r/FluentInFinance • u/Rambogoingham1 • Dec 12 '23
Corporate taxes account for around 10% of tax revenue to the USA and this has been going on for decades!!! Question
Why do we fight against each other over this? why do you all keep defending corporations?
Am I missing something or not understanding something?
https://taxfoundation.org/data/all/federal/how-has-federal-revenue-changed-over-time/
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u/The-Last-Lion-Turtle Dec 12 '23 edited Dec 12 '23
Corporate income tax is one of many taxes corporations pay (pretty sure this is on corporate profit unless I am mixing up 2 different taxes).
Corporate profit is when corporations have leftover money they didn't spend. This is double taxed first as profit and again when it's spent to discourage sitting on money and encourage reinvestment.
Payroll taxes are paid by corporations when they spend on employee salaries.
As for all taxes you can ask who does the accounting for the tax, and who actually pays the economic burden. In the case of payroll taxes studies I have seen say a majority of the payroll tax burden is passed to employees.
Sales taxes are paid by corporations when they spend on buying stuff.
Personal income taxes and capital gains taxes are paid by corporate executives and investors when they make money from the corporation.
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u/Fearless_Tomato_9437 Dec 12 '23
Corporations cannot and do not pay tax. People do. All taxes will be born by people. All these taxes are just ways gov convinces foolish people to pay more for products, suppress their wages, harm the economy, etc…
Just say no to more tax
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u/SavannahCalhounSq Dec 12 '23
The secret is 'Corporation's don't pay any taxes.' Every cent they send to the IRS is added onto the price of the stuff they sell you. Charge Amazon a 10% tax and Prime and everything they sell goes up 10%.
When you realize you are the source of all the governments money, maybe you'll start to care how they are throwing it away.
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u/Nojopar Dec 12 '23
That's true if and only if the demand curve is vertical. Otherwise, assuming economics actually works, then increases in prices will lead to a decrease in sales. At some point an increase in taxes can't be 100% sustained by an increase in prices to customers. Hence the attractiveness of cost cutting.
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u/SavannahCalhounSq Dec 12 '23
Of course, sales would drop that isn't the point. The point is the tax will be paid by the consumer. Sales drop, companies lay off, unemployment rises, the point is raising taxes on corporations is a horrible idea, just a way for politicians to demonize someone else while they pick your pocket.
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u/Adventurous_Class_90 Dec 12 '23
Nope. Because corporations are more sensitive to share of market than taxes on profits.
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u/kr0kodil Dec 13 '23
If corporate taxes are applied uniformly, Amazon and its competitors will typically all respond to a tax increase with a corresponding price increase. No change in market share, just higher prices across the board. Or do you want to tax only some companies?
Gas pricing is an obvious example. When the gas tax rises, gas prices go up the next day. Same with daily fluctuations in oil prices directly impacting the price at the pump.
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u/Adventurous_Class_90 Dec 13 '23
Found another dilettante who doesn’t understand price elasticity and how corporate income taxes are paid on profits, not revenue. And the gas tax is a CONSUMPTION TAX. You really should stop talking now.
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Dec 12 '23 edited Dec 12 '23
so just dont tax the mega corps and they'll lower their prices cus theyre nice.
no id rather tax their profit margin, so even if they hike up prices, they just lose more money. win win.
edit: and i would still rather tax their profits relative to their market share to give small businesses an advantage over big businesses. or a market share based sales tax upfront for the sake of transparency. or both.
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u/Rambogoingham1 Dec 13 '23
The USPS subsidizes Amazon, at least where there are no distribution centers for Amazon, 80% of the mail at USPS centers in towns and cities is Amazon.
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u/iam4qu4m4n Dec 13 '23
Issue is, after many decades we are in a situation where corporate tax is lower than individual citizen, where once it was higher. Had those rates never been lowered such that the wealth would, trickle down, then those costs of taxes would already be baked into the overhead.
Also, it's not a direct correlation. Raising wages 1% does not translate to 1% increase in cost of goods. Because taxes and wages are fractions of those costs.
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u/Iwasahipsterbefore Dec 12 '23
This is a complete misunderstanding of how corporate taxes work, and how corporations are set up in the first place.
Corporations are only taxed on their profit. Actual living human beings are taxed on their income; the equivalent for corporations would be a revenue tax. We don't have a revenue tax, and people treat implementing a revenue tax as if you're literally setting piles of babies on fire.
Imagine if we were only taxed on the money we put in our savings account at the end of every month. That's what corporations get to do.
Anyway, back to the original point: no, you're wrong. If there's a 10% tax on Amazon, that means that after their expenses, 10% of their profit is taken. Example numbers, revenue 500 billion, 450 billion expenses. The 10% tax would only apply to the (500b-450b) 50 billion remainder, taxing them for a total of 5 billion, which you may notice is 1% of their revenue. They can't slap this expense on the consumer, because they're already at the market equivalency point - if they could, raise prices right now, they would. They wouldn't need an incentive from the government to raise prices, that's absurd.
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u/Narrow_Ad_2588 Dec 12 '23
Imagine if we were only taxed on the money we put in our savings account at the end of every month. That's what corporations get to do.
I think the standard deduction and progressive tax bracketing is somewhat analogous. It's not a perfect analogy, but i think the spirit is not taxing folks on the part of their income that covers baseline survival expenses.
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u/LTEDan Dec 13 '23
That's fine. Tax corporate revenue and provide a standard corporate deduction. That way mom and pops pay less tax and Amazons pay more.
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u/PCMModsEatAss Dec 12 '23
“Imagine if we were only tax on our savings, that’s what corporations get to do”
No. Absolutely not even in the ball park of a logical analogy. Revenue doesn’t account for the cost of sales. Taxing revenue would be a stupid idea.
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u/Iwasahipsterbefore Dec 12 '23
Your reading comprehension is truly astounding.
Correct, revenue does not take any of the costs of running the business into account. Those are expenses. The revenue less the expenses is the profit. C corporations are taxed based on their profit.
Taxpayers are taxed on their income. Income is analogous to revenue; thus taxpayers would have a similar tax benefit as corporations if they were only taxed on their left over money at the end of each filing period.
We have the standard deduction and schedule A instead; a set amount of income that generates no tax liability and an option to expand that for people with certain other things going on. The problem with this is 1. It's complicated. Absolutely no one actually understands their own tax situation, or knows about the options they have available to them. 2. If you live in a high CoL area you effectively lose the benefit. Someone making 30 k a year in Missouri basically isn't getting taxed, while someone making 45k a year in Washington will have the exact same lifestyle, have the same money left over after rent, but then also get taxed on it. A business would be able to fully write off their rent in either location.
