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Does the corporation run the business or is it the employees? Does the corporation make a profit or the employees? Does the corporation hire people or the employees? Does the corporation lobby lawmakers or the employees? Are their incomes and capital gains being taxed already, excluding a corporate income tax?
The corporation is run by corporate officers as well as employees. The profit goes to the owners, or shareholders.
It goes like this:
Revenue is brought in and the costs are subtracted. This amount is profit which is taxed.
The owners are paid. This is also taxed.
The employees are paid. This is taxed.
In every scenario I've mentioned the money is being taxed twice. First, it is taxed when the corporation gets it. Then it is taxed a second time when it is passed off to the employee or the shareholder / owner.
Then, the employee or shareholder / owner pays someone else to do something and the money is taxed again. Then that person buys a comic book and it is taxed with sales tax and then the comic book company pays a tax and then the employee of the store pays an income tax and the process repeats itself into infiniti.
Think about it like this: Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Repeat.
... Think about it like this: Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Tax. Repeat.
Your chant of “tax, tax, tax, tax, tax, tax,” etc. as a refutation of corporate responsibility and advantage is entirely myopic and consistent with a self-serving nature. Corporations exist because there are certain advantages and opportunities to corporatism that are not to be had in privately held sole-proprietorships and simple, or even complex, partnerships.
Assuming that one believes in capital consumerism at all, the widely held view that entrepreneurial effort, liabilities, and financial risk is worthy of greater financial reward than paid employment is a rather obvious conclusion.
Risk is worthy of high reward. Personal risk.
Individual effort is worth reward.
Individual creativity is worthy of elevated reward.
Individual, specialized and highly effective skills are worthy of elevated reward.
Experienced, effective management is worthy of elevated reward.
All of the above five things can be found in corporations – EXCEPT the first: personal legal responsibility and financial risk commensurate to the potential return on any individual investment (if, indeed, there is any personal investment: consider the award of “shares” to elite executives). And this, above all others, is the primary reason behind corporations:absence of personal liability.
So now what we all live with is massive corporate earnings being divided among employees and shareholders – and then taxed at the individual employees’ and shareholders' income rates, and not at the earnings rate a sole proprietor would pay for the same levels of profits seen by large successful corporations.
The question that occurs then is: does this reality amount to unfairly rewarding an absence of personal accountability and risk? (I submit that it does.) If so, is this contradictory to the very philosophy behind the most primary capitalist concept: reward for risk? (I submit that it is a total contradiction.)
If people want to benefit from the advantages of corporate power – investing small individual amounts jointly with other diverse people to achieve large investment, purchasing, and operations power compared to sole-proprietorship and partnerships – and want to do so without personal risk / liabilities – then is it reasonable that they should be expected to pay for that advantage under a special tax category for corporations?
Things that make some people go: “hmmm?”
Consider California's financial position in the current crisis -- and facing the budget cuts that will cut not only fat but critical services -- if corporations actually paid their fair share for profit earned without personal liability and risk to the executives and shareholders.
“The most egregious example is General Electric ( GE - news - people ). Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.
Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.”
Oh how I LOVE these threads. I was just telling someone last night how funny it is to read these threads on City-Data an other sites. It goes like this. A guy (and it's almost always a guy over 50) posts " I want to move away from (insert State or area here) because I'm tired of the (insert hyperbolic statement about taxes and liberalism here!) Then they go on to talk about going somewhere (insert name of mythical place where taxes are low and people are like Mayberry characters here.)
Here's the thing... I have lived in several states. I read these forums all over the internet, and guess what? It all evens out in the end. Yep. It's true. You think California has such a big tax burden. Did you know that property taxes in most states are equal if not higher? You want to leave California to save money, but did you know that your food and utilities will go up?
As far as your politics go... I find it fascinating that anyone would truly believe that the political makeup of a State has really much effect on their day to day lives. Frankly, I find that California is more serious about locking up criminals and handing down serious sentences, than many other states. Try Texas, then. Oh, but wait.. their property taxes are nearly double of California. Some people think they're escaping to save money, but the truth is that someone has to pay for those wars that a certain group of non "liberal" people pushed for. Where did you guys think that money was going to come from? We still haven't paid back the billions borrowed from China +interest. The States.. ALL of the States took a hit when the Feds pulled back funding, and created unfunded mandates at an unprecedented rate.
