Can You Figure Out What This Chart Means? (Plus, Incentives Matter)

[Firethorn]

The way current corporate taxes are set up actually encourages marginal companies.

If you're profitable, you are taxed fairly heavily.  If you're not profitable or losing money, you're not taxed.

This encourages 'growth' stocks that dump all their profit into expanding the company, where it becomes an untaxed expense, as opposed to returning it to investors in the form of dividends.

Get rid of or drastically lower corporate tax rates and I think dividend stocks would come back, where investors demand a steady return on investment, not growth of stock value to get that sweet capital gains tax rate.

For that matter, I'd phase out the sweet capital gains rate if you're getting more than a million from it a year.

[Scout26]

"Corporate" taxes, aren't.  They are merely passed through to the consumer as a cost of doing business.  They should be abolished completely.

And yes, small businesses generally have enough expenses to write off any profits.   Same with very large business (*cough* GE *cough*).   The tax code needs to be blown up and a flat tax instituted, even if it puts me out of work...

[Firethorn]

"Corporate" taxes, aren't.  They are merely passed through to the consumer as a cost of doing business.  They should be abolished completely.

And, like I said, they're imposed only on profitable businesses, which means that if you have Company X that is running a tight ship up against company Y that doesn't, Company X is going to pay the tax penalty in the savings it could pass to computers or profits to investors.

And yes, small businesses generally have enough expenses to write off any profits.   Same with very large business (*cough* GE *cough*).   The tax code needs to be blown up and a flat tax instituted, even if it puts me out of work...

Bingo.  Get rid of corporate taxes.

[charby]

Tax shelters & tax havens are sub-optimal and are signs that business is driven to perverse sub-optimal financial arrangement due to gov't myopia.  Those are the sorts of assets one hopes to free up and get moving/investing when lowering cap gains rates. 

VAT is paid by the end-user in all the VAT regimes I have read about.  And they can even be avoided if the corporation is a multi-national.

Still MOAR SUPPLY SIDE is not going to save us.

Have you noticed every time a "tax" is cut another "tax" is increased elsewhere, usually a higher earner type situation gets a cut, then a new tax is created for those who pay less money.

We had property tax relief a few years ago in Iowa for commercial properties, property taxes partially pay for infrastructure improvements and schools, well with in two years the school district tax surcharge increased, vehicle registration fees went up and gas tax increased .10 to cover the losses from the property tax reduction. Funny thing is I don't remember rents going down on rental properties or price of goods in brick and mortar store, or even a wage increase for the workers of brick and mortar businesses.

If you think spending will be reduced you are just talking into the wind, never going to happened, politicians want to be reelected. 

I'm for flat tax on all income, but we also know that will never happen.

[charby]

More like keep as much money outside of the country as possible (US has one of thehighest corporate tax rates in the world).
Regardless of what people on the left think, you can't tax your way into prosperity.

Looks like that practice might becoming to an end. Seems like the civilized nations that lowered taxes to lure companies in, wanted jobs for the citizens and not a tax haven for outsider companies/investors.

News has been interesting all the last two weeks about the above and really interesting today with Allergan/Pfizer deal going south.

[brimic]

Have you noticed every time a "tax" is cut another "tax" is increased elsewhere, usually a higher earner type situation gets a cut, then a new tax is created for those who pay less money.

We had property tax relief a few years ago in Iowa for commercial properties, property taxes partially pay for infrastructure improvements and schools, well with in two years the school district tax surcharge increased, vehicle registration fees went up and gas tax increased .10 to cover the losses from the property tax reduction. Funny thing is I don't remember rents going down on rental properties or price of goods in brick and mortar store, or even a wage increase for the workers of brick and mortar businesses.

If you think spending will be reduced you are just talking into the wind, never going to happened, politicians want to be reelected. 

I'm for flat tax on all income, but we also know that will never happen.

That's a function of the government you vote for.

In WI, ALL taxes have gone up steadily for decades under tax and spend liberals and tax and spend rinos- it was the 'WI Progressive Way.' If you were against tax increases, you were against children, If you were for tax cuts, you probably kidnapped babies and made soup out of them, if you were against school referenda or exobitant raises and benifits for teachers, its because you were against the best public education system in the country (lol) .... Politicians literally could not speak in such terms without being excoriated by the media and the democrats, meanwhile democrats figured out how to skim money from all aspects of life to fuel their powerful machine.

At some point people had enough. They voted in Scott Walker and replaced the legislature's liberals and mushy rinos with TEA part conservatives, and the democratic machine got crushed.  Property taxes immediately stopped going up, in many places they started receding. In places where property taxes continued to move up, it exposed the local government to close scrutiny, and more often than not, the offending politicians got replaced.
All in all, overall tax burdens went down, which is almost unprecedented anywhere in America. In my old home where I lived until I got divorced, the property tax has gone down about 10%- and that's with a 120 million dollar school referendum being passed in that school district.