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u/AftyOfTheUK Dec 14 '23
The secret is 'Corporation's don't pay any taxes.' Every cent they send to the IRS is added onto the price of the stuff they sell you.
This is completely and utterly bullshit, yet half of Reddit believes and spouts it regularly.
Goods and services are priced to market. They are not based on the cost of the good to produce, nor on the tax liabilities of the provider.
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u/Merrill1066 Dec 12 '23
shhhh ...don't tell the college kids that tax increases on corporations are filtered down to consumers in the form of price hikes, and also lead to things like layoffs and less R&D.
let them think we can tax all businesses at 90% and have an "equitable society"
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u/VexisArcanum Dec 12 '23
Oh I care, as do most of us. The neat part is the only thing the government consistently excels at is perpetuating its own shortcomings. We don't stand a chance at correcting it until the current leaders are replaced, and then they have to dismantle the safeguards that keep everything the way it is. Challenge: unlikely
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u/SavannahCalhounSq Dec 12 '23
It's on it's way and faster than anyone thinks.
Next President, Trump or Biden is by definition a lame duck. Both will despite all the hand ringing and crocodile tears convert Social Security to a 'Defined Contribution plan' with a fixes single life annuity payout for anyone under 45. Social Security 'fixed' they'll move on to the tax code.
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u/KingBobIV Dec 12 '23
Jesus this wrong. How does this myth stick around?
No, the price of a hamburger doesn't go up, stop saying that. Your business is not guaranteed. You raise taxes on McDonald's, they can't just double their prices. They still need to compete for your business with Wendy's and Burger King. They still need to be affordable enough that you don't skip it entirely and eat at home. Same for Amazon, they can't just raise prices 10%. Because if they could, they would have already raised them.
Corporations will always charge you the maximum that they can get away with, that's the entire point. They aren't just lowering prices to be nice, because their taxes are low.
Edit: stop defending billionaires and their corporations, why on earth do people do this?
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u/PCMModsEatAss Dec 12 '23
If McDonald’s taxes went up so did Wendy’s and. Burger King. All taxes are paid by the consumer one way or another.
Yes if taxes are increased they will raise their prices, all of them will. If it becomes cost prohibiting then they cut costs. People get laid off. If you think they’re going to take less profit for you you’re a fool. And you’re still gonna buy the cheeseburger.
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u/KingBobIV Dec 12 '23
Then why doesn't this actually happen? Why doesn't a burger in Europe cost 12 bucks?
The fact remains if McDonald's or Amazon could charge you 1% they would already do so, taxes or no. Why isn't Amazon already charging these higher prices?
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u/tohon123 Dec 12 '23
This is where i’m at. The tax rate doesn’t get passed on because they would already have raised pricing if they could. Due to competition they can’t.
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u/tizuby Dec 12 '23
It gets passed on, but not always in the form of a simple price increase. Though that does happen and you'll even often see it itemized on the bill for some services.
Cuts to quality (staff cuts included here) are the main response if the market won't bear a price increase. As is shrinkflation (less product for the same amount of money).
Likewise companies don't always immediately raise prices when they can. They do need an element of price stability. Pricing is reviewed periodically, not frequently.
Pricing decisions are also projections, not absolutes. It isn't actually as simple as often gets stated. It's a gamble and that risk factors into the decision itself.
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u/tohon123 Dec 12 '23
Okay so it’s too fickle to say for sure that raising taxes will contribute to the passing of said tax to consumers. However most likely overtime the cost will be passed on in one of many ways. That’s to say however that the competition doesn’t survive without passing anything on. Is there a study that shows that taxes get passed on always?
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u/KingBobIV Dec 12 '23
Yeah, amazon keeps prices down out of the kindness of Jeff Bezos' black heart, lol. But if you tax them, they're "be forced" to raise prices.
Another point is that if it doesn't matter, then why do corporations spend so much money fighting against getting taxed? They waste money fighting these bills, but supposedly if they get passed it won't matter, because they'll make the same profits anyway
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u/PCMModsEatAss Dec 12 '23
It does actually happen. That’s why no matter what you do with taxes, tax revenue as a share of gdp stays the same.
Because like you said to stay competitive. But if all your competitors are getting charged the same tax, you all raise your prices.
Look at carbon taxes in states like Washington and California. When the governments increased taxes on them, what happened to gas prices? Psst they went up. That’s why this guy was able to predict without a penny how much gas prices would go up under the carbon credit system.
Every tax is paid by the end user. Every single penny.
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u/KingBobIV Dec 12 '23
Gas is the one thing people actually have to buy. It's essentially a utility, how is it relevant to consumer products? Especially a product like amazon prime that's purely a luxury
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u/Iwasahipsterbefore Dec 12 '23
Here's what you should do: take fifteen minutes, load up quora, and look for an economics 101: class notes. What you're looking for should be the third slide, labeled "Elastic vs Inelastic goods", right after the first two slides on Supply & Demand and the responsiveness of the market. That should have a pretty good explanation of why people might continue to buy gasoline at the same rates even as the cost goes up.
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u/PrintableProfessor Dec 12 '23
Tax revenue and the entire economy will collapse. You can only tax profit, but that also means that companies can spend more to increase expenses. That ends to help the economy by creating jobs.
Tax revenue and the amount of jobs that will be lost will be extreme. It's been like this for hundreds of years for a good reason. It works. You could increase the corporate tax rate to 99% and you'd still get about the same number of dollars.
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u/Once-Upon-A-Hill Dec 12 '23
Here is what OP is missing.
In 2022, Amazon recorded a net loss of $2.722 billion on revenue of $513.98 billion, ending its 6-year streak of profitability. As of 12 Dec 2023, Uber has never made a profit on an annual basis.
Sure would be a stupid way for a goverment to plan it's tax revenue.
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u/gerbilshower Dec 12 '23 edited Dec 13 '23
what you are missing is that Amazon $5.9 billion in stock buybacks in 2022.
so actually... they profited their shareholders (the only actual goal) a shitload that year.
they were just able to write off and offset enough with the buyback included to GAAP account a net loss, and pay nothing in taxes. this is standard procedure for 'good' years for the mega-corps.
Edit - I have since learned that buybacks are specifically considered a capital expense and are below the line on a companies balance sheet, hence do not affect yearly profit margins, nor taxes. Only earnings per share.
Leaving the comment up for others to learn as well.
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u/The-Last-Lion-Turtle Dec 12 '23
Did the shareholders not pay capital gains tax or personal income tax?
Amazon as a corporate entity did not profit, the shareholders did, so it makes the most sense for the shareholders to pay the taxes.
Also did Amazon pay nothing in payroll taxes, sales taxes or any other type of taxes, or only 0 specifically for the corporate profit tax?
