... and jobs for people who need them.

    I'd be fine with that deal - if the Chamber of Commerce can support pushing up cap gains and personal income tax back up to 1990s/80s/70s levels, let's do it.

    "Looking back over a lifetime, you see that love was the answer to everything." — Ray Bradbury

    by We Shall Overcome on Mon Aug 25, 2014 at 12:15:44 PM PDT

    •  What an awful idea. (0+ / 0-)

      First, we know that carbon based fuels are destroying the planet, and we need to get off them entirely pronto.  We should be significantly raising carbon taxes like the federal fuel tax and implementing such raises at the state level if the Feds won't.

      Second, despite the rise in us fossil fuel production, we're still net importers.  There is no scenario in which the US becomes energy independent based on fossil fuels alone.  Energy Independence IS National Security.  Improve national security by stopping fossil fuel use.

      -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 06:14:34 PM PDT

      [ Parent ]

  •  The downside of that proposal is (1+ / 0-)
    Recommended by:

    if there were no corporate tax and investors were taxed for selling their shares, then there would be even more incentive for the large companies to get even bigger and even more pressure to grow their stock price.

    The upside would be there would be less focus on short-term, "next quarter" thinking since investors were more long-term focused.

    Clearly, what has happened is that the use of the word Gestapo has clouded my message.
    - Maine Gov. Paul LePage

    by clinging to hope on Mon Aug 25, 2014 at 12:15:48 PM PDT

    •  Why? (3+ / 0-)
      Recommended by:
      VClib, goodpractice, delver

      Distinguish between two very different things kos is talking about here.

      Let's be clear about the phrase "taxed for selling their shares".  The capital gains tax does not create

      more incentive for the large companies to get even bigger and even more pressure to grow their stock price
      The incentive is the price increase itself;  you might argue if you reduced the capital gains tax that there would be more incentive, but I sort of doubt that would be measurably true.  But the incentive to buy stock is to either get dividends (which you get by holding the stock) or by waiting for the price of the stock to increase.  Tax the price increase (i.e., the capital gain) and the incentives still all point in the same direction.

      The other other tax kos is talking about, the transaction tax, also occurs at sale time, but it's tiny.  If you're doing a few trades a year, you're not going to even feel it.  What the transaction tax will effect are people who doing thousands of trades to benefit from microscopic changes in price.  In other words, the big investment banks that do computer driven trades far faster than ordinary people have any hope of doing.

      To be on the wrong side of Dick Cheney is to be on the right side of history.

      by mbayrob on Mon Aug 25, 2014 at 01:04:08 PM PDT

      [ Parent ]

      •  I don't understand you at all (0+ / 0-)

        If the only time I pay tax as a shareholder is when I sell the shares, then I'm going to hold on to my shares as long as possible, right?  And while I'm holding my shares as long as possible, I'm going to demand with my shareholding voting rights that the company make as much profit as possible, to drive the stock price up as far as possible, right?

        I'm convinced that the main cause of the 2008 crash was risky behavior by banks and other corporate players because they had more money than they knew what to do with, in addition to a incessant drive to continuously increase profits.  Removing taxes from corporations, in my mind, would lead to more of this same risky behavior.

        Now I don't think it's a reason not to follow Robert Reich's advice.  I'm just saying it's a drawback that we need to be aware of.

        I agree there is always an incentive to drive up stock price.  My point is if there is a disincentive to sell the stock (by taxation), then there would be even more incentive to drive up the price by whatever means possible, leading to adverse societal affects.  Just something to be aware of and to take further measures to mitigate.

        Clearly, what has happened is that the use of the word Gestapo has clouded my message.
        - Maine Gov. Paul LePage

        by clinging to hope on Mon Aug 25, 2014 at 01:26:19 PM PDT

        [ Parent ]

        •  Doesn't that already happen? (0+ / 0-)
          If the only time I pay tax as a shareholder is when I sell the shares, then I'm going to hold on to my shares as long as possible, right?  And while I'm holding my shares as long as possible, I'm going to demand with my shareholding voting rights that the company make as much profit as possible, to drive the stock price up as far as possible, right?
          Shareholders already do that.  When your primary focus and legal fiduciary duty is to maximize shareholder value, then it's not like you can make it any more your main priority.  The disincentive to sell the stock can't create any more incentive to drive up the stock price because the existing incentive is already maximizing efforts to increase stock prices.  It'd be like pushing on a string.  

          The big difference that I can see is that it encourages more profits over the long term over more profits over the short term.  That seems to me to be a good thing.  The existing tax structure encourages logarithmic growth in firms.  The incentive is to grow as quickly as possible, as soon as possible, forgoing potential future profits for profits now, and cashing out before growth slows down or stalls after all the low-hanging fruit has been picked clean.  A FTT, no corporate tax, and higher capital gains tax would incentivize more exponential-style growth, forgoing potential profits now for greater profits later.  

          From such crooked wood as that which man is made of, nothing straight can be fashioned. -Immanuel Kant

          by Nellebracht on Mon Aug 25, 2014 at 02:36:49 PM PDT

          [ Parent ]

          •  Now that makes sense (0+ / 0-)

            I wish we could implement these changes and see if they worked!

            Clearly, what has happened is that the use of the word Gestapo has clouded my message.
            - Maine Gov. Paul LePage

            by clinging to hope on Mon Aug 25, 2014 at 02:42:47 PM PDT

            [ Parent ]

          •  I don't think that's quite right (0+ / 0-)

            Several problems with your argument, which is the Party Line on corporate governance. But the Party Line is a crock, and we need to be clear about that.

            First, while the current legal regime right now does make it possible to sue management as a shareholder if they do not "maximize shareholder value" -- interpreted narrowly to mean "maximize share price", the underlying argument assumes, wrongly, that the market correctly prices future gains in value -- your future growth is supposedly already "priced in".  Because markets are perfect, right :-)

            Nothing about corporate taxes or capital gains changes that.  The incentives are going to be as short term as they always have been.  Because the perverse incentive has more to do with the whole "must maximize shareholder value" legal nonsense than it does with the tax regime.

            And growth doesn't have to be truly "exponential" before a firm grows out of the opportunities immediately available to it -- the "low hanging fruit" is just another word for "diminishing marginal returns" in the area of business the firm specializes in.   At some point, it makes more sense to return money to investors who can invest their funds into another firm with better available opportunities.  Or even better: pay more of it to their workers.

            I don't think that investment outcomes have much to do with this stuff.  I think ultimately, it's the need to extra excess wealth from the investor class, a la Picketty.  Because frankly, modern economies will do better if more people have great financial stability.

            To be on the wrong side of Dick Cheney is to be on the right side of history.

            by mbayrob on Mon Aug 25, 2014 at 04:22:42 PM PDT

            [ Parent ]

        •  You also pay tax on any dividends (0+ / 0-)

          which rate should be put back up to full regular income rate.

  •  One small problem with all of this... (4+ / 0-)

    The ONLY way this, or any other kind of tax reform gets done which increases the tax burden on the wealthy investor class, is with 100% Democratic control of the government. (including a SCOTUS nakedly loyal to the corporatist agenda)

    •  You may be right (1+ / 0-)
      Recommended by:

      But there is a slight chance that some Rs would support it.  This would only be possible in the period just after the 2016 election cycle, though.  No one would go there before Nov.

      Still trying to figure it all out

      by CindyV on Mon Aug 25, 2014 at 01:34:45 PM PDT

      [ Parent ]

  •  As long as we're talking about never-happen plans (8+ / 0-)

    Instead of finding some end-run to deal with

    large American companies are slow to repatriate profits made overseas, because they are not taxed on those profits until they do so
    just change the tax code to tax the corporations on their profits wherever the funds are located.

    And President Obama could drive a big stake through the heart of corporate inversion if he had a mind to do so:  just issue an executive order banning government contracts to corporations with overseas HQs.  

    Your corporation wants to move to Grand Cayman so it doesn't have to pay US tax?  Fine, but don't expect the US taxpayers to continue to do business with you.

    We must drive the special interests out of politics.… There can be no effective control of corporations while their political activity remains. To put an end to it will neither be a short not an easy task, but it can be done. -- Teddy Roosevelt

    by NoMoJoe on Mon Aug 25, 2014 at 12:18:30 PM PDT

  •  And replace sales taxes with a national VAT (0+ / 0-)

    Nothing tells you the harm a sales tax does when you walk around Portland, Oregon where there is no sales tax and very few empty store fronts - and lots of independents - and compare that to Chicago with its nearly 10 percent sales tax and plethora of empty store fronts.

    The VAT could be split between feds and states and would catch all the free riders in the world - the providers of services as a well as goods as well as the Amazons of the world.  While still a tax on consumption it would be less arbitrary and could be made less regressive.

    •  VAT taxes are regressive (3+ / 0-)
      Recommended by:
      PatriciaVa, VeggiElaine, grover

      Regressive taxation should be opposed.

    •  Um... (1+ / 0-)
      Recommended by:
      Square Knot

      sales tax is not what separates Chicago from Portland.  You can go down to Texas anytime and see what a high sales tax has done to their businesses (not harm them, that's for sure).  

      Nobody deserves poverty.

      by nominalize on Mon Aug 25, 2014 at 02:45:27 PM PDT

      [ Parent ]

    •  Amazon and other internet retailers (0+ / 0-)

      "freeload" where they are allowed to.

      I pay sales tax on all my Amazon purchases unless they are actual groceries, like flour.

      (There is also a line on our state tax return where we need to note any internet purchases on which we were not charged sales tax. That's added to our state tax liability.)

      I'm always surprised how many progressives here complain about this. People need to call state representatives and demand that taxes be collected.

