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Thread: Corporate Tax should be abolished, but what about capital gains tax?

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    Corporate Tax should be abolished, but what about capital gains tax?

    Despite what many people envision of businesses, at the end of the day, people will have to pay taxes on behalf of a business- whether it be shareholders or employees:
    A Corporate tax essentially becomes a fixed cost to run a business.
    It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.

    But what about capital gains? Doesn't this affect a lot of shareholders in the middle class as well as the upper class? Wouldn't we increase incentive to invest without it? Couldn't we simply increase income taxes to make up for the lost capital gains revenue? Or are there unintended consequences of doing so?

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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Corporate Tax should be abolished,
    Yes, as it is just passed on to the consumer.
    Taxing a Corporations earnings is double taxation, as the share holders (owners) are taxed on the earnings of their investment.
    Corporations/business creates employees who's income is then taxed and then provides product/services which are also taxed at the point of sale.


    but what about capital gains tax?
    No. It should be assessed when the gain (profit) is actually realized.


    Quote Originally Posted by Skorpius View Post
    It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.
    No. That is shifting the actual burden from the in-general consumer to those who aren't likely to consume the product at any greater weight or number.
    As the taxes accessed are being distributed to their product which is then bought by the consumer removing that obligation to the actual consumert should hit everyone equally. Not just one group.
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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Quote Originally Posted by Skorpius View Post
    Despite what many people envision of businesses, at the end of the day, people will have to pay taxes on behalf of a business- whether it be shareholders or employees:
    A Corporate tax essentially becomes a fixed cost to run a business.
    It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.

    But what about capital gains? Doesn't this affect a lot of shareholders in the middle class as well as the upper class? Wouldn't we increase incentive to invest without it? Couldn't we simply increase income taxes to make up for the lost capital gains revenue? Or are there unintended consequences of doing so?
    I think most taxes should be eliminated. I think government should govern not control every aspect of our lives. More taxes are just a burden on all the hard working people of this country. What we need is more people to get off their duffs and pitch in and support themselves. Unfortunately too many people think taxing the hard working to reward the lazy is the solution to the problem. Capital gains should not be taxed at all. Investing in industry should be rewarded not punished. Acquiring wealth and becoming self sufficient should be rewarded not punished. It is the people not willing to get out of bed each morning and go to work that need a boot in the behind. Everyone should be working towards independence not dependence.

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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Quote Originally Posted by Skorpius View Post
    Despite what many people envision of businesses, at the end of the day, people will have to pay taxes on behalf of a business- whether it be shareholders or employees:
    A Corporate tax essentially becomes a fixed cost to run a business.
    It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.

    But what about capital gains? Doesn't this affect a lot of shareholders in the middle class as well as the upper class? Wouldn't we increase incentive to invest without it? Couldn't we simply increase income taxes to make up for the lost capital gains revenue? Or are there unintended consequences of doing so?
    One thing to be clear on from the start is that taxes change behavior. You change the tax, you effect a change in the things people do.
    This is why taxes will reduce society's welfare, when they are not used largely for public goods.

    A change in a tax will have specific impact and will feed into the impact from other taxes. It is not trivial, what the consequences of a tax will be down the road, as it feeds into the economy and one change effects another and so on.

    Taxing companies seems best, as they are the most easy to control and follow and to the populace, because "you hit the rich". But it is like aerial bombardment. There is collateral damage among those that are hit by the fallout. The reduced output is no longer available to the populace or must be brought in from overseas, knocking jobs off the table.

    The tax that does the least welfare damage in economic terms id a head tax, where everyone pays a flat fee. This changes the production mix least and therefor comes closest to optimum allocation of resources.
    The second best in this respect is a VAT. It does have allocative fallout so the relative amounts of consumption change relatively less than for other taxes, but not as much as other taxes and it is relatively cost efficient to levy.

    To avoid the lower income brackets from hurting too much, a negative tax can be paid. This is cheaper than case by case control and cheap to organize.