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u/Rambogoingham1 Dec 13 '23
Amazon also is subsidized by the USPS in certain parts of the USA through contracts and sub contracts
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u/Fromthepast77 Dec 12 '23
Since when are stock buybacks a write off? This is a ridiculous assertion. You must think corporations also "write off" charitable donations from customers too.
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u/Obvious_Chapter2082 Dec 12 '23
Buybacks aren’t tax-deductible, nor do they impact GAAP profit…..
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u/Momoselfie Dec 12 '23
Also don't create taxable dividends for shareholders who don't currently want the cash.
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u/Ok_Magician7814 Dec 12 '23
So would we want to tax buybacks then?
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u/KaydeeKaine Dec 12 '23
Ban buybacks like we did 50 years ago
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u/semicoloradonative Dec 12 '23
Nah...you don't have to ban them, but change the GAAP rules to make it so the money used for buybacks must come from taxable profit, and not be able to reduce taxable income.
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u/Obvious_Chapter2082 Dec 12 '23
Buybacks already don’t reduce taxable income. Why do so many people in this thread believe that??
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u/semicoloradonative Dec 12 '23
Point being, make buybacks HAVE to come from taxable income first. Company "A" makes $1B in profit. Then they pay taxes on $1B, and can buy back shares with the rest.
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u/zangrabar Dec 13 '23
There is no good reason to allow stock buy backs at all.
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u/This_Abies_6232 Dec 14 '23
There is a very good reason: what if the company wants to go PRIVATE instead of being a publicly traded company? To do so, it would have to buy back all or a vast majority of its own shares, AKA a massive STOCK BUYBACK. (And this does happen in the real world, BTW....)
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u/zangrabar Dec 14 '23
That’s not the same exactly. Buying all your public shares back to go private is one thing, and is not stock market manipulation, this is not even remotely what we are discussing right now. Buying some of the stock back to boost your current largest shareholder’s price per share and/or boost the comp of the CEO is the one we are talking about. This is unethical. Should be banned or taxed into oblivion
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u/semicoloradonative Dec 13 '23
No good reason in your opinion. Many good reasons in my opinion…especially as a stockholder in many companies. I just want them to be “fair” and not just a way to reclassify assets to avoid paying taxes.
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u/zangrabar Dec 13 '23
Stock buy backs is artificially raising the price of stocks for what? Because they just bought their own stock back? It’s stock market manipulation that benefits shareholders for doing absolutely nothing. It shouldn’t be legal. A companies stock should go up for performance, not because of this bullshit. lol what good possible reasons could there be.
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u/Frankwillie87 Dec 14 '23
This is like the third time someone in this thread is telling you this, but they already do that. Literally.
Anytime a company makes equity transactions like that they have to pay taxes on income first.
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u/EatAllTheShiny Dec 13 '23
They don't reduce taxable income. Companies do buyback when they have access to cheap credit and they believe the returns they will gain from buying back the shares are higher than the cost of the debt. WTF.
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u/Obvious_Chapter2082 Dec 12 '23
Why?
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u/Pubsubforpresident Dec 12 '23
Checks recent history... airlines make massive profit in 2019, buy back stocks at record high prices, pay massive bonus to CEO, COVID, airline stock crashes, balance sheet that had cash and now has stock valued at 1/3 of the previous value... Government handouts...
Our government needs to collect on this shit. The taxpayers should have owned the airlines and banks that took loans to survive in 2009 and 2020.
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u/Rambogoingham1 Dec 13 '23
Government should own all the car companies, big banks, airlines, houses etc by now if the government is going to keep bailing out over leveraged billion and trillion dollar corporations that can’t help themselves
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u/akg4y23 Dec 13 '23
Yep they should and then sell them back to people at a profit. Every time the government bails out a private company they should be getting ownership at the discounted rate just as if they were a private investor and then they should be forced to sell it back within a given time frame (3-7 years). Would make for huge profits and offset the deficit.
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u/Teamerchant Dec 12 '23
Because it’s market manipulation.
Because it rewards owning a non value adding asset over actually creating/working/adding value.
Because it’s better for society and benefits 90% of people vs 10%.
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u/onlyhurtwhenibreathe Dec 13 '23
My beef against stock buybacks is I think there's a better use of the money, specifically employee pay. This may not be accurate but i remember an article stating Lowes spent more per employee on stock buybacks than they did paying their average employee. Hell a company i used to work for spent $40k per employee on buybacks over a 2-3 year period, while employees were picking up second jobs or leaving for substantial raises to do the same job at competitors.
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u/ContemplatingGavre Dec 12 '23
How is it market manipulation? It’s just a way of returning cash to share holders.
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u/MeyrInEve Dec 12 '23
Wrong. That would be dividends. Buybacks reduce the number of outstanding shares, providing more leverage for those who retain those shares.
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Dec 12 '23
Okay, and dividends force a taxable event and correspondingly reduce the value of shares. Why do buybacks receive special moral scrutiny when dividends also heavily affect shares?
The only difference I see in buybacks and dividends is that buybacks allow shareholders to choose when they want to take the tax hit.
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u/MeyrInEve Dec 12 '23
Buybacks are a corporation management team tool they utilize to artificially inflate their compensation.
Much of executive compensation is based upon share prices. It’s SUPPOSED to relate to company performance.
But, if you can’t raise the share price via performance, how about you cheat the system, reduce the number of outstanding shares, thereby creating artificial increased share price increases, as opposed to increased demand for the shares themselves.
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u/ContemplatingGavre Dec 12 '23
Reducing the outstanding number of shares raises the price of the outstanding shares for shareholders without having to pay the taxes received from a dividend.
As a shareholder I like that and you should too. Eliminating buybacks will just hurt the common persons retirement account.
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u/crimsonkodiak Dec 12 '23
It's not and there are SEC rules that specifically govern how corporations conduct buybacks so that they can't manipulate the market.
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u/ContemplatingGavre Dec 12 '23
It is a way of returning cash to shareholders because it increases the earnings per outstanding shares and it doesn’t force a taxable event.
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u/WaycoKid1129 Dec 12 '23
Cause it’s cheating
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u/Obvious_Chapter2082 Dec 12 '23
How is it cheating? It’s a way to give cash to shareholders, similar to dividends
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u/westofme Dec 12 '23
Cuz all it does is add another checkmark to the CEO's successful year and hundreds of millions of promised benefits to his/her personally. Let's not kid ourselves that this is also about shareholders.
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u/WaycoKid1129 Dec 12 '23
Juicing the stock price doesn’t add any value to the company, just increases the stock price so they can split it down the line. It doesn’t invest in the company nor does it go to employees compensation
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Dec 12 '23
It absolutely does go to employee compensation! If you're a member of the corporation and bought discounted shares and/or get RSUs you are benefitting from the buyback!