      © 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 03:01:25 PM PDT

      [ Parent ]

  •  Sadly, Reich doesn't offer (3+ / 0-)
    Recommended by:
    wayoutinthestix, shaharazade, hester

    much analysis to support his plan.  For example, why is this preferred to simply closing the loopholes that yield the negative result of small companies paying more than their larger brethren?  It seems a rather facile approach.

    How would this plan affect pensions?  It appears that a greater tax burden would be placed on middle and working class persons who participate in pension plans.  And what of those with IRAs, etc.?  Wouldn't they also have a greater tax burden, thereby whittling down their accounts?  This smacks of a regressive tax, which no progressive or liberal should ever laud.  

    I also do not see how such a revision would result in an influx of capital in the US.  Is there evidence to support the position that companies are not investing capital in the US solely because of corporate tax consequences as opposed to costs attendant to labor (wages, workplace laws) and regulatory obligations?    

    Furthermore, one of the benefits of corporate taxation is ease of enforcement.  If corporate taxes are essentially shifted to individuals, we'd require greater enforcement to eliminate fraud, cheating, etc.  

    I really wish Reich would clarify his position to account for these issues.  

    •  IRAs are already exempt from capital gains (0+ / 0-)

      I don't know about pensions, but wouldn't be surprised if they also have some exemption.  So this would not be regressive at all.

      The people most affected by this would be folks who have more money than they are allowed to tuck away in an IRA (due to contribution limits per year).  Those would be the ones that would feel this tax.

      The capital gains portion of this would definitely be a very progressive way to tax investors.

      Still trying to figure it all out

      by CindyV on Mon Aug 25, 2014 at 01:40:26 PM PDT

      [ Parent ]

      •  I'm talking about the additional taxes (0+ / 0-)

        deriving from the trading activities of the funds, not taxation incurred upon vesting.  I realize this is not clear from my comment.  If the funds pay higher taxes for their activities, those costs are ultimately passed on to the beneficiaries.  In this case, we are not talking about the wealthy paying more, but everyone with any skin in the investment gain, which includes many working and middle class Americans.  

        •  As long as the fees are small enough (0+ / 0-)

          It seems this approach would still be somewhat progressive.  The capital gains portion wouldn't impact most smaller investors.  Also, if the majority of the money actively traded is from investors in the top 10% (which it seems it would be), then most of the fees would be paid by them.

          Yes, the retirement investors would also pay a portion that is significant. But their portion would be spread among a much larger number of people, so their individual costs would still be small.

          I wonder if this type of per transaction fee would also have the added benefit of slightly disincentivising faster turnover.  And that seems like something that would be good for business - less focus on making the quick buck and more on investing in solid companies to hold onto.

          Still trying to figure it all out

          by CindyV on Mon Aug 25, 2014 at 02:55:33 PM PDT

          [ Parent ]

          •  It's still an additional tax (0+ / 0-)

            on those least able to afford it.  I don't accept the notion that it's only a small amount, no big deal.  This would constitute an additional tax on working Americans, who will not be able to use accounting to minimize their exposure.  Frankly, I don't see how such a plan could be endorsed by any true liberal or progressive.  Doing away with corporate taxes while increasing taxes on working Americans is simply not progressive.    

            •  So your view is "no new taxes" period (0+ / 0-)

              Guess you might want to consider being part of other organizations who have similar views like the Tea Party.

              Personally, I am not willing to draw such hard lines in the sand because I think the world never works with hard lines.  Especially in today's political climate, I think we need to be willing to take a little pain to get something worthwhile.

              This type of per transaction fee might be a way to slightly disincentivize the current trend of high volume trading which adds no real value to the economy.

              The fees would have a negligible impact on earnings for retirement investments.  And it seems there might be enough tax revenue to potentially include some offsets to those who can afford the extra fees the least.

              Still trying to figure it all out

              by CindyV on Tue Aug 26, 2014 at 10:22:05 AM PDT

              [ Parent ]

              •  Try reading the comment again (0+ / 0-)

                My view is:  no shifting tax burdens from corporations to average Americans.  Basic reading comprehension would make that clear.  I will add that there should be no new taxes on average Americans.  Additional taxes should come from the wealthy and corporations.  

  •  A pity I have only one recommend to give... (4+ / 0-)'s about time the Democratic party staked out a bold position on our broken tax code.

    This is both the time fiscally (to head off companies already bolting for distant tax regimes) and politically (before the Republicans come out with any bold, meaningful plan) to make the move.

    I'm kind of agnostic on a transaction tax, but it should reign in HFT and the financial sector at least a little bit.

    •  it would get rid (1+ / 0-)
      Recommended by:
      Bethesda 1971

      of that double taxation problem, personally I'd love to see a lower rate on corporations that headquarter in the US, and raise on corps headquartered outside the US. Also if you you are a day trader as your primary occupation the money you make should be treated as normal income. A FTT would be ok with me.

      It's nice pie in the sky talk, none of this could pass.

  •  don't overlook the small business benefits (7+ / 0-)

    Kos mentions this, but it deserves more emphasis.

    As a small business owner, I spend a ridiculous amount of time & energy trying to document tax deductions and dealing with tax filings.

    Then there's the ongoing juggling acts over how to time capital outlays, how much to withdraw for my person and when, etc., to avoid double taxation and extra taxation.

    And, as Kos points out, this puts me at a disadvantage to larger corporations that can set up offshore subsidiaries — something I can't realistically do (believe me, I've investigated it, since almost half of my sales come from overseas) — and can afford to hire squadrons of lawyers and accountants and lobbyists.

    Like Kos, I could afford to hire several more full-time people if I didn't have to pay corporate income tax every year, and I would.


    •  or you could just pay your taxes (3+ / 0-)
      Recommended by:
      shaharazade, Nada Lemming, Odysseus

      and make your business decisions about your business.

      •  that sounds like gibberish (2+ / 0-)
        Recommended by:
        VClib, goodpractice

        Is that sentence supposed to mean something? If so, please elaborate.

        •  if you are tired of jumping through hoops (2+ / 0-)
          Recommended by:
          Nada Lemming, Odysseus

          to avoid paying taxes, then maybe you should stop jumping through hoops to avoid paying taxes. If you don't like making business decisions based on tax implications, then don't make business decisions based on tax implications.

          I know you are trying to to say, "It's not fair that I pay taxes other companies don't."

          But what you're really saying is, "It's not fair that I can't avoid paying taxes the same way that they do."

          •  you've never owned a business, obviously (3+ / 0-)
            Recommended by:
            goodpractice, OCLefty, charliehall2

            If you're suggesting I should pay taxes on gross revenue, that's so stupid I don't even know how to comment on it, plus it wouldn't be charitable to assume you're stupid, so I won't.

            I'm not talking about jumping through arcane and dubious hoops, I'm talking about perfectly ordinary tax planning and deductions. That alone is a tremendous pain in the ass. (My accountant has urged me to be more aggressive, but frankly I'm more interested in spending time trying to understand how to better serve my customers than in trying to understand complex tax strategies.)

            I suppose I could just be careless and carefree about it all, as you suggest, but then I'd have to lay off 2 or 3 employees, and my margin for error would be so slim that anytime in the future when there was a revenue crunch I'd have to lay off some more. But if you've never owned a business then you wouldn't have any appreciation for what it's like to feel responsible for people's livelihoods.

            Then again, if I had been doing it that way all along, I probably would never have been able to grow to the headcount I'm at now. I guess that would be the better option in your view, am I right? The fewer private sector jobs created the better? You definitely wouldn't want me to be able to hire half a dozen more people, or have a few hundred extra hours per year to focus on business growth.


    •  I don' t think this goes away (1+ / 0-)
      Recommended by:
      Square Knot

      those deductions don't get lost but they'd go to the calculation of the tax allocable to shareholders.  So I don't see the paperwork going away.

  •  Will securities ops in NY move to London or if (2+ / 0-)
    Recommended by:
    FG, orestes1963

    implemented in London would securities ops there move to NY? That's one of the many points covered in this document as the EU ponders financial transaction taxation.
    The same rules would have to apply regardless of citizenship, residence, transaction location for it to succeed. In other words, there couldn't be any havens.

    This is just more details on the current proposal.

  •  What is stopping them from reinvesting in more ... (6+ / 0-)

    What is stopping them from reinvesting in more jobs or equipment now? Aren't wages and equipment deductible against profits now? I'm not getting the part where we assume companies will plow profits back into their businesses. Large companies will probably figure out somewhere else to put their pacs.

  •  End Corporations, seriously (2+ / 0-)
    Recommended by:
    shaharazade, Nada Lemming
    ....the goals of nationalization were to dispossess large capitalists and redirect the profits of industry to the public purse, as a precursor to the long-term goals of establishing worker-management and reorganizing production toward use.

    Nationalized industries, charged with operating in the public interest, may be under strong political and social pressures to give much more attention to externalities. They may be obliged to operate loss-making activities where it is judged that social benefits are greater than social costs — for example, rural postal and transport services. The government has recognized these social obligations and, in some cases, provides subsidies for such non-commercial operations.

    Warning - some snark may be above‽ (-9.50; -7.03)‽ eState4Column5©2013 "If we appear to seek the unattainable, then let it be known that we do so to avoid the unimaginable." (@eState4Column5)

    by annieli on Mon Aug 25, 2014 at 12:51:40 PM PDT

  •  why aren't they taxed on the income now? (4+ / 0-)
    Right now, large American companies are slow to repatriate profits made overseas, because they are not taxed on those profits until they do so.
    That seems like the problem.

