dave@lsuc.UUCP (David Sherman) (03/01/85)
In article <683@whuxlm.UUCP> mag@whuxlm.UUCP (Mike Gray) writes: ||By the way, there's been a lot of criticism of corporate tax rates ||in this group. What good does taxing corporations do? They pay ||their taxes out of income, you know, which comes from the consumers ||who buy their products. Individuals pay all the taxes in the end. It's not that simple. "Corporations" include many businesses which might or might not be incorporated - small businesses. If you don't tax at the corporate level, you provide a large deferral incentive to small businesses to incorporate to save tax. Less tax is collected and unnecessary incorporations themselves cause wastage. Dave Sherman -- {utzoo pesnta nrcaero utcs hcr}!lsuc!dave {allegra decvax ihnp4 linus}!utcsri!lsuc!dave
ems@amdahl.UUCP (ems) (03/05/85)
> By the way, there's been a lot of criticism of corporate tax rates > in this group. What good does taxing corporations do? They pay > their taxes out of income, you know, which comes from the consumers > who buy their products. Individuals pay all the taxes in the end. > Not quite so. Lets say that a coporation from a foreign country comes here and mines silver. They then sell some of the silver to fund the operation and take the rest back to their home land as 'profit'. They are a socialist country and these funds go into the national account. Should they not pay a tax for the privilege of taking our natural resource for their own use? In this case a foreign government is the tax payer. This argument can be generalized in several ways. The first is to say that the socialist government is in fact a set of stock holders. In that case, the 'individuals' paying the tax are not citizens of our country. The next is to say that yes, the stock holders can be anywhere in the world, even here. This still shows the tax comming from a (supposedly) more powerful group for the right to exploit the national heratage or minerals. The final generalization is to say that it is not silver, but instead is a resource of some other kind. Beach front property in California, wharehouse space in New York. Still, you are taxing the entity (company == stockholders) for the use of their share of public resources and facilities (police, fire, dirtying the water and air) etc. At this point you can see why many third world countries do not greet the corporate world with open arms. In we come to monopolize the sources of wealth and export the gain to our own shores. (In some of their eyes...) While we talk of making jobs and building industry. In an international economy there is a need for corporate taxation. Even within our own borders, tax on coporations can communicate to them the true costs to society of their actions. (You make the polution, you pay to clean it up and figure the cost into your profit equations...) E. Michael Smith ...!{hplabs,ihnp4,amd,nsc}!amdahl!ems Computo ergo sum The opinions expressed by me are not representative of those of any other person - natural, unnatural, or fictional - and only marginally reflect my opinions as strained by the language.
mcb@styx.UUCP (Michael C. Berch) (06/16/85)
The faction that has been clamoring for increased corporate taxes is going to be rather surprised by the intermediate- and long-term effects of a blanket increase in corporate tax rates. The fact is that an across the board corporate tax increase (that is not easily avoidable through use of income sheltering and special credits) will ultimately have a REGRESSIVE effect on the tax structure. (I'm not against this, by the way; I think it will have the beneficial effect of "flattening" the progressivity of the individual rate structure.) Most experts agree that the proposed changes will affect all firms in the same industry in the same way. (Unlike other tax changes which would favor cash-rich firms over cash-poor firms, etc.) This means that (say) the taxes for all the firms in the general retail business would go up X%. Since all the firms are operating on essentially the same profit margin, there is no incentive to do anything other than pass the entire cost on by way of price increases. (There are exceptions to this, but they are short-term and not economically meaningful.) Analyzed in a macroeconomic sense, this means that every household's purchasing power is diminished approximately the same amount, which is a regressive outcome. What the people who want to raise corporate taxes REALLY want to do is exact a greater amount of taxes from the owners of the corporations. There are a number of ways of doing this, ranging from the obvious (eliminating the preference on capital gains income) to the ridiculous (a special tax on corporate dividends), but raising the corporate income tax isn't one of them. Michael C. Berch mcb@lll-tis-b.ARPA {akgua,allegra,cbosgd,decwrl,dual,ihnp4,sun}!idi!styx!mcb
ems@amdahl.UUCP (ems) (06/19/85)
> The faction that has been clamoring for increased corporate taxes is going > to be rather surprised by the intermediate- and long-term effects of a blanket > increase in corporate tax rates. The fact is that an across the board > corporate tax increase (that is not easily avoidable through use of income > sheltering and special credits) will ultimately have a REGRESSIVE effect on > the tax structure. (I'm not against this, by the way; I think it will have > the beneficial effect of "flattening" the progressivity of the individual > rate structure.) There are a great many assumptions that must be made for the tax effect to be REGRESSIVE. You have not demonstrated that these are, in fact, proven assumptions. 1) That all firms in an industry have the same margin. 2) That the elasticity of all markets is such that a price increase can be passed on to the consumers. 3) That the market is not an international market and is free of international competitors. 4) That all competitors in the market will pass the cost to consumers, rather than to stockholders or supliers, or creditors, or ... I am sure there are other hidden assumptions, but these are the ones that I can see from a moments observation. > > Most experts agree that the proposed changes will affect all > firms in the same industry in the same way. (Unlike other tax changes > which would favor cash-rich firms over cash-poor firms, etc.) This means > that (say) the taxes for all the firms in the general retail business > would go up X%. Since all the firms are operating on essentially the same > profit margin, there is no incentive to do anything other than pass the > entire cost on by way of price increases. (There are exceptions to this, > but they are short-term and not economically meaningful.) Ahem, are you sure you mean this? *ALL* firms on the same margin? IBM, AT&T, Amdahl, HP, Compaq, Tandy, ONYX, Joes Computer Startup, ... all on the same margin? Macys, Pennys, Gemco, K Mart, Mom&Pop shop, all the same margin?? On what do you base the *ASSUMPTION* that they are short term or not economically meaningful? > Analyzed in a macroeconomic sense, this means that every > household's purchasing power is diminished approximately the same > amount, which is a regressive outcome. > ASSUMING that the effect was to pass on the increased cost in higher prices (An UNPROVEN assumption) then the effect would still be progressive as the increase would be born in proportion to the quantity of goods bought; ie in proportion to disposable income. (I know the rich spend a lower percent on consumption, but the absolute dollar amount is more, not 'the same amount' at all). > What the people who want to raise corporate taxes REALLY want to > do is exact a greater amount of taxes from the owners of the > corporations. There are a number of ways of doing this, ranging > from the obvious (eliminating the preference on capital gains > income) to the ridiculous (a special tax on corporate dividends), > but raising the corporate income tax isn't one of them. If the goal is to communicate the cost of the social goods consumed to the company consuming them, the best thing to do is to tax the company directly. For instance, a severence tax on mining minerals to pay for the costs to the society of a damaged land ... -- E. Michael Smith ...!{hplabs,ihnp4,amd,nsc}!amdahl!ems This is the obligatory disclaimer of everything. (Including but not limited to: typos, spelling, diction, logic, and nuclear war)