The utopia you seek does not exist, unless you're willing to put up with brutally cold winters, lack of services, or brutally hot summers. And do people really leave behind their family and friends to have a couple hundred on taxes every year? I'd rethink my priorities if I were you.
Well, that confirms it. You couldn't be from California. You left out a tax!
You're right. I forgot the tax that is levied when someone else buys shares of the company and must then pay a tax on the amount the value increases even if he doesn't sell.
To another poster: For the record, it isn't a defense of liberal policies to point out that conservatives spend money like crazy too. Liberals do have it half right. Just chop off the "al" and add "tarian" and you can make your state perfect. This is to contrast with conservatives who spend like crazy and who favor repressive regimes at home.
Oh how I LOVE these threads. I was just telling someone last night how funny it is to read these threads on City-Data an other sites. It goes like this. A guy (and it's almost always a guy over 50) posts " I want to move away from (insert State or area here) because I'm tired of the (insert hyperbolic statement about taxes and liberalism here!) Then they go on to talk about going somewhere (insert name of mythical place where taxes are low and people are like Mayberry characters here.)
Here's the thing... I have lived in several states. I read these forums all over the internet, and guess what? It all evens out in the end. Yep. It's true. You think California has such a big tax burden. Did you know that property taxes in most states are equal if not higher? You want to leave California to save money, but did you know that your food and utilities will go up?
As far as your politics go... I find it fascinating that anyone would truly believe that the political makeup of a State has really much effect on their day to day lives. Frankly, I find that California is more serious about locking up criminals and handing down serious sentences, than many other states. Try Texas, then. Oh, but wait.. their property taxes are nearly double of California. Some people think they're escaping to save money, but the truth is that someone has to pay for those wars that a certain group of non "liberal" people pushed for. Where did you guys think that money was going to come from? We still haven't paid back the billions borrowed from China +interest. The States.. ALL of the States took a hit when the Feds pulled back funding, and created unfunded mandates at an unprecedented rate.
The utopia you seek does not exist, unless you're willing to put up with brutally cold winters, lack of services, or brutally hot summers. And do people really leave behind their family and friends to have a couple hundred on taxes every year? I'd rethink my priorities if I were you.
It ain't funny, Trixie. We left CA last year and bought a modest but perfectly satisfactory house across the narrow street from the shore of a large (800 mile shoreline) lake for one fifth to one sixth of what it would have cost for the same anywhere in CA. We're not overly regulated so there are no building codes in our county. Instead, our builders are craftsmen who take pride in what they erect rather than relying on a bunch of illegals who may know how to pound nails but that's about it.
Food and everything else is about a third cheaper than in NorCal where we last lived and gas is usually 40¢ to 50¢ cheaper per gallon. Our real property tax was under $800 for the year, assessed at 19% of value, and our personal property tax for our car, our state's equivalent of annual registration, was $202 for a barely three year-old Honda Accord XE.
Let's talk utilities. Except during the worst of winter and summer, our electric bill usually hovers around $50-60 and at worst, may reach $100. We pay $10 a month for water and $20 for trash pick-up. As the Valley Girls were wont to say, "Gag me with a spoon!" Oh, yeah, and taxes. Sales tax maxes out at 4.225% (1.225 for food - hurt me some more) and income tax at 6% with discounts for us old farts and government retirees from anywhere.
Speaking of seasons, we have four of them; all distinct and none particularly brutal. Unlike CA it's brown in the winter and green the rest of the year - kinda the natural order of things. Cardinals, real blue jays, golden finches, red-winged blackbirds, woodpeckers and other colorful birds proliferate as do chipmunks, squirrels, cotton tails, white tail deer, foxes, coons and possums, black bears, coyotes, turtles, etc. and we have some of the best bass and trout fishing you can find anywhere.
When it comes to personal freedoms, we'uns despise government intrusion so we have a part-time, citizen legislature that actually listens to us. We're not called the Show Me State for nuthin. Hunting is big here and we also have a "must issue" clause for concealed carry as well as a "castle doctrine" for home protection. Imagine! Oh, yeah. Crime is much lower than in CA. Bad guys aren't fond of potentially armed citizens, and most of our citizens are just that. Illegals are scarce.