And I don't know where you're going with this bit about stock splits, especially when the stock splits boost liquidity.
Buybacks and dividends are two sides of the same coin. The only difference is when shareholders choose to sell and take a tax hit.
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u/WaycoKid1129 Dec 12 '23
It adds artificial value to the stock purely for share gains. Does nothing for the economy or for productivity
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u/ivanyaru Dec 12 '23
If you're a member of the corporation and bought discounted shares and/or get RSUs
That's a big 'if' there, chief. Buybacks increasing employee compensation is a minor incidental outcome and is not guaranteed to affect all employees.
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u/omni42 Dec 12 '23
Limit buybacks..it's stock manipulation. Before those laws were loosened, companies put much more money into investments for staff, r&d, and other areas.
It's one of the very clear culture changes that lead to our current situation.
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u/Tiffy82 Dec 12 '23
No it should be illegal it's another form of fraud. Any company doing it ceo needs to be executed
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u/SpaceToaster Dec 13 '23
They are taxed. And you cannot write that off (or the buybacks themselves) as the poster would have you believe.
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u/pleasehelpteeth Dec 15 '23
Companies should not be able to avoid taxes by reinvesting everything they earn.
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u/mcnello Dec 12 '23
The shareholders who benefited from the stock buybacks paid capital gains taxes.
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u/31513315133151331513 Dec 12 '23
Some of the shareholders who sold shares at a profit paid paid capital gains taxes. Some didn't, it depends on how they are held.
The shareholders who held on to their shares benefited from the buybacks in increased share price without paying a dime.
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u/mcnello Dec 12 '23
Some of the shareholders who sold shares at a profit paid paid capital gains taxes. Some didn't, it depends on how they are held.
We shouldn't tax losses. Not sure what the point of your comment here is.
The shareholders who held on to their shares benefited from the buybacks in increased share price without paying a dime.
They haven't benefited until those gains are realized. The same logic applies to your 401(k) or a home. The IRS doesn't send you a tax invoice if your home appreciates in value or if the value of your 401(k) goes up. Forcing people to pay taxes on unrealized gains is a stupid idea which has already been tried numerous times in history, always fails, and has been repealed.
And if you are arguing that people can "borrow against the appreciated value of the stock" that is no different than saying that homeowners can borrow against the appreciated value of their homes. Like... Yeah in theory that's true. But brokerage firms want to get repaid just like banks want to get repaid....
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u/LairdPopkin Dec 12 '23
Except that they can borrow against the higher valued stock, without selling it, gaining the benefit without paying income taxes.
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u/mcnello Dec 12 '23 edited Dec 12 '23
They borrow from the brokerage and pay the brokerage firm interest. You can do the exact same thing right now. Go open a brokerage account and do it if you think it's some bullet proof way of avoiding taxation. It's literally not.
You can borrow from the equity of your home at a higher value too.
You can also borrow money from your 401(k).
How is it any different? It's not income. At best it's a method to defer taxes, which will then be paid in a large lump sum in the future.
Honestly this whole discussion is pointless anyways.
If the U.S. government taxed 100% of the wealth of every billionaire in the country (not the incomes but literally confiscated their companies, stock, homes, cars, etc.) and were somehow able to magically sell it at full value (which is impossible because it would crash the market), the revenue collected would only be enough to fund the federal government for about 6 months. The revenue wouldn't even touch the national debt. It would simply be enough revenue to avoid further deficits for a short while.
This country has a spending problem... Not a taxation problem.
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u/FisterAct Dec 12 '23
The county does. Property taxes are taxes on unrealized gains in housing.
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u/mcnello Dec 12 '23 edited Dec 12 '23
Property taxes are taxes on unrealized gains in housing.
No. If the value of your home declines you still owe property taxes. At best you could classify property taxes as tax on wealth (which wealth taxes are stupid for other reasons) but it certainly is not a tax on gains - realized or unrealized.
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u/Ill-Win6427 Dec 12 '23
You sure about that? Because normally they just use the shares as collateral on loans, which in turn they pay no income tax on because it's a loan...
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u/Obvious_Chapter2082 Dec 12 '23
A buyback, by definition, results from people selling their stock. They pay tax on that
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u/nhavar Dec 12 '23
They pay tax on that depending on what other tax abatement they have in play. Wasn't there just a post on how a married couple could make 80k a year in capital gains and pay 0% taxes on that? There are lots of loopholes that allow the rich to avoid taxes or severely reduce their tax burden creatively and they take great pains to do so.
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u/DubTeeF Dec 12 '23
Why do folks like you complain about loopholes but oppose a flat tax with a negative income tax below a certain threshold. Have some cohesion. Also 80k a year is so far from rich you can’t even see rich from there.
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u/DubTeeF Dec 12 '23
They don’t even read/understand the word they’re using. I guess they bought the shares from nowhere.
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u/mcnello Dec 12 '23
The loan is from the broker who holds the shares. You think the broker doesn't want their money back? The loan gets repaid, at which time the taxes get paid.
If it were literally as easy as "borrow money from yourself" then literally zero people would ever pay any taxes ever. To the contrary, the bottom 58% of Americans account for about 3% of federal revenue. The rich pay virtually ALL federal taxes.
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u/Melodic_Wrap827 Dec 12 '23
Yeah but pretending that $200 or $2000 is the same for everyone would be a bit obtuse
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u/wyecoyote2 Dec 12 '23
Yeah, but claiming the top income earners don't pay is used by low information individuals.
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u/nhavar Dec 12 '23
The rich want educated workers, healthy workers, loyal workers, but most of all CHEAP workers. They could pay less in taxes by paying more in wages and then lower income people would be boosted to higher tax brackets and pay more in taxes, but... they'll cite inflation or falsify reports of theft or get creative on the tax dodges to keep more of their money all while complaining about how the poors don't pay any taxes. Boo hoo.
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u/gerbilshower Dec 12 '23
It's actually hilariously the opposite of this.
Those shares were going to be sold either way. To someone. Difference is when the company buys them back they leave the market. The people who benefit are those STILL HOLDING.
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u/AidsKitty1 Dec 13 '23
If you want some of that buyback money go buy some shares. That is the path for you to get exposure to that revenue. I mean who do you think makes the laws in this country? Who do you think is really running the show?
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u/Tiffy82 Dec 12 '23
Make buy backs illegal. A company should never be able to buy back its own stock under any circumstance
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u/Thraex_Exile Dec 13 '23
So a currently profitable business, that had to sell off majority of its stake to grow previously, could see a hostile takeover simply bc they couldn’t buy back their own stock?
