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Old 04-16-2011   #1
Join Date: Nov 2005
Posts: 646
Why tax corporations?

A few people here have repeated the conservative talk show hosts' arguments that we shouldn't tax corporations.

There are several reasons why we have a corporate income tax in addition to the personal income tax. The first, called the benefit principle, is that people pay for the government services they consume. If you're a business that benefits from legal, police, and financial protections and regulations, you're expected to pay money to support the system. It's also a lot easier to tax a single entity than thousands of shareholders, and eliminating the corporate tax would create bad incentives: If the government taxed only individuals, it would encourage companies to hoard the money and never pay shareholders.

See Why do we tax corporations instead of the shareholders who own them? - By Christopher Beam - Slate Magazine

The alternatives are worse. There are no simple solutions.

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Old 04-16-2011   #2
Renaissance Redneck
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Huson, Montana
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but according to the supreme court corporations have the same rights as people....

"You're gonna be doin a lot of doobie rolling when youre LIVIN IN A VAN DOWN BY THE RIVER"
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Old 04-16-2011   #3
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Basil, judging from your past posts I'm surprised your so naive. Corps will pass down in cost to consumer. Stockholders already pay double taxation through this system and we do have the second highest tax rate in the industrialized world for companies stupid enough or not rich enough to pay off the politicians...or as the cpa/accountant mentioned in another thread carrying over fake losses from past years.

Tax the rich bastards not paying w2 or 1099 income. I know all the arguements of why we should not tax cap gains or dividend at same rate as salary/wages but believe it's total bullshit. Why shouldn't the ultra rich pay at least the same tax rate as the average joe. Eventually they have to cash in and pay taxes.
Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery. Winston Churchhill
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Old 04-17-2011   #4
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Golden, Colorado
Paddling Since: 1984
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Originally Posted by mr. compassionate View Post
Corps will pass down in cost to consumer.
I was waiting to see if someone brought out this canard. You're assuming that every market that a corporation serves is perfectly inelastic; i.e. that a corporation would be able to adjust prices to garner the same profit margin no matter what. That's not the case; manufacturers have to adjust costs (or dividends, or executive compensation, etc) in order to keep prices in line with what the market bears. Even in the case of oil / gasoline; there's a point in which prices cause consumers to adjust their behaviors and modify their spending by using public transportation, buying smaller cars). In general, prices are far more elastic in almost every other market you can think of.

Also- talking about US corporation having the world's highest tax rates is disingenuous or dumb. While our statutory tax rates are indeed high, everyone knows (or should) that our effective tax rates are very low.

Between 2000 and 2005, U.S. corporate taxes amounted to 2.2% of the GDP. The average for the 30 mostly rich member countries of the Organization for Economic Cooperation and Development was 3.4%.
If you some quick math, corporate tax revenues are actually 35% lower than most any other wealthy country. To your credit, you at least acknowledge that the budget implications of super-wealthy, politically influential corporations and their ability to change the tax code to suit their balance sheets. I'm actually encouraged that you're on board with progressives against John Roberts & crew in his ruling on the Citizens United case. We welcome you, Comrade!

When it's perfectly legal to import the losses and export the profits, you get a situation where corporations ride the backs of the taxpayer.
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