    I mean, I am not an economist, but it seems like allowing companies to defer their income tax on profits earned overseas until the time of their choosing is straight-up ridiculous.

    •  What's good for the goose is good for the gander. (1+ / 0-)
      Recommended by:
      Square Knot
      it seems like allowing companies to defer their income tax on profits earned overseas until the time of their choosing is straight-up ridiculous.
      Yup.  Try that as a citizen.  I'll be sure to write you some letters you can read in the prison yard.

      -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 06:21:30 PM PDT

      [ Parent ]

  •  Yes, and (0+ / 0-)

    Lower the Social Security and Medicare tax rates and apply the tax to all income from all sources.

    The greater Medicare taxes would be poised to eventually fund a Medicare For All plan.

  •  corporations used to pay 50% in taxes, now the (3+ / 0-)

    Er is 12%, hardly the 35 the right claims, I favor 1% transaction tax, split between the buyer and seller So lets say kos sells me 100 shares of coke at 50 bucks a piece, the value of the transaction is 5000, meaning the tax is 50 bucks, of which I cover 25. since i already paid 5000 bucks for those shares , whats another 25 to me?

  •  Well (3+ / 0-)
    Recommended by:
    eltee, Betty Pinson, orestes1963

    I guess it depends on what the corporations will do with their money.

    It seems to me they would take the money and "invest" it in congress, thereby receiving further benefits and subsidies.


    by otto on Mon Aug 25, 2014 at 01:03:38 PM PDT

  •  At least on its surface, I'd support (1+ / 0-)
    Recommended by:

    this plan.  

    I don't begin to know, much less understand (or claim to) tax laws... What I do know is that the current system is not working fairly, which in my understanding is one of the principles historically underlying U.S. tax law.  Of paramount importance in considering this plan is acknowledging this fact.  IT AIN'T WORKIN'!

    As it's stated, taxing transactions instead of income would seem to more fairly tax the rich, and that's a good thing -- the very rich make much more money from capital gains than they do income.  Again, from a practicality standpoint, and assuming Congress 1) will not change in electoral make-up, and 2) as such will not magically warm to any kind of tax increase, this would seem to be a good alternative.

    At the very least, I'd suggest trying to fill in the blanks that would arise in any contemplation of such a change, and proposing, say, a one year waiver of current tax laws as they are and substituting this plan for that one year... and see what happens.

    One question I have at this point: Are "corporate" tax laws the same as tax laws for businesses that are not corporations?  Could they be?  I'd assume that the fortunes of small businesses that are not corporations would be a target of the predicted gains in the U.S. economy and fairness thereof under this plan, and I'd support that, as well.

    I wonder how many people remember or even knew that the original Occupy Wall Street -- which was spearheaded at its very beginning by a/the nurses union -- carried with it a demand for a transactional tax (on all stock transactions), and the number was less than Kos's suggested .25% -- I believe it was .05%.

    In further contemplation, I'd like to see some projections or predictions of how this would affect corporate funding of elections, since one could make the point that the current system is resulting in a Republican House (and possibly Senate), so why would they give up that "system"  (as it currently works)?

    How children dance to the unlived lives of their parents. Rilke

    by ceebee7 on Mon Aug 25, 2014 at 01:04:15 PM PDT

  •  finally. I've been saying this to friends (0+ / 0-)

    for 25 years.  And while we're at it, tax all income at 15% and give every adult 15k a year whether or not they have other income (so your net federal tax is 0 if your other income is 85k).  Oh, and Medicare for All.

    Put tax accountants, tax lobbyists and insurance-claim deniers out of a job!  Let them do something productive instead.

  •  Something has to be done. (1+ / 0-)
    Recommended by:

    And wouldn't it upset the chessboard for the Dems to come out with a plan like this?

  •  this is a great idea (2+ / 0-)
    Recommended by:
    ceebee7, charliehall2

    I am pleased that someone on my side had the guts to suggest it.

    The corporate tax is an uncollectable mess of bizarre deductions and rules that benefit the wrong people. We need to replace it with fair taxes on owners of capital -- capital gains and dividends taxes.

  •  I give up (4+ / 0-)

    it's absurd that we've come to this.

    Dear NSA: I am only joking.

    by Shahryar on Mon Aug 25, 2014 at 01:11:17 PM PDT

    •  Not one person (7+ / 0-)

      Has pointed out HOW you owe corporate taxes.  

      It's at the end of the year, and the money you took in is greater than the money you put out.

      Repatriating profits, if they we're put to use in the business, would no longer be profits, but expenses.  So not taxing the profits would have zero effect on hiring or capital improvements.

      Kos claiming he could create more jobs by not paying taxes is pure bullshit.  He pays taxes AFTER he pays his employees, on what's left over, or what we rubes refer to as "income".  Not taxing it will only make him richer, not hunter.  He could pay hunter more and have less profit and therefore less taxes.

      His hiring is based on demand, not on a prediction of leftover income.

      What right wing claptrap.  It's Romneyesque.

  •  What if you just eliminated the tax... (2+ / 0-)
    Recommended by:
    VClib, OCLefty

    ...on foreign profits?

    Wouldn't that bring the money home too?

    •  BB - yes, that's how the rest of the G20 handles (4+ / 0-)

      it. Non domestic earnings can be repatriated without any additional domestic income tax due. The US is an anomaly on this point.

      "let's talk about that" uid 92953

      by VClib on Mon Aug 25, 2014 at 01:17:03 PM PDT

      [ Parent ]

      •  I think overall revenue to the US Treasury would (0+ / 0-)

        go down in that scenario.

        For every dollar that isn't repatriated, there's more than one dollar that is taxed, even though the money stays overseas.  I don't know the exact ratio, but multinational companies do pay taxes on overseas profits in excess of what is currently not taxed.

        The un-repatriated profits will be taxed when brought back - but multinationals can structure their cash flow to build in substantial delays on when the taxes are paid.

        "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 02:17:03 PM PDT

        [ Parent ]

        •  Substantial delays as in never (2+ / 0-)
          Recommended by:
          johnny wurster, goodpractice

          Multinationals will not repatriate the overseas cash at 35%. It makes no sense when that cash can be re-invested anywhere in the world, except the US.

          "let's talk about that" uid 92953

          by VClib on Mon Aug 25, 2014 at 04:02:05 PM PDT

          [ Parent ]

          •  So why give them the choice? (0+ / 0-)
            Multinationals will not repatriate the overseas cash at 35%.
            Corporations are chartered by governments.  Governments hold all the trump cards.

            Corporations will do whatever they are told to do.  There is no reason to allow any delay in repatriation.  Simply state that all corporate income must be repatriated by the end of the reporting period in which it is earned.

            -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 06:27:15 PM PDT

            [ Parent ]

            •  Congress could certainly change the code (1+ / 0-)
              Recommended by:

              as you suggest, but there is no support for such a change. Incorporating in the US is already a competitive disadvantage for a multinational.

              While most startups that are seeking professional investors are still incorporated in Delaware I am seeing the start of incorporating startups outside the US, right from the initiation of the company. The message to me is that we don't have competitive tax laws or tax rates for corporations. That's why I like Kos' idea.

              "let's talk about that" uid 92953

              by VClib on Mon Aug 25, 2014 at 07:21:28 PM PDT

              [ Parent ]

          •  Not always never (0+ / 0-)

            I work with a lot of Fortune 1000 companies, and some of them need the overseas cash to fund operations in the US.

            It's easy to see why a company like Apple, which is hugely profitable, would permanently keep the cash out of the US, although it is taxed by the foreign country.  But there are a lot of companies that are struggling to break even and they don't have the same flexibility.

            "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 Tue Aug 26, 2014 at 06:34:55 AM PDT

            [ Parent ]

      •  That's part of US exceptionalism, we tax money ... (0+ / 0-)

        earned everywhere.

      •  Simple statements are so hard to understand. (0+ / 0-)

        The US claims that it can tax income.  Period.  That's not outdated and it's not obviously logically wrong.  That it's different than how others choose to do it is irrelevant.

        United States Income Tax Treaties - A to Z

        If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for the applicable U.S. tax return.

        -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 06:25:40 PM PDT

        [ Parent ]

  •  No (0+ / 0-)

    If there's no Corporate tax, then compensation to the 1% wouldn't be paid out the way it is now (and the way Reich wants to tax it).

    There'll just be another work-around for the oligarchs.

    IANAA (i am not an accountant), but if there's a way to avoid taxes - the 1% will figure it out post-haste.

    bonzo goes to bitburg should be required listening...

    by decitect on Mon Aug 25, 2014 at 01:12:54 PM PDT

  •  I s'pose, if it's the only solution that's doable, (0+ / 0-)

    but given that the current environment allows the GOP to block things at will, this solution's worth would be best measured by how effectively it allows Dems to take full control of national government, to enact this &--more importantly--the companion reforms as well (the financial transaction tax/STET) without obstruction, or even effective resistance.

    And frankly, I'd rather attack corporate offshore holdings by eliminating free trade & reinstating punitive tariffs on offshored labor & profits, by using the exact same approach.  Buuuuut...  I guess that eliminating the corporate tax would prove more doable, via the whole jujitsu style of politicking, & less well-organized opposition as a result.

    I dunno.  Currently we can't even trade a lowering of the corporate tax rate for a closure of loopholes for offshored labor & profits, so I'm skeptical, but if, say, Chuck Schumer could get behind Reich on this, then hell, game on.

    It's time to start letting sleeping dinosaurs lie, lest we join them in extinction by our consumption of them.

    by Leftcandid on Mon Aug 25, 2014 at 01:23:12 PM PDT

  •  Plus, it would remove the (1+ / 0-)
    Recommended by:

    anchor that makes a corporation a "person."