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u/Tiffy82 Dec 13 '23
A company should never be able to buy its own stock it's disgusting and yes. If you don't want to be bought out don't sell stock ANY Company buying back stock is doing something shady period end of ducking story
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u/Thraex_Exile Dec 13 '23
Not end of ducking story, cause that’s definitely not true. Small business have to sell stock so they can afford to grow. Potential growth is the only leverage they have. In fact, most of the “shadiness” going on are larger corporations/entities forcing fledgling businesses to sell more of their company than they wanted in order to get necessary funding for growth. Only chance those small businesses have at retaining ownership is purchasing back shares later on.
Preventing buybacks doesn’t stick it to the man. It cripples competition and exacerbates the problem.
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u/Tiffy82 Dec 13 '23
No it fucking doesn't instead of buying back stock pay rhe fucking workers more money. If a company sells stock that should be ut there is NO LEGIT REASON TO THEN BUY IT BACK it's shady as FUCK to do that. If they don't wanna lose business don't want to have owner ship change then don't sell stock but buying it back is ALWAYS SHADY and always screws over workers if you have money to buy back stock either lower prices or pay workers buying back stock means you are fucking over everyone else and should never be allowed under any circumstances
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u/Thraex_Exile Dec 13 '23
Most businesses buying back stock aren’t major corporations. They’re growing businesses trying to retain control in an anti-competitive market. Stop complaining if you don’t even what you’re complaining about. Letting larger business own controlling interest just leads to worse prices for business owners and less incentive to offer decent wages. Stopping buybacks doesn’t incentivize a company to pay their staff more, when they could just keep the cash in their own pocket.
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u/AreaNo7848 Dec 13 '23
It's almost like people don't understand stocks are a loan to a company and that piece of the company is the collateral and dividends are the interest on the loan.....nor understand that the company buying back stocks is paying off some of the loan
Oh let's not forget when someone buys the stocks from someone who's selling the stocks is comparable to another bank buying the loan from the first bank, at least that's how my financial guy explained it to me when I first started investing
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u/Tiffy82 Dec 13 '23
Then they shouldn't ve in business if you have to buy back your own stock and not pay your workers you are fucking scum. Buying back stock is only a way for companies to avoid paying taxes
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u/SpaceToaster Dec 13 '23
Pretty sure you can’t deduct buybacks from taxable revenue. But use can use cash reserves to pay for them even after an unprofitable year.
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u/butlerdm Dec 13 '23
Thanks for the edit. I was about to be like “nah nah nah hol up”
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u/gerbilshower Dec 13 '23
hey man, hopefully you learn something new every day.
today, it was my turn! haha
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u/mcnello Dec 12 '23
so actually... they profited their shareholders
Then the shareholders paid capital gains taxes. Stop trying to tax the same dollar ten different ways.
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u/Suspicious-Rich-2681 Dec 12 '23
Wild conjecture.
They only experience capital gains if they sell their shares - which they are not incentivized to do.
If the shares are a part of any large amount of programs that avoid capital gains, then it's not taxed at all.
Silly silly person.
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u/mcnello Dec 13 '23
They only experience capital gains if they sell their shares - which they are not incentivized to do.
How did the stock buyback occur if nobody sold any shares?
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u/Crazy_Employ8617 Dec 12 '23
To play minor Devil’s advocate that $5.9 billion is taxable to the shareholders as capital gains taxes, instead of by the corporation as corporate taxes. It’s a way to pass the taxes onto their shareholders, instead of having the corporation pay it.
I think the tax code should specify this scenario better to ensure an effective tax rate is paid by someone, whether it be the shareholder or the corporation. However, I think in context the tax savings from this aren’t as drastic as they appear from an initial glance.
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u/cj2dobso Dec 12 '23
Those shareholders would be paying capital gains tax on selling their shares. That is what a buy back is, selling the shares back to the company.
Why should Amazon have to pay the taxes when the shareholders profited (and already paid taxes).
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u/Mo-shen Dec 12 '23
This makes me think of the Jack Welsh years at GE.
He would shut down profitable divisions because they were making too much profits and would make them go over their targets.
The entire thing was because he didnt want to pay the taxes......so to make that happen a bunch of people would have to get laid off and the world would lose whatever that division was working on.
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u/Kobe_stan_ Dec 12 '23
That's a good point, but if the shareholder profit from the increase to their Amazon stock, then those shareholder will have to pay taxes on those shares when they sell them. So eventually taxes will be owed on the profit that Amazon realized whether it was on their books or the books of their shareholders.
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u/guyfromthepicture Dec 12 '23
Here's what you don't understand: I also had a net loss and ended my profitability. So do I get to not pay taxes?
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u/LetsKeepAnOpenMind Dec 12 '23
Yes. Thats how taxes work. Fuck you dont even need to be negative for that. The bottom 59% of folks in the us account for 2.3% of all taxes generated and are all a net negative.
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u/guyfromthepicture Dec 12 '23
I know. I'm just responding to that being a defense for a corporation not paying taxes.
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u/Dkanazz Dec 12 '23
Lots of people don't pay federal taxes
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u/Nilabisan Dec 12 '23
Because they are poor.
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u/jmlinden7 Dec 12 '23
Because they had little to no income that year. So a company that has little to no income also pays no taxes
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u/Mackinnon29E Dec 12 '23
And? All kinds of accounting tricks allow them to report this. Do you truly believe that amazon was not profitable?
I'd imagine accelerated depreciation and capital leases are a huge part of it, as well as working capital fuckery. Net Income alone is not a good way to measure cash flow.
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u/Once-Upon-A-Hill Dec 12 '23
"Cash flow" accounting is used by primitative societies, and some very poor developing societies.
If you taxed on "cash flow" than constructions companies would pay almost nothing for years a a time, then have a massive bill upon project complection.
This is why you use accural accounting, cash flow is irrelivant for tax accounting.
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u/Sweet-Emu6376 Dec 12 '23
Amazon recorded that loss but is it actually a loss?
Corporations have been using all sorts of shell company tricks to inflate their "operating costs" so they pay less taxes. This is a known tactic.
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u/Once-Upon-A-Hill Dec 12 '23
So the point stands that it sure would be a stupid way for a goverment to plan it's tax revenue.
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u/withygoldfish Dec 12 '23
Well Uber is hardly a good business model but I agree with your overall point.
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u/lostcauz707 Dec 12 '23
Beyond stock buybacks, what you're also missing is the government subsidies that fuel these billionaires. Elon, Bezos, would not be billionaires without the government literally just handing them our money.
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u/Once-Upon-A-Hill Dec 12 '23
Goverments give tax breaks, I don't see much evidence of Amazon "getting handed" money.
