Should corporate taxes be eliminated?

[Anonymous]

Trying to tax corporations is a waste of time because they aren't like people....ultimately they just pass along the cost of the tax to their shareholders, workers, and (to a small extent) customers.



Corporate tax abolitionists are not all conservatives either. The Atlantic's Megan McArdle has said the corporate income tax "may be the stupidest tax we have."



The corporate income tax may be the stupidest tax we have. At 35 percent, America's levy on corporate income is one of the highest in the developed world. In 2007, about 2.5 million companies prepared lengthy returns at great expense, yet the tax generated only about 15 percent of total federal tax revenue. The tax on corporate profits discourages capital formation, targets shareholders regardless of their wealth, and fuels frantic, and costly, business efforts to dodge it. Among experts who study its effects, support for the tax is at best sort of sheepish. Yet as taxes go, it is relatively popular.



When confronted with all the economic costs of the tax, and its anemic contribution to federal coffers (even though in 2007, it accounted for a higher proportion of tax revenue than it did in 1985), its supporters generally call for "closing the loopholes." But such efforts have historically only made the tax code more complex, raising compliance costs and creating new opportunities for avoidance.

 

By one estimate, what companies spend in complying with the tax equals almost 13 percent of the tax bill they owe—and that's the smallest drawback. Corporations go to extraordinary lengths to avoid taxes. Entire investment-banking firms and law practices have been built solely for the purpose of creating valuable tax deductions, and they employ highly educated and skilled people who could make a greater contribution to society by ... well, doing almost anything else, really.



But the most compelling reason to eliminate the corporate income tax is that it doesn't target those with the most ability (or obligation) to pay. A company's owners won't necessarily be the ones who bear the tax—corporations might decide, for example, to pass on the cost of the tax to employees in the form of smaller bonuses. And even if you could guarantee that the fat-cat managers and the owners bear the brunt of the tax, those "owners" aren't necessarily rich—they could be retirees invested in pension funds, or small shareholders.

 

Democrats are looking at ways to lower the rate and "close loopholes" so that more corporate revenue, particularly profits earned abroad, gets hit by the tax. But Uncle Sam could collect at least as much revenue in a more progressive and less distorting manner by eliminating the thing entirely, and raising taxes on capital-gains and dividend income (which were previously kept low to ease the negative impact of "double taxation"—taxing corporate profits first as corporate income, and then again as shareholder income). That might not provide the moral thrill of demanding that corporations cough up their "fair share." But with so many real advantages, it's an idea that both left and right ought to be able to get behind.

[Anonymous]

Seoulbro, I do not know much about politics..



However, I pay tax on my meagre salary..



Surely a bank making billions can afford to pay tax too.

[Romero]

The US effective corporate tax rate is one of the lowest in the world. Taxes in the US have dropped dramatically over decades but corporations still aren't hiring and investing. Same thing with Canada. We've lowered the corporate tax rate. Where are the economic benefits and jobs? The only benefits are higher corporate profits.



Darn right they should be paying their fair share with the millions and billions they make. Corporations would be nothing without government services. They depend on an educated and healthy work force, infrastructure, subsidies, research...

[Anonymous]

We pay for corporate business taxes not some fatcats.



Banks have pulled back on lending, and some firms find it more difficult to raise funds in the shorter term commercial paper market or longer term corporate bond markets, finance directors prefer to hold higher levels of cash in case they need funding. This is exacerbated when regulators are encouraging banks to build up capital reserves to cover for leverage.

[heinzy]

Corporations are risk takers , as such they can rake it in during good years and profits tie them over the bad years. Risk-taking needs an incentive for rewards and vice versa; all our research , inventions and improvements came about because  risk- and loan  takers , believers, optimists and credit givers.

Naturally, companies as corporate citizens of society need to be taxed , but not to a degree that robs incentives to risk taking and leaves  hairline margins. Efforts and rewards must stand in a healthy relationship to each other to survive.

[Zetsu]

I believe they should be lowered to deal off foreign threats.

[Anonymous]

I believe they should be lowered to deal off foreign threats.

I think they should be replaced with a more effective means of raising revenue.

[Zetsu]

I believe they should be lowered to deal off foreign threats.

I think they should be replaced with a more effective means of raising revenue.