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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Quote Originally Posted by Skorpius View Post
    Despite what many people envision of businesses, at the end of the day, people will have to pay taxes on behalf of a business- whether it be shareholders or employees:
    A Corporate tax essentially becomes a fixed cost to run a business.
    It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.

    But what about capital gains? Doesn't this affect a lot of shareholders in the middle class as well as the upper class? Wouldn't we increase incentive to invest without it? Couldn't we simply increase income taxes to make up for the lost capital gains revenue? Or are there unintended consequences of doing so?
    Why should everyone pay higher taxes so that those who own shares of a company can pay less?

    And... Since corporations fought so hard and/or celebrated the decision to become citizens with the right to political speech... Then those new super citizens must pay their taxes. Can't have it both ways.

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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Quote Originally Posted by Skorpius View Post
    Despite what many people envision of businesses, at the end of the day, people will have to pay taxes on behalf of a business- whether it be shareholders or employees:
    A Corporate tax essentially becomes a fixed cost to run a business.
    It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.
    High corporate taxes are one reason we have companies leaving the US. Reduce them and more will stay. Eliminate Self Employment tax for sole proprietors. That's the one that hurts small personal businesses.

    But what about capital gains? Doesn't this affect a lot of shareholders in the middle class as well as the upper class? Wouldn't we increase incentive to invest without it? Couldn't we simply increase income taxes to make up for the lost capital gains revenue? Or are there unintended consequences of doing so?
    We can solve that by eliminating all capital gains for those with middle class income. I would not increase income taxes, however. The best thing to do - is tighten our belts, keep our tax dollars at home, and reduce as many taxes as possible.

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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Quote Originally Posted by Excon View Post
    Yes, as it is just passed on to the consumer.
    Taxing a Corporations earnings is double taxation, as the share holders (owners) are taxed on the earnings of their investment.
    Corporations/business creates employees who's income is then taxed and then provides product/services which are also taxed at the point of sale.
    \
    And those employees are taxed on that income again at the point of sale when they make a purchase, and the business they make the purchase at is taxed at the point of sale, and gives that money to its employees where it is taxed as income and for some reason only capital gains is "double taxation."
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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Quote Originally Posted by Deuce View Post
    And those employees are taxed on that income again at the point of sale when they make a purchase, and the business they make the purchase at is taxed at the point of sale, and gives that money to its employees where it is taxed as income and for some reason only capital gains is "double taxation."
    Because no transaction is taking place. The stock owners own the company.

    It would be like taxing you every time you took money out of your savings account and put it in your checking, or visa versa.

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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    Quote Originally Posted by Skorpius View Post
    Despite what many people envision of businesses, at the end of the day, people will have to pay taxes on behalf of a business- whether it be shareholders or employees:
    A Corporate tax essentially becomes a fixed cost to run a business.
    It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.

    But what about capital gains? Doesn't this affect a lot of shareholders in the middle class as well as the upper class? Wouldn't we increase incentive to invest without it? Couldn't we simply increase income taxes to make up for the lost capital gains revenue? Or are there unintended consequences of doing so?
    Corporate tax is just a hidden tax on people, it is NOT a cost of running a business. Every single dime of the tax is passed on to the consumer, there is no cost to the business. That being said, it absolutely should be abolished, taxes are for people not businesses. As for capital gains they should be taxes at the same rate as labor. Why should someone that actually produces goods and services pay a higher tax then those that leech profits off of the labors of others?

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    Re: Corporate Tax should be abolished, but what about capital gains tax?

    The entire tax code needs to be scrapped. The IRS should be abolished and the building should be condemned. We should then implement an extremely simplified tax code that makes it illegal for politicians to buy ANYONE'S vote with tax money taken from other people who earned that money. Milton Friedman's negative income tax might be a good way to start.

    I feel really sorry for those who feel we don't tax people enough. How sad your lives must be. The reality is we spend too much, plain and simple. We need to reign in spending, pass a balanced budget amendment and scrap the 73,000+ pages of the convoluted mess that the current tax code is.
    “The most important single central fact about a free market is that no exchange takes place unless both parties benefit.” - Milton Friedman

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