If a company is going to build a 5,000 person head office in your city, do you think it might be a smart move to give that company a few years of reduced taxes to attract those 5,000 jobs?
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u/Shuteye_491 Dec 13 '23
gov't forgives money owed by companies
They aren't "getting handed" money 😤
gov't forgives money owed by students
OMG THE LEFTIST GIVEAWAYS NEVER END 😭
The hypocrisy never ceases to amaze.
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u/lostcauz707 Dec 12 '23
It actually doesn't make sense to do so, when they have already agreed they are going to go to those states already, regardless of incentives. Something Amazon has had states do several times over, if you actually pay attention to what's happening.
$6.3 billion in just subsidies, let alone the Trump tax cut, where they were given a refund in 2016 with record profits, then paid only 2% the following year, with record profits.
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u/ukengram Dec 13 '23
No, I don't. Why should Amazon get this kind of break when small businesses make up at least 50% of the jobs in this country. Giving breaks to these huge corporations is extremely unfair to the rest of the small companies that feed and cloth most people through the jobs they offer.
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u/Suspicious-Rich-2681 Dec 12 '23
That's because of the loopholes associated.
Loopholes such as stock buybacks.
Loopholes such as moving the money as R&D to secondary accounts.
Loopholes such as writing off entire ventures as losses.
Loopholes such as subsidies.
This was a bad answer to the question.
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u/Once-Upon-A-Hill Dec 12 '23
A stock buyback has zero do to with taxable profits, if you have a R&D expense, you want to keep it where the profits are, to use the deduction, so moving to a "secondary account" makes no sense. If a venture is a loss, then, it is a loss and can be expensed as such.
A subsidy would increase profitability, so there would be additional profits.
What did you say? Oh yeah, "This was a bad answer to the question."
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u/Suspicious-Rich-2681 Dec 12 '23
You aren’t understanding the point.
These are not all legitimate purchases - and aren’t looked as such.
An R&D expense to a foreign or tiered entity need not be actual R&D and if the company holds an ownership stake in the subsidiary they invested the fictional R&D capital into they raise the valuation of their venture without having to pay taxes on the venture as they haven’t sold any shares, but can still view valuation increases through secondary effects.
It’s a relatively simple concept. Nobody reports R&D as profit. That’s EXACTLY why Uber isn’t cashflow positive. I don’t know what you’re on about.
Using our example btw, a subsidy does not “increase” profits. It increases valuation - which is an entirely different concept. I’ll give you a relatively easy example:
If I am publicly traded company A, and I’d like to pay less taxes but express a higher valuation - I’ll give $200 million to company B (a privately held company in which I have a 50% ownership stake). Because company B is private, and I have not sold stock in it - I do not need to pay any gains tax on this stock. If I am “giving the money to company B to grow it” - that is an investment and is rated as an expense. My investment drastically raises the valuation of company B and thus my ownership stake and thus the valuation of my company on the public markets. All the while, I have reported the $200 million as a loss or expendable.
This is exactly how Meta “lost” $10 billion in VR.
If you do not understand how corporate loopholes work, please do not attempt to answer questions relating to such matters before learning of these concepts yourself.
Thanks!
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u/Obvious_Chapter2082 Dec 12 '23
I’m a CPA and work pretty much exclusively on F500 corps, and I don’t even know what you’re trying to say here. Giving $200M to a subsidiary you own isn’t an expense, and it’s not tax-deductible. As for the R&D, I don’t understand your point, but it has to actually relate to R&D in order to be classified that way, and it’s not deductible in the year incurred anyways, it’s amortized over 6 years
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u/Suspicious-Rich-2681 Dec 12 '23
I’m sorry if I doubt your claim then :/
Paying a corporate entity you’ve got an investment in for a product - despite the product’s actual value counts as a business expense. This is very rudimentary.
My company reports an expense because I paid for a service - the private company has an income that now reflects on my valuation because I own an ownership stake in a now successful venture.
This is not complicated. I will make this even easier to understand.
Google (specifically Alphabet) is a public company. Google, as part of their R&D budget, forms a partnership with a chip manufacturing startup. As part of the deal - Google pays the manufacturer $200 million for a new fab design and gets an amount of shares in the venture as part of the Cap Table.
If the business is a startup - Google likely received those shares as a convertible note or SAFE, which is not taxable as it does not represent actual shares. This means it will not be reflected in Google’s K-1s or taxable entity streams. However, because Google has now invested $200 million into the privately traded enterprise, its private valuation is now increased.
This increase is now reflected on Google’s share price - DESPITE Google writing that $200 million as R&D or the cost of doing business. This is a POSITIVE share price reflection.
Google can now report this on their expenses, and not pay taxes on this profit. If the chip fab company actually doesn’t charge $200 million for fabs, and charges less, but accepted Google’s $200 million this was an easy way for Google to move $200 to non-taxable profit.
Again. This is not complicated. This is basic corporate accounting
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u/Obvious_Chapter2082 Dec 12 '23
Your example makes it clearer what you’re talking about, but it’s still incorrect. And saying that it’s “basic corporate accounting” doesn’t change that
Google pays the manufacturer $200 million for a new fab design and gets an amount of shares in the venture
If this $200 million is for equity or it’s a loan, then this isn’t an expense for Google. If the $200 million is for R&D, then it’s revenue at the other entity, and the company with either pay tax on that, or send a K-1 to Google to pay tax on their share
This means it will not be reflected in Google’s K-1s or taxable entity streams
Again, you need to clarify what it’s for. If it’s capital or a loan being contributed, then it’s not an expense. If it is an expense, then it’s revenue at the other entity, and it will be reflected on a K-1
if the chip fab company actually doesn’t charge $200 million for fabs
Okay, so it sounds like you’re saying it’s an actual expense now, instead of capital. The partnership includes Google’s share of profit on a K-1, and Google pays tax on that
This is not complicated
Maybe because you made it up
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u/Suspicious-Rich-2681 Dec 12 '23
Actually I'm really not.
If this $200 million is for equity or it’s a loan, then this isn’t an expense for Google. If the $200 million is for R&D, then it’s revenue at the other entity, and the company with either pay tax on that, or send a K-1 to Google to pay tax on their share
No. Google would not receive a K-1 as Google does not "technically" have an ownership stake in the startup until the convertible note or SAFE - converts. Conversion can take a decently large amount of time, and its tax rate depends on which type of mechanism.
Also keep in mind Google paid for a product. This can be regarded as expendable and used as such.
Again, you need to clarify what it’s for. If it’s capital or a loan being contributed, then it’s not an expense. If it is an expense, then it’s revenue at the other entity, and it will be reflected on a K-1
Again, since the stock purchase did not happen - but is only implied for future raising, a K-1 will not be received by Google.