    "Moon landing was real. Evolution exists. Tax cuts lose revenue. The research has shown this a thousand times. Enough already." - Austan Goolsbee

    by anonevent on Mon Aug 25, 2014 at 01:29:13 PM PDT

  •  Dividend payouts are optional (0+ / 0-)

    If there were only capital gains taxes, I'd bet you'd see a bunch of coordinated activity from corporations to payout dividends when income taxes were low rather when they were high and it would create more variances on actual budgets.  Conservatives would then argue that we collected more revenues when income taxes were low than when income taxes were high (which would likely be the case while in their first year of power).

    I've been able to argue successfully against conservatives on other forums that corporate taxes + dividend taxes should not equal individual income taxes.  They should be more.  Corporate taxes are based of net income rather than gross income.  They get tax refunds when their income is negative.  Plus corporations get limited liability, which is something that individual businesses and partnerships do not enjoy.  If individual businesses commit fraud and underpay their workers, the owner's wealth can be confiscated to make their employee's whole.  Shareholders don't have worry about their wealth being confiscated to pay for outstanding debts.  There should be a cost of a corporation's limited liability in the form of higher total taxation for a corporation because the corporations are not the same as individuals or partnerships.

  •  You just offset the extra tax on investors (3+ / 0-)
    Recommended by:
    Meteor Blades, orestes1963, dizzydean

    by demanding greater returns on the investment.

    The way you do this is by reducing production costs and to do so either you force wages down or offshore.

    Or you trade stock elsewhere. I'm sure London is slavering at the idea.

    There is always a way around paying tax.

    "I decided it is better to scream. Silence is the real crime against humanity." Nadezhda Mandelstam

    by LaFeminista on Mon Aug 25, 2014 at 01:30:16 PM PDT

  •  Add to this the news today that Burger King, HQ'd (2+ / 0-)
    Recommended by:
    defluxion10, goodpractice

    in Miami is acquiring the doughnut and coffee shop company from Canada called Tim Horton's.  

    Tim Hortons is the rough equivalent to America's Dunkin Doughnuts but far batter in terms of products and quality.  This move will now allow for Burger King to shut down it's American Miami HQ and take up corporate shop in Canada where the tax rate will be favorable for them, and they in turn will not have to pay the taxes rate here in America.

    This very legal slick move is called a "tax inversion".

    "Burger King in Talks to Buy Tim Hortons and Move to Canada"

    "Burger King Wants to Buy Tim Hortons, Move to Canada, and Stop Paying U.S. Corporate Taxes"

    “My soul is from elsewhere, I'm sure of that, and I intend to end up there." - Rumi

    by LamontCranston on Mon Aug 25, 2014 at 01:34:34 PM PDT

  •  Wealth tax is better, see Piketty. You can hide (2+ / 0-)
    Recommended by:
    ceebee7, goodpractice

    income but wealth is much harder to hide.

    "The poor can never be made to suffer enough." Jimmy Breslin

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

  •   large corps and big bus do not pay fed taxes now. (1+ / 0-)
    Recommended by:

    Yea lower the fed tax to zero does not help the USA citizens it hurt them.  
    So that rate at 35% is not real.

    So we need to restructure corp and big big biz so they pay around 10 %.
    50 % plus minus 7 % pay Zero taxes federal taxes. the rest pay 5 to 8 % federal taxes
    Total tax revenue of all business in the nation is 250 billion is less then 12 %.
    SO middle income and low income businesses get hammered in taxes!

    Every business in all the USA pay 250 billion to 280 billion now. That is 10% of less. How low do they want it? WE the USA citizens need to take away all those tax breaks and loop holes for corps and big bizz.

    This lowering fed taxes has not worked since DDE but they and the GOP does not care.

    You know the USA tax payer already subsidizes Corps and bib bizz about 500 billion a yr. That is on goods people have to buy. If they can not make money with their own money They need new CEO's.
    Lets take away almost all subsidies.

    Now we need to do the same thing invest large amount to infrastructure!

    The USA has been spending less on infrastructure since Nixon.

    Red states even less.  

    A synthesizer can create any instrument made and others that have not been created yet.

    by RSGmusic on Mon Aug 25, 2014 at 01:46:47 PM PDT

  •  The Reich/Kos plan is flawed (4+ / 0-)

    First, there is a good part to the plan: the financial transaction tax. But it isn't going to happen without a progressive political triumph--and that same triumph could fix the corporate tax (for which there is fix as noted later).
    Second, Repealing the corporation tax is a bad idea. Wealthy individuals would be able to divert all their income--wages, self-employment profits, capital gains and dividend income to a separate tax-free, self-owned corporation they would set up to receive that income and then flow the income from that corporation to secret LLCs in Nevada or Wyoming or into offshore accounts. (If necessary, the income can flow through additional layers of entities.) They would then be able to live off the income totally tax free.  The notion that small business owners would spend the tax savings on hiring people is debatable.  Maybe they would, maybe they wouldn't. That is because instead of hiring more people they would have the choice to avoid taxes entirely through a tax dodge such as  described above or some similar version. So, the only ones ending up paying taxes would be average wage-earners, modest income retirees, really poor people paying regressive sales taxes or fees and very small businesses who cannot afford the accountants and lawyers to set up the tax avoidance schemes.
    Third, the corporate tax (whether on net income or a gross receipts version) is one of the few ways that a state can get an out-of-state corporation (really its owners) to pay taxes for the state services they use and benefit from. The same is true for foreign corporations using federally provided services. State governments would end up having to increase taxes on, again, ordinary wage-earners, retirees, poor people with little income, and on modest small businesses who have not figured out how to exploit the new tax avoidance opportunities created by repeal of the corporate tax.
    Third, the "off-shore" cash of large corporations is often invested in the U.S. economy through dollar denominated assets, especially U.S. treasury notes.  Much of the off-shore cash is actually stashed in international accounts within the corporate structure of U.S. Wall Street banks.
    Fourth, we know how to fix the U.S. corporate tax--enact something called "worldwide unitary combined reporting" that effectively stops all the current tax avoidance schemes.  However the barrier is political--it isn't going to happen without a progressive political triumph in the U.S. And not even the FTT is going to happen without that.
    Finally, kos is a genius on politics, not so much on tax policy. On tax policy, he sounds like a conservative, small business lobbyist who says, "give me a tax reduction, and I will create jobs."  States have been doing that for years for businesses--and it does not work.  It just raises taxes on ordinary folks.

    •  Paying corporate taxes to secret llc's is tax (0+ / 0-)

      fraud. Anyone who is doing that could just as easily bury their profits now.
      I don't necessarily agree with ending corporate taxes, but they do seem to be more about intensive lobbying and insanely complex tax laws than consistency and fairness.
      One thing is for sure, such a change would have drastic effects on the economy, for example reducing advertising spending and R&D. If you are going to pay profits in high corporate taxes anyway, you might as well spend the money, but if it becomes more attractive to distribute profits through dividends, then it could rebalance certain kind of spending.

      "You can die for Freedom, you just can't exercise it"

      by shmuelman on Mon Aug 25, 2014 at 02:24:27 PM PDT

      [ Parent ]

      •  Much easier to engage in tax fraud with repeal of (2+ / 0-)
        Recommended by:
        goodpractice, magsview

        the corporation tax. The people who first designed individual income taxes figured that out and developed the corporation tax, in part, as a backstop to prevent the fraud.  But when corporations are tax free, taking the first step in tax evasion becomes easier.  Now it is possible to bury income in secret LLCs now--and I wrote separately about that in another post.  In part, tax evasion or fraud is growing precisely because of the advent of LLCs, which on a widespread basis are only about 20 years old. So tax evasion (fraud) is a serious problem, but it will become an epidemic if it is possible for people to channel their income in the first step into their own personal corporations. Taxing authorities will have difficulties finding it after that.  I think the average citizen underestimates the degree of tax evasion that the wealthy engage in--and how much more it will occur if there are misguided proposals such as those proposed by kos and Reich. For example, many people believe that Mitt Romney refused to reveal returns for 2009 and earlier because he may have participated in the IRS's tax fraud amnesty in 2009.

        •  Yeah, make the rate low but not zero (0+ / 0-)

          so they still have to report. Also per "They would then be able to live off the income totally tax free" upthread: no, not if they spend it themselves, that would be fraud if not counted as "earnings" or "dividends".

  •  I agree, but I would also eliminate all (1+ / 0-)
    Recommended by:

    income tax deductions and credits by simply raising the minimum taxable income from it's current ridiculously low $400 a year to at least 150% of the poverty line. That way everybody's basic needs would be untaxed and the progressive marginal income tax rates will only be applied to incomes higher than a basic subsistence income. This would simplify our tax code significantly and eliminate the need for millions of lower income taxpayers to file returns saving the IRS millions every year.

    Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

    by RMForbes on Mon Aug 25, 2014 at 01:57:34 PM PDT

  •  I've never had a problem with the idea.. (1+ / 0-)
    Recommended by:

    ..of not taxing companies and only taxing people's income.

    I'd actually prefer going an extra step and taxing the wealth that companies sit on, instead of their income.  Give them an incentive to invest money instead of sitting on it doing nothing.  If they keep their pile of cash below a certain percentage of their overall value, then they'd never pay any taxes at all.

    Anyone they pay as an employee though, get's taxed.  Whether it be through wages or stock options.  Also, treat all compensation equally.  A grand total "value" for all compensation with no special tax rates for different types of compensation.