I'm all for it too, but either way tax really need to be lowered in the US, corporate tax average around 35% while China's about 20%, yet their labour only cost 1/6 of ours, not to mention they can OT like crazy if ever needed.

[Romero]

The US effective tax rate is only around 15%. Many huge corporations pay little or no taxes because of all the loopholes, and in many cases they've even received refunds!

Kudos to Apple's finance lawyers, who are the Cirque Du Soleil of legal contortionism. On the eve of live testimony from CEO Tim Cook, a scathing congressional investigation of Apple's tax dodging strategy reveals how the computer giant avoided $13.8 billion in taxes through a clever labyrinth of offshore tax havens, shell corporations, and paper shuffling.



"The ability to pay taxes of less than 2% on all of Apple's offshore income gives the company a powerful financial incentive to engage in convoluted tax planning to avoid paying U.S. taxes," notes the report from Senators Carl Levin and John McCain of the Permanent Subcommittee on Investigations.



In addition to the majesty of rolling hills, towering waterfalls, and a rich culture, Ireland also welcomes billion-dollar multinational corporations with an appealing 12% tax rate. Even better, in a sweetheart deal with the makers of the laptop used to type this story, the Irish have offered Apple a tax rate below 2%. At least since 2009, according to the report, it was, on average, 0.06%.



http://techcrunch.com/2013/05/21/3-mindbending-ways-apple-dodged-13-8b-in-taxes/">//http://techcrunch.com/2013/05/21/3-mindbending-ways-apple-dodged-13-8b-in-taxes/

So apparently even 2% is too high. And what does Apple do with all that extra cash? Hire US workers and invest back into America? Nope. They just outsource cheap suicidal labour.

[Obvious Li]

corporate taxes are an abomination and should be zero....they create the exact opposite effect of what the lefties think they do.........the only tax that will make corporations pay their share is a VAT or GST type tax.......can you imagine the revenue if corporations had to pay 15% GST on everything they purchased...instead of spending untold billions on tax avoidance loopholes as is currently the practice

[Romero]

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So where are the benefits? Why did American and Canadian economies do better when corporate tax rates were higher?



The only effect low corporate tax rates have is higher profits and begging for more. It hasn't had any good effect on economies or citizens.

[Anonymous]

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This fall, U.S. fast-food giant McDonald's (MCD) will move its European headquarters to Geneva from London, joining Kraft Foods (KFT), Yahoo! (YHOO), and Nissan. They've all relocated their main Europe offices to Switzerland in the last two years to take advantage of low corporate taxes.

http://www.businessweek.com/magazine/content/09_38/b4147062134006.htm">http://www.businessweek.com/magazine/co ... 134006.htm">http://www.businessweek.com/magazine/content/09_38/b4147062134006.htm



A high statutory and effective corporate tax rate has not helped the United States. It has been a bonanza for the Swiss, but not Americans.

[Anonymous]

There's not much consensus about effective corporate tax rates -- the rates corporations actually pay. Studies don't even agree on what the U.S. effective rate is, pegging it between 23 percent and 35.6 percent. Older studies put the U.S. near the top; a recent study says the U.S. is No. 1 among OECD nations.

http://www.politifact.com/texas/statements/2012/nov/01/michael-mccaul/michael-mccaul-says-us-corporate-tax-rate-worlds-h/">http://www.politifact.com/texas/stateme ... -worlds-h/">http://www.politifact.com/texas/statements/2012/nov/01/michael-mccaul/michael-mccaul-says-us-corporate-tax-rate-worlds-h/

[Anonymous]

corporate taxes are an abomination and should be zero....they create the exact opposite effect of what the lefties think they do.........the only tax that will make corporations pay their share is a VAT or GST type tax.......can you imagine the revenue if corporations had to pay 15% GST on everything they purchased...instead of spending untold billions on tax avoidance loopholes as is currently the practice

Businesses don't pay taxes. They collect taxes and they take those taxes out of wages, prices to customers and investor returns.



I can't understand why some people cannot grasp that. The United States should tax dividends and capital gains at ordinary income rates, instead of their current 15% rate.

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Corporate taxation is not an effective way of generating revenue. A high corporate tax rate is a hindrance instead of a help to workers.