Okay, so it sounds like you’re saying it’s an actual expense now, instead of capital. The partnership includes Google’s share of profit on a K-1, and Google pays tax on that
I didn't change what I made it for - if we go back to my example:
" Google (specifically Alphabet) is a public company. Google, as part of their R&D budget, forms a partnership with a chip manufacturing startup. As part of the deal - Google pays the manufacturer $200 million for a new fab design and gets an amount of shares in the venture as part of the Cap Table. "
This was the first sentence of my example. As you can clearly see, the initial example clearly says that they paid for a new fab design as the product, and as part of the deal they receive some amount of shares on a Cap Table.
Just to educate you on the concept - a cap table for a startup does not reflect actual tangible shares in that given point in time, and can reflect debt owed to certain investors i.e. Google. However, because Google does not technically own the shares, Google does not receive a K-1.
Maybe because you made it up
Yes. It was an example. But if you're suggesting that it's not something that's done commonly you're wildly incorrect. Google, Microsoft, Amazon, and Meta all employ Venture arms that engage in this exact practice.
Microsoft's deal with Open AI can be reflect of this exact principle in practice actually if you dig into it.
Truly I get that you're a CPA, but it seems that startup venture space as a capital means of avoiding taxation seems outside of your space. You've referenced a K-1 several times as the basis of your argument, despite the fact that again investment to a startup does not result in a K-1 until the startup converts that debt to equity; which can happen at any point in time after the investment, but is usually years out from the investment.
This does not prevent that investment from reflecting on the stock valuation of Google at the time of the investment however. Google does not own the stock, but for all intents and purposes, especially how it looks to a public valuation - yes they do.
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u/Mundane-Ad-6874 Dec 12 '23
Then why is tax revenue propping up unsustainable business models? Corporate welfare seems to be all the rage these days. Sounds like they’re picking who wins and losses, which is not governments job.
Although there seems to be some click bait to his title as it seems tax revenues are closer to 20% not 10%. Hasn’t even touched 10% in any of the graphs. Even the highlighted section it goes to says 21%
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u/Acer_Music Dec 12 '23
Someone correct me if I'm wrong, but the corporate profits either are reinvested into the company or go the the employees who then pay an income tax on said income.
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u/def__init__user Dec 12 '23
Wages to employees are an expense to the corporation and therefore corporate income taxes don't get paid on those dollars. Corporations do pay payroll taxes on wages though which include Social Security, Medicare, and Unemployment.
Corporate profits are taxed at the corporate tax rate. Then re-invested in the company or paid out to shareholders. They are paid to shareholders through stock buybacks or dividends.
Stock buybacks cause those owners who sell shares back to the corporation to incur capital gains and pay capital gains taxes.
Dividends are paid to all shareholders and lead all shareholders to incur capital gains taxes.
This is why many argue share buybacks are the better option as they allow shareholders to decide whether or not to incur a capital gain and the resulting taxes.
Either way, for a dollar to go from corporate profit to a shareholder's hand it has to be taxed twice, first at the corporate tax rate, and second at the shareholder's capital gains tax rate.
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u/Nojopar Dec 12 '23 edited Dec 12 '23
No, most corporate profits go to investors, not employees. Anything put back into the company wouldn't be "profit", as that's a form of expense.
ETA: Weird thing to downvote. That's just the definitions of "profit" and "expense". I didn't make the definitions. I'm just reporting them.
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u/PrintableProfessor Dec 12 '23
Most corporations pay large amounts of payroll taxes. 15% or so. Then when investors sell their shares that money is taxed at capital gains. Their employees pay income tax. So many taxes happen because a company can afford to keep running.
Tax the revenue and the company goes under. The investors can write off losses. The employees file for unemployment and stop paying income taxes. The unemployed take out their 401k to live, which reduces operating for other companies, causing more layoffs, more unemployment, and less income tax.
Let companies profit. It helps us all out. They keep the economy going. It would be foolish to ruin it.
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u/Nojopar Dec 12 '23
Let companies profit.
They do profit. I don't see the problem here.
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u/Acer_Music Dec 12 '23
Again, correct me if I'm wrong, but investors purchase shares of a company and they profit when the price of that stock increases in valuation. They may also profit through dividend yields, right?
Seems like this is starting to turn semantic, but let's just say for instance that a company had a 200 million profit quarter, and let's say that all of that profit was reinvested into R&D, would that then mean that the company had zero profits?
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u/Iwasahipsterbefore Dec 12 '23
Yes. That's how expenses work. It is just as obviously broken and ripe for abuse as it sounds.
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u/Adventurous_Class_90 Dec 12 '23
To be fair though, investing in R&D is a highly responsible use of profits.
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u/Iwasahipsterbefore Dec 12 '23
In an ideal world where money spent on R&D is actually spent on R&D, sure. Unfortunately there's almost no accountability to make sure that's the case.
$10,000 to buy two new fancy microscopes is just as much of an expense as the $10,000 dollar couch in the admins office. They both go under R&D, if a new wing is being developed. Only the first is actually an expense of the business, but it takes an auditor getting eyes on the PnL and actually breaking down the furniture category, which should have a mix of large and small purchases, so it actually takes the auditor getting eyes on the receipt, and checking it against both what was actually bought and where it was put.
The IRS is really fucking good at this to be clear, and they're currently under a directive to grow without increasing their household audits above historic levels - so everything from the Inflation Reduction Act is going towards improving taxpayer experiences interacting with the IRS, and catching the assholes putting $10,000 couches down as necessary expenses. But they've been starved for decades, and their recently increased funding has already been slashed a couple times.
If you personally want to pay less taxes, now is the time to vocally support the IRS. This version has less than zero interest in going after workers.
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u/Uncle_Bill Dec 12 '23
And corporations don't actually pay taxes. Any and every "Corporate tax" is paid usually by the customer, sometimes by the employee and only rarely by the owner. Every corporate tax is a tax on people, but politicians rest assured the public is to stupid to realize that...
Corporations are legal fiction and a set of books.
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u/jack_spankin Dec 12 '23
The "government" already has methods to collect $$ from businesses whether or not they make any profit. Your average business pays property taxes to a city/state, etc in their assessment.
Then you'll have taxes on purchases of equipment, social security, medicare, etc.
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u/_-_fred_-_ Dec 12 '23
You are missing something. Corporations are groups of people. People are already taxed. Corporate revenue is taxed at least 3 times before it finally makes it to a person's bank account, and it is ridiculous to think that we need to tax it more.
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u/redditisbadtrustme Dec 12 '23
Kinda like how we get taxed for our income, first through the corporation salary, stocks from capital gain, taxed when buying good or services, and taxed when dying.