    •  not taxing companies, but individuals doesn't work (2+ / 0-)
      Recommended by:
      goodpractice, magsview

      As you can see from my other posts, it is not possible to have an individual income tax without a corporation tax that prevents high income people from channeling their income into a tax-free corporation as the recipient of that income--and then structuring sufficient transactions through entities they control until they have their lives financed by tax-free income.  High income people can have all their compensation (wages, stock options, dividends, interest, capital gains) paid not to them, but to tax-free corporations they own.  The compensation would be paid in the form of contract service payments to their personal corporation (for their labor services instead of wages) and the stock options would be assigned to the tax-free corporations.  The corporation tax exists, in part, as a "back-stop" to the individual income tax to prevent high income people from completely avoiding individual income and payroll taxes. It would be a disaster for the individual income tax to repeal the corporate tax.  It would be a utopian dream for tax cheats--and would incentivize a whole host of new tax cheats. I cannot believe kos and Reich fail to understand why a corporation tax needs to exist if you also want to tax individual income.  The two go together.

      •  That's part of the problem that my suggestion.. (1+ / 0-)
        Recommended by:

        would need to address.

        The notion that an individual can have all their money held in a corporation is a root of this problem.  At some point, that money transfers to them, and out of a corporation.  If the corporation is making payments on the mortgage for the house they live in, then those payments are compensation and should be taxed accordingly.

        That's the point where taxes should be calculated.

        Just because an individual owns a corporation, or a business, does not mean all their personal finances should be intertwined with those of the corporation.  They should be required to be delineated.

  •  Why is this not already a thing? (0+ / 0-)

    Money that is in play BY the corporation should be un-touched by the government.  Distributed profit is the only thing that should be taxed.  

    Taxing un-distributed profit is like the state deciding to retail-tax a wholesaler on goods not yet sold.  It's crazy.

    What's the difference between the Federal government and organized crime? One's legally sanctioned.

    by FrankenPC on Mon Aug 25, 2014 at 02:03:24 PM PDT

    •  Have you ever heard of INVENTORY TAX ?? nt (2+ / 0-)
      Recommended by:
      charliehall2, FrankenPC
    •  It is "not already a thing" for a good reason. (3+ / 0-)
      Recommended by:
      goodpractice, magsview, FrankenPC

      Taxing profit only when distributed falls prey to tax evasion, as explained in other posts. If corporation taxes are repealed,  high income people can structure their ownership of stock in the name of a wholly-owned, tax-free corporation to receive dividends and gains (the distributed profit). That corporation would be owned by the owner through other layers of business entities owned by the same person (probably LLCs) until the final entities attain a level of secrecy within a tax haven jurisdiction (on-shore or off-shore). The final entities would pay for all the expenditures of the wealthy person.  This is a major reason why when the individual income tax was developed, the corporation was developed as a necessary companion as well.  It functions as a "backstop" to prevent this money laundering and tax evasion.  Without it the taxation of distributed profits might never occur at least for wealthy people.  Some of this is happening already today through business conducted through LLCs instead of corporations. Multilayered LLC and partnership structures are used to launder income until taxing authorities can not longer find it.  But the situation would only get much worse if the corporation tax were repealed. Kos, Reich and the bulk of the commentators really do not understand how tax collection actually works and how tax evasion would expand if the corporate tax were repealed.

      •  Thanks for the breakdown! (0+ / 0-)

        You're right.  And since I DON'T know how this all works, how do I know who to trust when it comes to operational opinions?  I mean that literally.  WHO should I trust?  Do you have any suggestions for a progressive leaning individual?

        What's the difference between the Federal government and organized crime? One's legally sanctioned.

        by FrankenPC on Tue Aug 26, 2014 at 09:18:01 AM PDT

        [ Parent ]

  •  one more thing on dodging taxes under the kos plan (2+ / 0-)
    Recommended by:
    magsview, delver

    What I failed to note under the earlier post, is how higher income people would be able to divert, tax-free, what we now consider a wage into income of the corporation they would be using to dodge taxes.  High income persons would no longer receive wages for their labor and would not be subject to wage withholding for income taxes or Social Security and Medicare payroll taxes.  Their labor would be made available to what was previously an "employer" through a contract with the individual's corporation.  The labor compensation for the high income person would flow to that person's tax dodging corporation as a payment for contracted services.  So there would not be any withholding of payroll taxes on their income. The contract would be structured by an attorney to make certain that the high-income person's work could be characterized as a contractor, not an employee. The high-income person would never take a wage. The contract services income (what used to be a wage before the corporation tax repeal) would flow along with all the person's other income into layers of business entities until sufficient secrecy was attained--and the secret entities would pay directly for all the high-income person's expenditures at that person's direction. Corporation taxes stop these schemes at the beginning because they function as a withholding tax for corporate owners.  This is a critical reason one cannot repeal corporation taxes if one wants to tax individual income as well. Mitt Romney and his cronies would love the kos/Reich plan.

  •  25 basis points (1/4%) is a huge number. (2+ / 0-)
    Recommended by:
    red moon dog, Ozy

    It seems quite small, but that number would be considered large when talking fund management fees. If you have funds  that are passively managed through index funds, and there is a regular re-balancing of assets, say on  a quarterly basis, you could see huge expenses over time. This is not just to big investors, but to "little guys" where this expense would be hidden or the expense passed on through high management fees.
    Better a flat transfer tax. It may not raise as much, but would be far less debilitating to the portfolios of retirement funds.

    "You can die for Freedom, you just can't exercise it"

    by shmuelman on Mon Aug 25, 2014 at 02:17:44 PM PDT

  •  How about getting on the same page (2+ / 0-)
    Recommended by:
    OCLefty, delver

    Reich has a proposal. Stiglitz has a proposal. Krugman probably has a proposal, I just haven't read it. How about if the prominent economists who support a rational tax policy could come together and make ONE proposal together. I know, that's asking a lot, but still, it would be impressive. It's something that the Republican think tanks are able to do well, by the way.

    I can support anything that has a clear set of rules and a clear set of outcomes that can be tested and that meets Democratic / Progressive ideals.

    •  I keep harping on this, ... (1+ / 0-)
      Recommended by:
      red moon dog

      but no-one wants to listen.

      It's something that the Republican think tanks are able to do well, by the way.
      You need to run a political party like it was a business. You can build a better mouse trap, but no-one will buy it without first-class advertising.
  •  What about taxes based on U.S. revenue? (1+ / 0-)
    Recommended by:

    As explained here:

  •  Capital gains won't make up for the loss of (0+ / 0-)

    corp tax revenue because markets go up and down and people can write off losses against gains, and don't pay cap gain on the sale of stock when they take losses.  People also might not sell.  

    I would reduce the corporate tax rate to a flat rate structure based on size (e.g., 5%-10%-15%). The issue will be how to apply the tax rate to ensure that the government gets value and corps can't take of alternative tax structures to avoid paying the tax.  We could add a mandatory disclosure of all tax returns for parents and subs and affiliates in which there is an ownership relationship.  We could also do an alternative min tax concept based on gross revenues (not net), and the corp would have the choice to pay either the alt min tax or the tax rate applied on net income.

    Global Shakedown - Alternative rock with something to say. Check out their latest release, "A Time to Recognize": Available on iTunes, Amazon, Google Play, Spotify and other major online music sites. Visit

    by khyber900 on Mon Aug 25, 2014 at 02:22:57 PM PDT

  •  how about a maximum wage? (0+ / 0-)

    set it at $5mil a year. Anything over that goes to everyone else (also known as taxes)

    Dear NSA: I am only joking.

    by Shahryar on Mon Aug 25, 2014 at 02:24:08 PM PDT

  •  that rate is higher than shown (1+ / 0-)
    Recommended by:

    just sayin', but a .25% rate would really be .5% because you pay it coming and going. Kos has it as a rate for every stock traded.

    don't get me wrong: I support the idea of a transaction tax. It seems that the rate has been pulled out of a hat. It more than triples the amount coming from the corporate income tax if it lives up to the projection. There have been some other suggestions, too, for what this rate might be. Some have even been put out there by finance industry people. I think Michael Lewis had a bit about the idea in his latest book but I don't remember the rate. The point would be we need a consistent, feasible, defendable rate that is widely agreed upon.

  •  Interesting plan (3+ / 0-)
    Recommended by:
    charliehall2, Odysseus, delver

    That Communist Reagan signed a tax bill that equalized income and capital taxes.

  •  How about instead (1+ / 0-)
    Recommended by:

    we take a protectionist view of our own country like so many other countries do? In other words, if you don't make your products here on American soil with American workers then you aren't an American company and therefore have to pay a tariff.

    Sorry dude, but I'm not interested in playing footsie with these corporations after the shit they've pulled.

  •  Many people here seem to think that ... (1+ / 0-)
    Recommended by:

    that eliminating Corporate Tax is a Gift to the 1%. And that the 99% will have to make up the short-fall.

    The US of A has the highest Corporate tax rate of any country in the whole-wide-world. See this article in todays LATimes This is why Inversion is popular with LARGE companies. If a company uses Inversion, the US loses the tax revenue.

    The entire US TAX Code is seriously effed-up -- it's way past time for an overhaul.

  •  Tax Corporate Assets (0+ / 0-)

    The problem with taxing only the corporate profits paid to shareholders is that corporations spend a lot of their income on corporate property deducted from profits, property that is used for the lifestyles of corporate executives and their guests. All those golf outings, all those executive washrooms, conferences at luxury spas, corporate jets, corporate yachts - $TRILLIONS in corporate property.

    Instead of paying these corporate people more taxable income, they give them more expensive perks. That are not taxed even now.

