![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
badlydrawnjeff.livejournal.com posting in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
talkpoliticsToday, President Obama unveiled his latest plan to reform the corporate tax structure. I'm not too curious about the community's thoughts on this overall since I'm fairly sure we all know where we all sit on Obama making good/bad choices here, but I do have a more general question:
Why have a corporate tax rate at all?
I'd like to think we all agree on these basic points:
a) The corporate tax rate is not really paid by the corporation or business in question. Taxes are simply another cost that is levied on a company, a cost recouped through fewer services, lower wages/employment, higher prices, or some combination therein. It's not an issue of "fair share," really, since we're all paying it.
b) Our corporate tax rate is comparatively high when stacked up against other nations. We're #1 in the OECD at 35%. Canada, directly to our north, is at 15%. And that's without factoring in the corporate tax rates of individual states. Whether you think this matters much is up to you.
c) We only tax profits, and that's proper: If a company doesn't make a profit, it's not paying that tax rate. It's one reason why many corporations don't end up having a tax obligation.
d) We offer a lot of tax credits and opportunities to lower the effective rate: From green energy tax credits to employment credits, even profitable companies are able to reduce their effective rate to zero - or lower.
e) Corporate taxes account for a fairly small amount of overall receipts: Well under $250b in 2010.
So the question I pose is this - if you're in favor of a corporate tax at all, why? Is it worth it given what we all know and agree on? Is the value of getting $220b in revenue from the corporations worth it?
Why have a corporate tax rate at all?
I'd like to think we all agree on these basic points:
a) The corporate tax rate is not really paid by the corporation or business in question. Taxes are simply another cost that is levied on a company, a cost recouped through fewer services, lower wages/employment, higher prices, or some combination therein. It's not an issue of "fair share," really, since we're all paying it.
b) Our corporate tax rate is comparatively high when stacked up against other nations. We're #1 in the OECD at 35%. Canada, directly to our north, is at 15%. And that's without factoring in the corporate tax rates of individual states. Whether you think this matters much is up to you.
c) We only tax profits, and that's proper: If a company doesn't make a profit, it's not paying that tax rate. It's one reason why many corporations don't end up having a tax obligation.
d) We offer a lot of tax credits and opportunities to lower the effective rate: From green energy tax credits to employment credits, even profitable companies are able to reduce their effective rate to zero - or lower.
e) Corporate taxes account for a fairly small amount of overall receipts: Well under $250b in 2010.
So the question I pose is this - if you're in favor of a corporate tax at all, why? Is it worth it given what we all know and agree on? Is the value of getting $220b in revenue from the corporations worth it?
(no subject)
Date: 23/2/12 18:51 (UTC)Investors are fickle and have billions of investment options open to them. They don't need to worry about what tax rate a corporation pays, and only care about what the return will be for them at any given risk tolerance.
So businesses need to maximize the after-tax profit. Other costs will be squeezed to deal with the higher cost of business and the shifted supply curve. The costs will be shifted to people who are least able to negotiate. So people who desperately need a job will take a lower wage than a fat cat with a golden umbrella who can walk away from a paltry 1.5 million dollar salary.
I can get great prices on vacations, electronics, high end clothing and any given luxury. A soft economy gives me that negotiation. But my rent, food and other necessities are through the roof, and I have to suck it up just like a person making half my salary. But it hurts me a lot less than a person making half my salary.
Taxation is one method we can ameliorate the inequalities of the market. By demanding the corporations do the heavy lifting, you're instead exacerbating the inequalities for faux 'economic justice'.