• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

House GOP Tax Reform Plan

JasperL said:
Any evidence for this assertion?
Click to expand...

You have to pass all the cost of doing business along to the consumer unless you want to make less profit.

But in a publicly traded corporation if they make no profit the value of their stock goes down

Eventually the stock is worthless and the company goes bust
 
jonny5 said:
Its unfair because it gives one product a financial advantage over others. If we're going to start assigning pollution taxes to products then that is a whole other debate. I prefer the simplicity of letting customers decide which products they think are better for the environment than forcing that decision on them. This has the added benefit of not allowing corruptible officials to use tax laws to favor special interests. And saving compliance costs.
Click to expand...

We tax things we want less of so why not give tax breaks on things we want more of? There is nothing wrong with Govt. encouraging good behavior and discouraging bad. In fact that is an important purpose of Govt.
 
Mac77 said:
You have to pass all the cost of doing business along to the consumer unless you want to make less profit.

But in a publicly traded corporation if they make no profit the value of their stock goes down

Eventually the stock is worthless and the company goes bust
Click to expand...

So go from less (after tax) profit (correct) to no profit (FALSE) then to a baseless conclusion that 'eventually the stock is worthless.' That makes no sense.

Income taxes are assessed on...NET income. If I make $100 in profits, and pay $40 in taxes, I still get to keep a profit of $60. So companies can pay income taxes and pass NONE of them onto their customers and make sustainable profits and stay in business theoretically forever.

I can't tell if we are talking past each other or what the problem is, but a tax that is a share (currently perhaps 40% in the U.S. including state taxes) of net taxable income CANNOT eliminate the profits of a business. The company can keep (1 minus the tax rate) of total profits, indefinitely.
 
Mac77 said:
I can point you to several colleges that teach economics but I can't teach the course here
Click to expand...

Right, I have an undergrad degree in Econ from a pretty good university, a masters in tax from a different one, and have read at least a half dozen academic papers on the incidence of corporate income taxes in just the past 18 months or so, referred you to a discussion of several papers on the subject with links, and based on what I learned in college and the economists I've read who teach at those colleges, you're just not correct.

If you're well versed in economics, you have some basis for your conclusion that changes in corporate income taxes are 100% reflected in higher or lower prices, and can produce your evidence, or links to arguments for your position. I've done it for my position, and now it's your turn. Asserting I'm ignorant isn't an argument. I could be wrong - have been MANY times - but you just asserting it isn't convincing anyone.
 
Mac77 said:
You pay taxes on the net

Meaning revenue minus expensers

If your competator has less gross he still passes 100% of his tax obligation along to the consumer just like you do
Click to expand...

Can't we all just agree that while there ARE some taxes included in the price of stuff (payroll taxes, fuel taxes hidden in delivery costs, the tax on employees' health care premiums), the tax on the company's profit CANNOT be costed out of existence!!

Let's just walk thru this real quick, and assume that there are no market forces prohibiting a company from raising prices. Let's take iPhones for example. Say Apple sold a million iPhones and paid a million dollars in tax on sales of just their iphones last year (just so the math is easy) and they want the consumer to pay that tax instead of burdening the company with the expense. No problem!! Just raise the price of an iPhone by $1 and sell the same number as they did last year and presto!! ... they won't owe any ... Uh .. wait a second. Now they're going to owe tax on an extra million dollars! Dammit!! Now they have to raise prices again to cover the increase tax burden!

It's a viscous circle. Like living in the mind of a Republican. :D
 
JasperL said:
So go from less (after tax) profit (correct) to no profit (FALSE) then to a baseless conclusion that 'eventually the stock is worthless.' That makes no sense.

Income taxes are assessed on...NET income. If I make $100 in profits, and pay $40 in taxes, I still get to keep a profit of $60. So companies can pay income taxes and pass NONE of them onto their customers and make sustainable profits and stay in business theoretically forever.

I can't tell if we are talking past each other or what the problem is, but a tax that is a share (currently perhaps 40% in the U.S. including state taxes) of net taxable income CANNOT eliminate the profits of a business. The company can keep (1 minus the tax rate) of total profits, indefinitely.
Click to expand...

In your previous post you referred to gross income

If you meant net that makes a big difference
 
Mac77 said:
You pay taxes on the net

Meaning revenue minus expensers

If your competator has less gross he still passes 100% of his tax obligation along to the consumer just like you do
Click to expand...

Except our nets are different.

My gross profit (net before taxes) was 100,000.. so I paid 40,000 in taxes ..

My competitors gross profit (net before taxes) was 60,000 so he only paid 24,000 in taxes.

A substantial difference in taxes paid.