    The real solution is to eliminate income tax completely, replaced by a sales tax on everything, paid by everyone (and by everything). With exemptions for human necessities like groceries, used clothing, public education and transit, the cheapest housing and its utilities, ACA minimum health insurance. Even a sales tax on shares in corporations, though that should probably be a tiny amount (1% or so), until a majority share is accumulated when the full sales tax rate is charged.

    If we're going to reform corporate taxes by eliminating them, let's move to an actually rational basis that can be objectively measured. Instead of letting corporations decide which of their profits will be laundered as untaxed corporate property.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Mon Aug 25, 2014 at 02:41:09 PM PDT

    •  Republicans favor sales tax for income tax swaps (0+ / 0-)

      Republicans know the interest of their wealthy supporters. Hence at both the state and federal levels they have proposed versions of sales tax for income tax swaps.  Why? Because it favors the very wealthy over the ordinary citizen.  And a sales tax structured with the exemptions you describe would be extremely high if it were to substitute for all federal, state and local income taxes.  Repealing federal income taxes also repeals state and local income taxes because the administration of those taxes is based on the federal tax and would collapse once the federal tax is repealed.  So the sales tax rates to replace all income taxes would run into the 30% range (I have done the math). Now that means that middle income people would effectively pay sales taxes that would typically total to about 25% of their income.  Very wealthy people who save a lot and consume less would typically pay sales taxes that would likely total less than 10% of their income.  That is even with the exemptions you propose.  Any question why Republicans propose sales tax for income tax swaps?

      •  Answers, Not Questions (0+ / 0-)

        Middle income people already pay about 25% of our income. 25% sales tax on a $16T GDP would raise $4T dollars. Which would be enough to pay the $3.5T Federal expenses with $500B left for paying down debt, or increasing subsidies.

        Subsidies are the right way to defray costs that poorer people cannot bear. Passing subsidies through tax exemptions just makes the tax code more perverse, complex enough for richer people to evade it.

        If people save a lot and consume less, What does it matter that they're paying less? They're getting less. And the taxes paid by everyone cover the large Federal expenses.

        Just because Republicans like something doesn't mean it's automatically bad. And what Republicans like doesn't include the exemptions that let anyone - poor or otherwise - live tax free on a frugal consumer lifestyle.

        The income tax system you're defending is a proven ripoff, worse the lower one gets in the scale down from corporate to poor. It also invades everyone's privacy, is a hamfisted method for pushing people around according to Congress' whimsical preferences, and costs a vast amount both personally and publicly to administer - while failing to either fund the government or to protect the right people from its direct collection effects.

        The sales tax system is fair and effective. It collects money proportional to the benefit people get from the system, more than enough to pay for governing the system.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Tue Aug 26, 2014 at 07:35:50 AM PDT

        [ Parent ]

    •  Wealth tax, not sales tax (0+ / 0-)

      Want to squirrel money away in a Swiss or Cayman Islands bank account? Tax it. Either you pay taxes on it or you don't own it.

      And God said, "Let there be light"; and with a Big Bang, there was light. And God said "Ow! Ow My eyes!" and in a flash God separated light from darkness. "Whew! Now that's better. Now where was I. Oh yea . . ."

      by Pale Jenova on Mon Aug 25, 2014 at 04:27:25 PM PDT

      [ Parent ]

      •  What Rational Basis? (0+ / 0-)

        How about people who squirrel money away in their checking account, that barely (if even) pays for retirement? Their wealth without income will get drained to nothing.

        A wealth tax might serve to "disarm" people who have become dangerously wealthy. But it's not a permanent basis for funding the government, because it's not really fair - it's just return fire for the unfairness of the richest who've gained their wealth almost always unfairly.

        A sales tax charges people for the benefit they get from the system. They can live frugally - anyone, rich or poor - without paying any taxes. It's a perfect match for subsidies to people who still can't afford the tax-exempt purchases. It's simple and sensible, far easier to police than income tax. Without privacy invasion, complexity only the rich and corporate can afford to exploit. It's fair and sensible.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Tue Aug 26, 2014 at 07:39:22 AM PDT

        [ Parent ]

  •  Makes sense. (0+ / 0-)

    Why, maybe we could even come up with a way to induce them to manufacture products in the US again and employ people here.

  •  We do need to institute a Tobin tax, but (2+ / 0-)
    Recommended by:
    Pale Jenova, delver

    forgiving corporate income tax wouldn't provide any stimulus. We forgave bazillions when we eliminated the DISC provisions. Resultant additional expansion of US operations was negligible.

    Funds in offshore operating subsidiaries can, FWIW come back pretty much tax free unless they are in tax haven countries. Furthermore, a shocking percentage of those funds "parked abroad" have been lent back to the parent companies or affiliates.

    That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

    by enhydra lutris on Mon Aug 25, 2014 at 03:11:39 PM PDT

  •  And how long (0+ / 0-)

    ...until the companies simply offshore their stock sales?

    America, we can do better than this...

    by Randomfactor on Mon Aug 25, 2014 at 03:17:16 PM PDT

  •  go the other way : corp tax at 100% (0+ / 0-)

    If low taxes created jobs, we'd be awash in jobs. More jobs than people, but No! Look around at our economy; there are plenty of toasters of every kind in stores; what's missing is not another foreign toaster factory, but someone with a job able to buy said toaster.

    To push corporations into being better citizens, and more involved, I propose a 100% corporate income tax. First, what is a corporation for? It's an investment vehicle and a mechanism for delivering product/service ideally with a profit. The corporations operate unimpeded; deducting all costs including business taxes, expenses, and employee pay and ancillary costs. They can pay their CEO anything they want, and pay any dividend they want. Then allow a 5 year tax-free revolving unlimited cash 'slush” fund that hopefully would be used for growth/infrastructure/investment. They can put 100% of that overseas return into that slush fund, taking up to 5 years to decide what to do with it. Whatever is left is taxed 100%.
    This pushes cash out into our economy. Money spread out by expense, pay, dividends, and taxes are the power that our economy needs. Give the businesses a 5 year strategic reservoir, then push the rest out into our economy. If they hate taxes, the companies could either pay out more in wages and/or dividends, or lower prices.

     Corporations are sitting on over $2Trillion dollars, and not doing anything constructive with all that cash. Stock buy-backs don't make jobs or GDP growth; same with cash hoarding.  The country is sinking, over half of it going broke while the corporations and the upper 5% have never had it so good.

  •  tax the individuals not the corporation (3+ / 0-)

    Should eliminate the corporate tax. Limit the "perk" spending that is not for everyone in the company (free coffee etc. OK, personal yacht for the CEO is not) and tax all money removed from the company (dividends, capital gains, perks, paid up life insurance, employee stock option discounts and all the rest) at the regular income levels of the individual.

  •  When did doing business in America become a RIGHT? (2+ / 0-)
    Recommended by:
    goodpractice, orestes1963

    So they don't want to pay taxes, then they no longer can do business in American, in the States, in the Cities.   If Burger King moves it's head quarters to Canada, we should have a law that doubles the taxes.  

  •  even more beggar thy neighbour (4+ / 0-)

    taxation policies will not bring the money "home" nor ensure that it is invested in the US, thereby creating a stimulus package. The private sector invests where they think they can earn a profit; they do not invest if they do not think that they can. Certainly, the destruction of trade unions through the destruction of manufactures and industry will have lowered wages, but there is no guarantee that they will invest it in the US. They can make far greater profits investing overseas where wage costs, raw materials cost are still lower and technical conditions of production are available. So why invest in the US.

    The claim in the diary demonstrates a complete lack of understanding of way in which investment and economic growth occurs under capitalism. It is not high taxes which are preventing the repatriation of profits; corporate taxes are extremely low. It is cost of production and profit creation. Now, they do have a problem and that is sale of goods and services since so much of the advanced capitalist world has undermined incomes of the working class leading to decreased effective demand in the absence of easy but expensive credit.

    Certainly, introduce broad financial transaction taxes, no problem at all with that. The money can be used for direct government jobs creation in green industry, transport and cough cough public sector housing. It could even be used to provide free child care and free women from primary caring responsibilities.

    However, foregoing corporate tax will only increase their profits and that will do nothing for ensuring growth. This is a right-wing argument that honestly will only increase income inequality and will do nothing to stimulate the economy as taxation is not the reason for lack of repatriation of profits for the purposes of investment. I am sad to see such a specious argument advanced here ... and, of course, to get so many recommendations

    "Hegel noticed somewhere that all great world history facts and people so to speak twice occur. He forgot to add: the one time as tragedy, the other time as farce" Karl Marx, The Eighteenth Brumaire of Louis Bonaparte .

    by NY brit expat on Mon Aug 25, 2014 at 03:58:01 PM PDT

  •  I've said here before (1+ / 0-)
    Recommended by:

    rather than bemoan tax money leaving this country for a cheaper rate abroad,  keep them here- by making tax rates competitive. Money takes the least path of resistance.

  •  Everyone else should be taxed more than me (0+ / 0-)

    is basically what it comes down to, a la Pink Floyd's "get your hands off of my stack".

    I don't think we can solve America's so-called tax problems, because the issue is global, and we need a global solution. Something like a cradle-to-grave minimum income for all people, and a maximum income cap.  But of course, that reeks of "socialism", which it does.

    We need to turn things upside down, by both thinking and acting globally, as if each and every one of us already is a citizen of Planet Earth, as we indeed are.  Every other monetary "solution" just seems like playing within the parameters of an outdated game.

    We can go back to expansive capitalism as soon as 50% of us have left Earth to colonize other worlds.

    Otherwise, I am thinking Mother Nature is going to start offing a whole bunch of us...

