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

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Skorpius

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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 should be abolished,
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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?
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No. It should be assessed when the gain (profit) is actually realized.


Skorpius said:
It may be a better option to completely cut the corporate tax, but increase the marginal income tax rate of the top X%.
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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.
 
Skorpius said:
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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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.
 
Skorpius said:
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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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.
 
Skorpius said:
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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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.
 
Skorpius said:
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%.
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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?
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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.
 
Excon said:
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.
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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."
 
Deuce said:
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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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.
 
Skorpius said:
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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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?
 
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.
 
LagerHead said:
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.
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Excellent post
 
LagerHead said:
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.
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You touched on something a lot of folks miss - typically, two types of people advocate higher taxes, those who are at the bottom of the income food-chain, who feel they stand to receive additional free services -- the other type -- are those who pander to the first type.

While the story is entertaining, most people realize Robin Hood was a common thief.

Wanting to raise taxes goes hand-in-hand with being fearful. When a person does not feel confident to provide for himself, he has to look for other ways, and it's simpler to advocate the distribution of another's wealth rather than proactively seeking work. Of course, there are those who are truly unable to provide for themselves and that's where we need to be charitable on a personal level.

It's the second type of person whose agenda is so much more insidious than the first type. The second type wants something aside from assistance. Perhaps they want to win an election or they want to force their political views on others. Or, they simply value the underdog more than the breadwinner. All of those reasons are suspicious and detrimental to society.
 
HowardBThiname said:
You touched on something a lot of folks miss - typically, two types of people advocate higher taxes, those who are at the bottom of the income food-chain, who feel they stand to receive additional free services -- the other type -- are those who pander to the first type.

While the story is entertaining, most people realize Robin Hood was a common thief.

Wanting to raise taxes goes hand-in-hand with being fearful. When a person does not feel confident to provide for himself, he has to look for other ways, and it's simpler to advocate the distribution of another's wealth rather than proactively seeking work. Of course, there are those who are truly unable to provide for themselves and that's where we need to be charitable on a personal level.

It's the second type of person whose agenda is so much more insidious than the first type. The second type wants something aside from assistance. Perhaps they want to win an election or they want to force their political views on others. Or, they simply value the underdog more than the breadwinner. All of those reasons are suspicious and detrimental to society.
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Spending more money than is taken in is just another "Robin Hood" and if you think we are $18T in the hole because that money was distributed to "those who feel they stand to receive additional free services", you are right, those people by far are the rich and the corporations. If it truly was "those that advocate the distribution of another's wealth rather than proactively seeking work"; then those people would be so rich they would not need to work. Almost 100% of the wealth spent on entitlements ends up in the hands of the corporations that provide the goods and services, not in the hands of those that received the entitlements. The faux outrage of the rich over the amount of tax money being spent on the poor is what is insidious, we both now where that tax money ends up.
 
If we are going to give corporations the same legal privileges of being treated as a "person" then it needs to have the responsibilities that go along with it. Strip them of their legal protections and I am ok with getting rid of their taxes.
 
BrewerBob said:
If we are going to give corporations the same legal privileges of being treated as a "person" then it needs to have the responsibilities that go along with it. Strip them of their legal protections and I am ok with getting rid of their taxes.
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Agreed
 
cpwill said:
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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No, it would be closer to paying income tax on the interest my bank pays me.

Or better yet. Just call it what it is. A tax on the income that is derived from company profits.
 
Deuce said:
No, it would be closer to paying income tax on the interest my bank pays me.
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No, because interest is additional income paid to you by a different entity. When you own a company and it makes profits, those are your profits. Taxing it twice when you make it and then transfer it to yourself is, yes, like taxing your income when it hits your bank, and then when you shift a portion of it to put in a savings account.

Or better yet. Just call it what it is. A tax on the income that is derived from company profits.
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Fine. But we should only have to pay it once. Either at the point where it is earned, or the point at which it hits the owners' individual accounts.
 
cpwill said:
No, because interest is additional income paid to you by a different entity. When you own a company and it makes profits, those are your profits. Taxing it twice when you make it and then transfer it to yourself is, yes, like taxing your income when it hits your bank, and then when you shift a portion of it to put in a savings account.



Fine. But we should only have to pay it once. Either at the point where it is earned, or the point at which it hits the owners' individual accounts.
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Why not say the same about income taxes? Tax the employer when its earned, don't tax the employee when it hits the employee's bank account.
 
Skorpius said:
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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Corporations should not pay taxes, nor should they make political contributions. The people who make up that corporation should pay taxes, of course, and, being citizens, should be able to make any political contributions that they want to make.

What about capital gains? Tax it the same as earned income. Tax all income the same, regardless of source. Do that, and no tax increases will be necessary.
 
Deuce said:
Why not say the same about income taxes? Tax the employer when its earned, don't tax the employee when it hits the employee's bank account.
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Because there is an actual transaction taking place. Money owned by the employer is going to be owned by the employee in return for labor.

Whereas money taken from a corporate account and put into individual accounts is money owned by the business owner going to be owned by the business owner. The money doesn't change ownership, and it isn't in return for anything.
 
cpwill said:
Because there is an actual transaction taking place. Money owned by the employer is going to be owned by the employee in return for labor.

Whereas money taken from a corporate account and put into individual accounts is money owned by the business owner going to be owned by the business owner. The money doesn't change ownership, and it isn't in return for anything.
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Who says only transactions should be taxed?
 
Deuce said:
Who says only transactions should be taxed?
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Should money be taxed when an individual is moving it from one place to another, say for example, taking money out of a savings account and putting it into a checking account or vice versa?
 
cpwill said:
Because there is an actual transaction taking place. Money owned by the employer is going to be owned by the employee in return for labor.

Whereas money taken from a corporate account and put into individual accounts is money owned by the business owner going to be owned by the business owner. The money doesn't change ownership, and it isn't in return for anything.
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I thought it was money owned by the corporation - in which various people buy and sell shares - being transferred to those shareholders? Isn't that the whole point of corporations; that their assets are not owned by individuals directly?
 
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Dittohead not! said:
Should money be taxed when an individual is moving it from one place to another, say for example, taking money out of a savings account and putting it into a checking account or vice versa?
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That's not what dividends are, so I don't see the relevance.
 
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