So again.. please explain how I can pass that 40,000 onto my customers... while my competitor only passes 24,000 to his customers... and I can still be competitive in pricing?
 
Mac77 said:
You have to pass all the cost of doing business along to the consumer unless you want to make less profit.

But in a publicly traded corporation if they make no profit the value of their stock goes down

Eventually the stock is worthless and the company goes bust
Click to expand...

income taxes are not a "cost of business" that you can pass along.

if they could be passed on then prices would never stabilize...

I get to pass my tax onto my customers.. and now I make EVEN MORE profit, which causes increased tax.. so higher prices, more profit,, more tax paid etc.

Sorry but your premise simply is not valid.
 
jonny5 said:
In fact there is debate about whether AGW is real, amongst the experts.
Click to expand...

Much as there is debate over whether we live in a geocentric system vs. heliocentric system.
 
Mac77 said:
In your previous post you referred to gross income

If you meant net that makes a big difference
Click to expand...

You're confusing me with someone else, and obviously taxes are imposed on net or taxable income, so I'm sure that person just misspoke, and everyone reading knew that, or should have.

Furthermore, I'm addressing YOUR comment that an income tax leaves corporations with no profits, and being unable to pass the income tax to customers will eventually lead to a zero stock price, and those are just FALSE statements.
 
JasperL said:
You're confusing me with someone else, and obviously taxes are imposed on net or taxable income, so I'm sure that person just misspoke, and everyone reading knew that, or should have.

Furthermore, I'm addressing YOUR comment that an income tax leaves corporations with no profits, and being unable to pass the income tax to customers will eventually lead to a zero stock price, and those are just FALSE statements.
Click to expand...

I don't think corporate taxes take away from the bottom line of corporations assuming all the other companies in the market pay the same tax

Because they all just pass the tax along to the consumer
 
Mac77 said:
I don't think corporate taxes take away from the bottom line of corporations assuming all the other companies in the market pay the same tax

Because they all just pass the tax along to the consumer
Click to expand...

That's the problem - they don't pay the same effective tax rate. I've pointed it out several times now - seen the studies, know the tax rates in an industry range WIDELY. Some aren't even organized as C corporations and so will only pay individual tax, others are part of global conglomerates with many lines of business, some of them allowing for significant tax planning schemes, and some competitors will be foreign companies with higher or lower tax burdens than U.S. companies, etc.
 
Mac77 said:
I don't think corporate taxes take away from the bottom line of corporations assuming all the other companies in the market pay the same tax

Because they all just pass the tax along to the consumer
Click to expand...

but they DON"T PAY THE SAME TAX:

Even if they pay the same marginal rate.. the actual AMOUNT of tax will differ depending on how much profit before taxes they make.

I made 100,000 in profit before taxes and paid 40,000 in tax

My competitor made 60,000 before taxes and paid 24,000 in tax. Same marginal rate.

Please explain how they are paying the same tax they can pass on to the consumer. I would have to pass on a greater cost to my customers.. making my products less competitive than my competitors.
 
Mac77 said:
I don't think corporate taxes take away from the bottom line of corporations assuming all the other companies in the market pay the same tax

Because they all just pass the tax along to the consumer
Click to expand...

Taxes are not passed onto the consumer in the form of higher prices. As proof, General Electric hasn't paid federal income taxes in at least a decade. Are GE's prices to their customer's any less expensive compared to their competition that pays taxes? No.

David Cay Johnston explains:

Taxes are on profits, and profits are calculated at the end of a tax year by adding up all the revenue and subtracting all the costs. When a product or service is sold the company doesn't really know yet how much profit, if any, it will have at the end of the year, so it doesn't know what the tax will be, so how can it adjust prices? But if a company was able to just raise prices based on anticipation of profits, then the result would be that profits would be higher because of the higher price charged, which means taxes would be even higher, so the company should have raised prices even more, but that means the profit would be even higher, so they have to go back and charge more, but then ... I think you are starting to see how silly this idea of raising prices to cover taxes can get.
Click to expand...

The reality is that a business always charges the most it can charge to maximize revenue and profits. Economist call this the peak of the price demand curve. If they raise prices, demand falls enough to reduce revenues and profits. If they lower prices, demand increases but total revenue falls because of lower pricing.

Apple charges hundreds of dollars for an iPhone, even though it costs less than $50 to manufacture an iPhone. Demand dictates the price. Does anyone really think Apple would drop the price of iPhones if Apple's taxes were lower? Of course not. If Apple's tax bill was lower, the savings would go to Apple and its shareholders, not consumers.
 
jonny5 said:
This is actually a plan theyve had for about a year.