  •  Corporate taxation (1+ / 0-)
    Recommended by:

    That's why I love this website. It's not a liberal idea or a conservative idea; just a good idea. And, Beardsley Ruml, President of the NY Fed made this argument quite eloquently in 1946.

  •  Thank you, Robert Reich and Kos... Finally (1+ / 0-)
    Recommended by:

    a diary about one of the steps that needs to happen in order to transition to a fairer, more efficient, more internationally competitive and significantly faster growing economy.  I did not read all of the comments, but a key point that the diary missed is that the corporate income tax is the single most significant contributor to the corruption of Congress as former members line up corporate clients to lobby for special tax breaks.  If we want a better government, we need to get behind this idea.  There are many good ideas for replacing this income. In promoting the elimination of the corporate income tax, I would not get too hung up on the how the revenue is replaced although personally I would like to see truly progressive tax rates and higher custom's duties.  Way to go Kos!  

    Dedicated to recapturing the American Dream by changing the framework of the debate to focus on: Growth, Efficiency, Community, Sustainability and Economic Fairness. Improve constantly and drive out fear - Dr. W. Edwards Deming

    by Paradigm Change on Mon Aug 25, 2014 at 04:09:09 PM PDT

  •  Corporations make a lot of use of gov. services (2+ / 0-)
    Recommended by:
    magsview, orestes1963

    and they should have to pay something for those services.

    I'm not convinced that this sort of plan just won't lead to the corporations not paying anything and the shareholder not paying anything either. Even if you can get the capital gains increase in exchange for the corporate tax elimination, the GOP will immediately turn around and start campaigning for lower capital gains taxes, talking about how they've been raised to unfair levels.

    We really can't do anything on taxation until we first reestablish it as something legitimate. Otherwise, backing a plan like this is a strategic retreat from our support for revenue generating taxes that could become a full retreat.

    And what happens to all the tax incentives -- such as for health care coverage -- that we've created to induce certain corporate behavior when we've eliminated the taxation lever we've used to induce that behavior? I think that's a potentially large impact on people that you haven't considered.

  •  HAHAHAH haha oh, fuck. Of course, you're a (1+ / 0-)
    Recommended by:

    "Real jobs creator".

    Do your employees have pensions yet?

    Do they have health care?

    Little capitalists like you aren't somehow superior to the big ones.  You operate just like they do - you exploit workers to maximum amount workers will allow.

    The tax burden belongs on you.  

    You do not pay your fair share as-is. It's flatly grotesque for you to demand your insanely low taxes be cut further.

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

    by JesseCW on Mon Aug 25, 2014 at 05:21:21 PM PDT

  •  Another Republican idea that got adopted by Dems (1+ / 0-)
    Recommended by:

    because it's a good idea.

    I wonder when it will go the other way?

  •  Who are you? (3+ / 0-)
    Recommended by:
    JesseCW, RANGERIC, orestes1963

    And what have you done with Kos?


    Corporations are separate legal entities from their shareholders and they should just like any other legal entity pay their taxes for which our government goes out of its way to protect and nurture them.

    When a Corporation dividends, the shareholders pay taxes on their capital gains.  That is fair.  This whole business of not taxing corps and relying on shareholder taxes is nuts.

    If we went back to the early 1960's tax rates were much higher, AND we had this key provision that required corporations to dividend excess retained earnings.  We wouldn't have massive deficits if we would just tax our corporations and shareholders like we used to do.

    --United Citizens defeated Citizens United...This time. --

    by chipoliwog on Mon Aug 25, 2014 at 05:34:47 PM PDT

    •  it would make more sense to get rid of (0+ / 0-)

      Income taxes and create more taxes on business. That way you have citizens instead of just consumers and taxpayers. And demand goes up. And businesses want access to us...but we make them pay to play. Like it used to be. Paying taxes was the cost of having access to the people who buy your product. Now it's topsy turvy...Business comes before the welfare of citizens. I oppose that and only see it getting worse if we keep lightening the corporate tax burden.

      You'd also see a lot more stock options being used as collateral for interest free loans that never have to be paid back. Many companies would jump out of the market the year before this went into effect. Others would become closely held and pension funds would have fewer investment options.

      Yet if the income tax went away...Kos could simply pay himself the profit and then lend the money back to the business. Same outcome but with more warm fuzzy citizenry. Kos would have more money AND so would we.

  •  The only reason to have a corporate tax at all (1+ / 0-)
    Recommended by:

    is to prevent fraud by individuals who try to incorporate to avoid individual taxes.

    Those folks should be given free room and board for a long time. ;)

    Corporations aren't people. Period.

  •  Word n/t (0+ / 0-)

    This aggression will not stand, man.

    by kaleidescope on Mon Aug 25, 2014 at 05:51:23 PM PDT

  •  How long would the capital gains increase last? (1+ / 0-)
    Recommended by:

    It sure seems like a good idea in theory but I don't think it would be more than a few years before someone gets the great idea to repeal the capital gains increase but leave the changes to corporate income taxes.

  •  The limited liability corporation (2+ / 0-)
    Recommended by:
    delver, orestes1963

    The limited liability corporation is a legal entity distinct from its shareholders.  One of the reasons the recent Hobby Lobby decision was so horrible is because it said the corporation partakes in the religious beliefs of its owners (at least in limited cases).

    Think of it like this - we are proposing to make the corporation a full legal person, potentially immortal,  with unlimited "freedom of speech" (i.e., money it can spend), with religious beliefs and rights that supersede rights of its employees; and now we want to make it tax-free as well!

    If you want to abolish corporate taxes, I would demand

    1. End to corporate personhood - in particular it has no political rights, and no religious rights.

    2.  Taxation of capital gains like ordinary labor income.

    3. Taxation of dividends like ordinary labor income.

    There may be one or two more conditions (such as reforms in executive compensation) but this is a start.

  •  Delete my Fing Corporate Taxes Markos!!!! (0+ / 0-)

    Somebody had to say it.....

    The modern conservative is engaged in one of man's oldest exercises in moral philosophy;the search for a superior moral justification for selfishness

    by CTMET on Mon Aug 25, 2014 at 06:13:54 PM PDT

  •  Jared Bernstein is against corp tax cuts in NYT (0+ / 0-)

    opinion pages, for a different take.

    Someone actually admitted on DK, "Yes. If it pisses you and the other Greenwald-Tweet-pearl-clutchers off, it's smart." Wow.

    by Inland on Mon Aug 25, 2014 at 07:48:45 PM PDT

  •  No. Wrong. (0+ / 0-)

    Just eliminate the capital gains tax and tax capital gains like ordinary income.

  •  qwatz (1+ / 0-)
    Recommended by:

    why not tax them for earnings held overseas?

  •  In all honesty, if people could honestly be tru... (0+ / 0-)

    In all honesty, if people could honestly be trusted to actually pay taxes and not do everything they could to avoid it, I might agree; however, we all know that people can't be trusted to pay their rightful taxes.

  •  under this tax free plan who pays (0+ / 0-)

    my employer's current contribution to social security and unemployment? Does that go away too?

  •  I have a much better idea pass laws that make a... (1+ / 0-)
    Recommended by:

    I have a much better idea pass laws that make all forms of tax avoidance illegal including schemes like inversion. Give all CORPORATIONS and individuals 60 days to repatriate all monies hid OFFSHORE or face 20 years in federal prison. Allowing this to go on without penalty is going to destroy America as we know it. This is the repuglican agenda to drown the federal government just as they predicted and as President Teddy Roosevelt warned us about during the robber barons days.

  •  I have been saying this for awhile (0+ / 0-)

    this is obvious.

    Lowering capital gains tax was a really stupid thing to do.  It is income for these rich folks.  If we went back to the pre-Reagan tax rates on income we wouldnt need any grand bargain.

    A very good idea, one that some Republicans would even support.

    We need to address the incrementally concerning problem of the "Facebook-ization of Daily Kos". it has to stop. Just sayin'

    by Indiana Bob on Mon Aug 25, 2014 at 10:34:38 PM PDT

  •  OR..... (2+ / 0-)
    Recommended by:
    delver, orestes1963

    a steep tarif for these companies when they try to import or sell services in the US. As tax evaders.

    We don't have a high corporate tax rate. "Corporate People" don't PAY the rates rates listed. They pay the deducted rate, After the slight of hand. Often close to nothing. And that's still too much for them!

    Any company that operates in the US but doesn't pay at least 20% taxes should be "deported". Barred from performing any business operations here.

    You want to leave? OK, REALLY LEAVE.

  •  New tax (0+ / 0-)

    Why not replace this tax with any US company paying a fee for goods or services moved into or out of the country.  Make it just high enough to replace all the taxes they have been avoiding.

  •  I'd sooner... (0+ / 0-)

    a) return taxes on the individuals back to the pre-1964 rates (i.e., upwards of 90 %, and back then even after all the loopholes and deductions their armies of tax lawyers could find they richest still paid over 70 %);

    b) if the corporations want to be "individuals" under the law; fine. Then tax all their profits at the individual tax rate (almost certainly at the 90 % rate!)

    c) Allow an out--the corporation can transform itself into a cooperative, with each employee having one vote and electing the CEO and board, with the stockholders being transformed into bondholders.  That way people who invest in the company can't take it over or force it to do stupid, self-destructive, things (the major cause of companies going bankrupt and the resulting job loss in the US, as I see it). It also stops the Bain Capitals in their tracks; they'd have to actually do real work creating real things instead of looting companies.

    d) of course this also requires Wall Street reform. As long as those who have to play in competitive markets making real things or delivering real services have to compete with Wall Street fraud and ponzi schemes, then we will have a problem. In the US I grew up in a company turning in 5 % profit was perfectly acceptable, as that profit margin didn't have to compete with 70 % profits from companies manipulating markets (like Apple) or fraud or ponzi schemes.