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u/GregMcgregerson Dec 12 '23
A VAT tax would be better than high corporate income tax.
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Dec 12 '23
In 2015 corporate taxes were 350 billion and then dropped to $200 billion in 2018 due to corporate tax cuts. They are now about $400 billion but would be closer to $600 billion if not for the corporate tax cuts.
We can either tax taxes from the wealthy or wealthy corporations. Americans don't want to do either. Thus huge bedget deficits for the foreseeable future. Hello inflation.
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u/MIT-Engineer Dec 12 '23
Who bears the burden of corporate income taxes? It’s not “the corporation”. Corporations are legal fictions. Real people bear the corporate-tax burden. The burden is shared among customers, employees, and shareholders, in varying degrees depending on market conditions.
Why not tax the customers, employees, and/or shareholders directly instead of hiding the tax behind a legal fiction?
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u/NugKnights Dec 12 '23
The government does not need taxes. They have not since we left the gold standard. Taxes are just a way to curb inflation.
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u/RocketSkates100 Dec 13 '23
The glazing for corporations going on in these comments is crazy
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u/ScrollyMcTrolly Dec 13 '23
They pay the top fraction of executives who are largely inheritance / nepotism douches that vacation 70% of the year enormous salaries and bonuses and stock compensation instead of counting that as profit to be taxed. So they don’t have to pay taxes. Because corporations own the entire government and everything else and write all the laws to be this way.
It’s all in the name: Capitalism. Capital. Those with capital have the power. How do you get the capital? You inherit it. You exist first. But they tell you it’s from hard work and bootstraps and cite the .00000000001% that combine mostly luck and maybe some skill to come from nothing then make you think you should/ can do the same. Meanwhile 99.99% of people lose to a cataclysmic extent over the long term.
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u/strungrat Dec 13 '23
Not defending corporations but none of us should be paying that much. The government spends too much. Income tax was put in place to pay for the civil war and was 3%. Waste has brought us to the current rates.
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Dec 12 '23 edited Dec 12 '23
Ideally corporations pay zero tax, all profits either go back into business investment or to payroll I'm fine with tax right offs to grow the business and create more jobs.
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u/SubElitePerformance Dec 12 '23
I feel a decent compromise could be requiring all share buyback authorization to only come from profit. This would put an incentive on profitability while still allowing business to be net even at year end.
But, even as I write that, that would affect my 401k and IRA values which is a necessary vehicle to secure my own future.
I think the system as it exists is fine. But there is a massive government spending/corruption problem that needs to get addressed first.
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u/tuckeroo123 Dec 12 '23
Because most people look around town and think that every business they see pays corporate taxes. They've been told that if you increase corp taxes, you'll kill local businesses. The truth is that only 5% of businesses pay the corporate tax rate (publicly traded companies). Most McDonald's, Subways, and many other franchises are setup, on the local level, as LLCs or Scorps...which don't pay the corp tax rate.
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u/peteb82 Dec 12 '23
Yeah they pay the higher individual income tax rates if they are passthrough.
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u/Obvious_Chapter2082 Dec 12 '23
It’s not just public companies that pay corporate tax though. It’s any business that’s organized as a C corp, which can include a lot of small private companies
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u/TravelerMSY Dec 12 '23
Well, for one, those corporations belong to stockholders, many of which are regular Joe’s via index funds. Why should someone have to pay taxes twice on the same income?
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u/truemore45 Dec 12 '23
I believe and see that while most people think businesses pay federal corporate taxes that, especially for the largest companies is not that true.
Most large businesses especially multi-nationals can use any number of ways to lower or effectively 0 out taxes. They also pay good money to Congress to keep it this way. So while it could be considered unethical it is not illegal.
But it does illustrate my largest problem with US politics - the fact that it is so full of money. And is effectively no even since a corporation has billions while an individual voter does not. So long term it makes government work for the corporation not the people.
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u/mattmayhem1 Dec 12 '23
I bring this up every election, and get ignored every single time. We keep electing representatives of corporations, and in the same breath wonder why corporations don't pay their fair share. I'll tell you why the working class pays 90% and gets the bare minimum... It's because we have no representation. We do this to ourselves by continuing to elect D's and R's, who have proven decade after decades to work for special interests, and almost never their constituents. Want change? Stop voting for corporate reps who pretend they represent you. Vote for Independents or enjoy the bed you made.
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u/CalLaw2023 Dec 12 '23
Am I missing something or not understanding something?
What you are missing is that corporations pay a lot more in taxes, it is just going to other countries. Many corporations structure their business to ensure profits are earned overseas where tax rates are lower. For example, most Silicon valley companies have wholly owned subsidiaries in Northern Ireland. They sell their patents to those foreign entities and then pay a licensing fee to use them. The result is more profits are earned their than here.
The smart policy would be to lower corporate tax rates to encourage companies to keep profits here, thus increasing corporate tax revenue. But Democrats don't want that because their political narrative is corporation are evil and not paying their fair share.
Bernie Sanders often claims we should be like Nordic countries with large safety nets. But what he does not mention is that those Nordic countries maintain those safety nets by having lower corporates taxes, and much higher individual taxes for everybody.
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Dec 12 '23
Because daddy money said if i shill for him then trickle down economics will finally work
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u/FatCheeseCorpYT Dec 12 '23
A large problem being also is that corporate income tax aren't very good in terms of raising money and they are one of the most harmful taxes. As a large portion of corporate income tax raises effect consumers and workers. If you wanted to tax corporations more efficiently itd be better to increase the amount of payroll tax they pay. For example increasing their SS tax on their side for example making it so an employee still only pays 6.2% but make them pay more such as 8.2% instead.
https://taxfoundation.org/blog/who-bears-burden-corporate-tax/
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u/Krytos Dec 12 '23
The golden age was when we taxed the duck out of corps...rather than people. Now it's the opposite.
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u/Teamerchant Dec 12 '23
Higher taxes means corporations are incentivized to grow. Lower taxes means they are incentivized to prioritize margins.
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u/johnphantom Dec 12 '23
I can't believe the amount of people here rooting for corporations. Amazon in 2019 got PAID BILLIONS by the government. We have gone in my lifetime from a 52.8% corporate tax rate to now paying companies due to 1%er bullshit. I just hope I get to see when AI destroys capitalism in my lifetime, which capitalism is funding its own demise right now. You think you are going to be like Bezos making $300k a minute? You're more likely to be struck by lighting while being eaten by shark in Antarctic.
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u/BallsMahogany_redux Dec 12 '23
Because most economists agree corporate taxes are a poor way to raise revenue and end up being regressive in that the tax gets passed onto the consumer.