-reduce tax brackets to 3
-tax cap gains at ordinary income rate with a 50% exclusion
-increase standard deduction
-increase child tax credit
-eliminate all deductions except mortgage and charity
-eliminate AMT
-eliminate estate and gift taxes
-lower corp taxes

I think its a step in the right direction, but still too complicated. Multiple brackets, multiple deductions (and others will creep back in), too many credits that will take people off tax rolls all together. Tax Foundation says it will reduce revenue by 2 trillion over 10 years without factoring in stimulus effect. -200 Billion when estimating stimulus effect (higher income tax, lower corp taxes). More jobs, investment, wages, tax savings, though.

The biggest problem will be political. Liberals will not accept any tax plan that reduces taxes for corporations or the rich, even if it helps everyone else as well, and the economy as a whole. And of course the media will run with the 2 trillion dollar 'cost' as if nothing else is happening.

https://taxfoundation.org/details-and-analysis-2016-house-republican-tax-reform-plan/
Click to expand...

It's got some good and some bad. I like the simplification. I dislike that capital gains, estate, and gifts are still treated differently than ordinary income. All three should be taxed at standard income rates with no special treatment.
 
" I dislike that capital gains, estate, and gifts are still treated differently than ordinary income. " md #317
Click to expand...
I'm not sure why.

"It takes $money to make $money."

A seamstress can't earn a living without a needle & thread.

An investor uses different tools; usually capital.
So your formula rewards wealth, thereby punishing the impoverished and the working class.

Talk to some working class citizens, before you pass judgement on which is more deserving of favorable tax consideration.
 
jaeger19 said:
no they don't.

If I gross say 100,000 and pay a 39.9% tax rate that means I paid 40,000 to the IRS.. in other words a cost of 40,000

My other competitor had a much smaller profit last year. only 60,000 dollars ... at the same tax rate.. so they paid only 24,000 in taxes.

Please explain how I can pass 40,000 dollars of "cost in taxes".. onto my customers..

while my competitor only has to pass 24,000 dollars of "cost in taxes" onto their customers.

Since they have less cost to pass on.. it would mean my competitor's product is now much cheaper than mine.. and I will lose significant market share.

So again.. please explain how I can do what you claim I can.
Click to expand...

One could argue though that because you are bigger you get a better price for your cost of goods than your competitor does.
 
Critter7r said:
Can't we all just agree that while there ARE some taxes included in the price of stuff (payroll taxes, fuel taxes hidden in delivery costs, the tax on employees' health care premiums), the tax on the company's profit CANNOT be costed out of existence!!

Let's just walk thru this real quick, and assume that there are no market forces prohibiting a company from raising prices. Let's take iPhones for example. Say Apple sold a million iPhones and paid a million dollars in tax on sales of just their iphones last year (just so the math is easy) and they want the consumer to pay that tax instead of burdening the company with the expense. No problem!! Just raise the price of an iPhone by $1 and sell the same number as they did last year and presto!! ... they won't owe any ... Uh .. wait a second. Now they're going to owe tax on an extra million dollars! Dammit!! Now they have to raise prices again to cover the increase tax burden!

It's a viscous circle. Like living in the mind of a Republican. :D
Click to expand...

Same thing could be said of liberals though when it comes to many things. Whenever their policies don't work the solution is always to do more of whatever it was that didn't work.
 
Moderate Right said:
One could argue though that because you are bigger you get a better price for your cost of goods than your competitor does.
Click to expand...

I am not bigger. I simply had more profit last year.
 
jaeger19 said:
I am not bigger. I simply had more profit last year.
Click to expand...

I figured that but I was making the argument that you COULD have had more profit because you were bigger and therefore got a cheaper wholesale price for your cost of goods.
 
Moderate Right said:
Same thing could be said of liberals though when it comes to many things. Whenever their policies don't work the solution is always to do more of whatever it was that didn't work.
Click to expand...
And that's normally because they had to cut the program that they originally wanted by 75% or the Rs wouldn't allow it to pass.

Sent from my SM-G360V using Tapatalk
 
molten_dragon said:
It's got some good and some bad. I like the simplification. I dislike that capital gains, estate, and gifts are still treated differently than ordinary income. All three should be taxed at standard income rates with no special treatment.
Click to expand...

Why should a gift or inheritance be taxed again when its given to another person? Like if your grandma gives you $500 for your birthday it should be taxed?
 
"Sin in haste
repent in leisure."
Click to expand...
Trump making stink large about 100 days is silly, egotistical.

I'm all for tax reform.
But I'd rather see the studious, responsible, conservative approach; guiding the process intelligently toward a superior replacement; not just change for the sake of change.

Problem is, the Republicans are gunna own this.

Let's hope Speaker Ryan has the brains to resist Trump foolishness.
 
You must log in or register to reply here.
Back
Top Bottom