    •  forgot to add.. (0+ / 0-)

      b1) the cooperatives could also pay no taxes, because their owners (employees) do. So there would be a tax advantage going that way.

      From where I stand, what I see Wall Street destroying the real economy by placing wildly unrealistic demands on profits which keeps companies not only from compensating their workers better, but also not upgrading their capital or investing in the future. Everything must be sacrificed for next quarter's profit margin.

  •  I'd sign on with the estimable Professor Reich ... (0+ / 0-)

    I'd sign on with the estimable Professor Reich as soon as the first corporate brist is suffered.

  •  This is actually a reasonable, progressive (0+ / 0-)


    A couple problems: (1) This would allow wealthy families to throw all their assets into corporations and let their kids inherit it free of income tax.  It would basically be a supercharged IRA for wealthy kids to inherit from parents (but better for them, for a few reasons I don't have time to go into now).

    (2)  This would never pass because wall-street bankers and hedge fund guys would go crazy over the financial transaction/increased cap gains tax.  As much as we hate to admit it, Wall Street types donate more to and have even more influence over Democrats (Schumer, Clinton, etc.) than Republicans.  Those Wall Street democrats would never let it fly.  

  •  first argument that doesn't let corps off the hook (0+ / 0-)

    Great position, Kos. Now, let's figure out how to sell it and get around all the lackeys in Congress. A financial transaction tax, alongside taxing capital gains at least as much as income produced by labor, is the first change we need to make. We could sluff off 50% of the Internal Revenue Code if we did that. Just imagine how the world would be if we tax pros could work on something that was actually productive. I satisfy my clients by understanding and unpacking the tax code. I would rather be writing erotic novels. Now THAT would be useful. The FTT, meanwhile, is allocated to each country by head count strictly for social welfare programs run by the GOVERNMENT. I do not care what you think about that. Corporations are entirely unaccountable to the public. You can vote a bad politician out of office.

  •  Not sure about this (0+ / 0-)

    If you kill the corporate tax then there'd be momentum built up to kill capital gains taxes shortly thereafter.  When the trend is toward reducing taxation, there is no making up for the windfall.

    Also, there are plenty of ways to juggle this to make it look like we'd get more taxes and more money coming in, but I think we rely too much on stimulus and job creation.  We need to start thinking beyond the paradigm of capitalism altogether and not reverting to Keynesian fixes to coax capitalists to stay.  

    I say we require all companies operating in the US to be wholly owned by the American worker!

  •  There is a book on this (0+ / 0-)


    by Gio Weiderhold. Emeritus prof at Stanford in Computer Science and consultant to the Treasury Dept chasing down corporate tax cheats. He recommends eliminating the corporate tax as well and making "long-term" capital gains be long-term - e.g., much more than one year. Also eliminate all the capital gains loopholes, such as Venture Capitalist's pay being treated as long-term capital gains.

  •  **** (0+ / 0-)

    No no no!

    Fine them for setting up shop overseas...even higher fines than their taxes would be. Much higher. Much, much higher!

    See, one thing that baffles me is the whole corporate greed thing. "We are beholden to our stock holders". Bull! There's no such thing as a sure thing...their investment brings risk. How about the risk that they'll make money, but not uber money because you actually pay your taxes, pay your employees a livable wage, etc???

    Fine 'em!

  •  Where is that money? (0+ / 0-)

    Is there a big mattress in Ireland somewhere?  You don't need to be paying american taxes to invest in the US.  Remember when the feds were going to freeze all of Putin's assets held in the US?  Did he pay income tax on that?  I've read that the whole argument about money sitting overseas is basically hogwash.  A foreign company can invest in the US just like a US company can.

  •  Cut rates (0+ / 0-)

    I don't know if we should eliminate corporate taxes altogether, but our nominal corporate tax rate is actually higher than in those in those other industrial nations to which we should be compared - western Europe and Scandinavia for instance.  We should be able to cut corporate rates and eliminate the deductions and credits that bestow a negative tax rate on the General Electrics of the economy.  Taxes on capital gains, etc. should also be raised, of course.  

  •  kos, the man, never fails to deliver n/t (0+ / 0-)
  •  Just eliminate the ability (0+ / 0-)

    of stockholders and management to keep the gains made during their ownership which are due to illegal acts.

    The protection of stockholders was designed to protect them from financial mistakes--not from actual criminal actions.

    And we know these days due to computerized records, exactly who owned and profited from stocks at which times, and thus who has taken profits from illegal actions.

  •  Corporate taxes need to go up, not down (0+ / 0-)

    Corporate taxes need to go up, not down.  When corporate taxes are high, companies reinvest in plant and capital goods since these expenses reduce their tax burden.  This then results in more demand (the REAL job creator, not big or small businesses) which creates more jobs to meet that demand.  It sounds a little counter-intuitive, but just look back to the '50s:  high corporate tax rates, very high personal income tax rates (at least for the very wealthy - can you say 90%?) and the result was a middle class that flourished until trickle down, voo-doo economics took place under Reagan.  It took 30 years and some help from the Democrats, but the Republicans have basically managed to re-distribute all the wealth in this country from those that made it to those those that don't need.  Torches and pitchforks are just around the corner, my friends, and your gated communities won't save you.

  •  Perhaps you haven't heard? (0+ / 0-)

    Perhaps you haven't heard that corporations are people?
    We tax people so why wouldn't we tax corporations? Further, many big corporations wouldn't invest their money in the US but would find other places in the world to invest leaving the US no corporate tax income at all and no benefit from zero corporate taxation.
    Stockholders wouldn't benefit if the company paid no dividend and if the stock price didn't move up. And even if the stock price did move up who's to say if the stockholders would even sell their stock knowing that they would be taxed at a high rate. So, the rich would continue to get richer and everyone else would be screwed.
    This is supposed to be the UNITED States of America but is increasingly becoming the "CORPORATE States of America" of which you are not a member unless you are a rich stockholder.

  •  The Corporate Income Tax Conundrum (0+ / 0-)

    A potential solution to offshore inversions, loopholes and other undesirable features of the corporate income tax conundrum is to completely abolish the corporate income tax and replace it with a Value Added Tax (VAT). The purpose of a VAT is to generate tax revenue for the government similar to a corporate or personal income tax (see link below).

    The Republican party has no use for corporate taxes, period.  And the Tea party has no use for taxes or government (except as sanctioned by the Tea party).  Obviously, a VAT (and all other reasonable solutions) will be rejected by the obstruct, repeal and impeach crowd.  Nevertheless, a VAT does offer a potential solution to the corporate income tax conundrum.

  •  It Will Never Happen (0+ / 0-)

    because it's a fair and simple way of taxing corporate profits and as we know, conservative politicians want only the "commoners" to shoulder the tax burden.

    "It is the responsibility and duty of everyone to help the deserving underprivileged and less fortunate among us."

    by sichuan on Wed Aug 27, 2014 at 09:00:27 PM PDT

  •  Why tax corporate profits? Tax wealth. (1+ / 0-)
    Recommended by:
    peregrine kate

    Throughout history, governments have taxed the means of production.  In different historical eras and in different cultures/states, the type(s) of economies -- and therefore, the means of production --  have varied.  

    In early agrarian societies where production was (is) performed by bound serfs or slaves, the local suzerains paid taxes based on the quantity and quality of land, the number of livestock and a capitation based on the number of inhabitants.

    (It is noteworthy that when the western plains of the USA were opened up, each grid platted for settlement included a certain amount of land, the income from which would support the local school.)

    As economies industrialized, a piece of property with a factory generated more products than a residence, and the productivity of factories as compared to farms was significantly different.  As a result, states and municipalities started adjusting real estate tax rates based on the potential for production.  (One reason we have the zoning laws with which we are familiar.)

    It is reasonable to think of productive capacity as wealth.  Wealth, today, takes on many forms.  It is the capital represented by a factory, it is the ability of a residence to generate rent, it is the savings a people accumulate to support them in their old age. AND, it is cash reserves that a company holds which can be used to invest.

    The mechanisms for quantifying wealth and taxing wealth would require investigation, but an old idea can certainly find a place in today's world.  

    Right now, we tax income and profits.  An economic truism is that if you tax something, you will get less of it.  Accordingly, those individuals and corporations with income and profits do what they can to defer or mask that income and profit.  By the same token, businesses that take a loss end up paying no taxes, even though they may have great wealth.

    One benefit of a wealth tax is that by simply sitting on assets, they are slowly taxed away.  Therefore, in order to avoid loss of all wealth, the wealthy must put their assets into production.  Thus, they can generate more wealth than by simply holding them.

    No sane capitalist wants to decrease wealth, but too heavy a tax rate on wealth will induce the wealthy to find loopholes.  Accordingly, a wealth tax must be reasonable.  Still, maybe this old dog called a tax on wealth can be taught new tricks.

  •  Corporate greed (0+ / 0-)

    is a major reason why America has not completely rebounded from the Republican financial disaster. Congress, yes Democrats and Republicans gave these greedy Un-American Corporations billions of our tax payer dollars and what do they do with these dollars? They draw interest on the money and make loans that pays them 20 times more than what they had to pay back. Yes us tax payers bailed them out and what do we get for our tax dollars, screwed.

  •  Have you noticed (0+ / 0-)

    the Democrats have the same old tired consultants that brought us the election of 2012. If we lose the Senate all of these consultants should be fired and go to jail because they were there just for the money.

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