Now for politics. My wife and I worked in them in Sacramento for 20 years and/or thereabouts. We know first-hand that California has the most broken system of anywhere but, perhaps, Illinois, the most self-promoting. expensive and intrusive, incestuous legislature. They've rendered CA broke as well as the most over-lawed, over-regulated state there is. If you're OK with that, welcome to it. We moved back to America!
We do lack some things, however. Starbucks are few and far between. Trader Joe's are even rarer (St. Louis only) and Whole Paycheck....mmm....Whole Foods consists of only one, also in St. Louis., 275 miles away. We'll pass. Not a whole bunch of ethnic food, but some if ya know where ta find it. It's awful havin' ta subsist mostly on local food, ya know. We're real deprived here. You'uns wouldn't like it a bit.
People here are strange. They look you in the eye. They talk to you even if they don't know you. Hell, they even wave to you when you or they drive by. Imagine that! What's the world commin' to?
In short, y'all Califoreigners would be like fish outta water here, but for a few, and we're reservin' places for 'em by name.
nullgeo - not all forms of "corporation" shield the owners/shareholders from personal liability. Even for the forms that do - using taxes to somehow correct an imbalance of risk/reward is a damned inefficent way to collect taxes.
Corporations are liable for their mistakes and they sometimes fail as a result of bad decisions. Corporations are also the favorite target of lawsuits, because of their size, assets, and unpopularity (at least sometimes).
I really don't see how taxing the company, which gets passed through to its customers anyways, does anything to correct this supposedly unfair risk/reward ratio. Taxes cause businesses to do many dumb things - like leave their assets in foreign countries. Businesses work hard to minimize taxes, which is non-productive work. And in a large company, many people have as their sole job tracking and minimizing taxes. And since you and I pay these taxes anyway when we buy goods, why not go straight to the taxpayer?
nullgeo - not all forms of "corporation" shield the owners/shareholders from personal liability. Even for the forms that do - using taxes to somehow correct an imbalance of risk/reward is a damned inefficent way to collect taxes.
Corporations are liable for their mistakes and they sometimes fail as a result of bad decisions. Corporations are also the favorite target of lawsuits, because of their size, assets, and unpopularity (at least sometimes).
I really don't see how taxing the company, which gets passed through to its customers anyways, does anything to correct this supposedly unfair risk/reward ratio. Taxes cause businesses to do many dumb things - like leave their assets in foreign countries. Businesses work hard to minimize taxes, which is non-productive work. And in a large company, many people have as their sole job tracking and minimizing taxes. And since you and I pay these taxes anyway when we buy goods, why not go straight to the taxpayer?
The culture of corporations did not come into existence for the fun of it. The reason for incorporations is to provide an independent entity for conducting business – independent of the limitations and liabilities of individual ‘real persons’ … this is two-fold:
1. to separate the officers and shareholders from various liabilities that might face the business -- both financial and also many various kinds of personal exposures. It is true that if officers of a corporation engage knowingly in illegal enterprise they may be criminally, and sometimes civilly, sued or charged with the effects of intentional harm caused. However, as an independent entity, a corporation can be, and often is, granted various powers, such as credit lines in its own name, liabilities for which are not transferable to the individual corporate officers. It is also the case that in most instances of corporate error, which is not a result of intentional criminal acts, there is no personal liability to the officers – and certainly NEVER liability to the shareholders (other than a reduction of value of their shares).
2. to facilitate the raising and maintaining of large amounts of investment capital from a pool of diverse investors – particularly in which the investor/shareholders accept that any projected return on their individual contribution is non-guaranteed – in which case also, the officers of the corporation are not individually responsible for any small investor’s (shareholder’s) gamble.
Neither of these advantages are natural to individuals in sole-proprietorships and partnership businesses.
Taxing corporations is not a way to “correct an imbalance of risk/reward”… it is the taxation of an independent entity’s enjoyment of national and local infrastructures that serve its interests of making profits. This is a reasonable demand on a corporation just as it is on an individual. Everything gets passed through to customers in all business. Correct. But not all people buy all the products that all corporations manufacture and market. Thus only the customers of a given corporation pay for the “pass through” of the cost of a particular corporation’s taxes. That is an acceptable way to balance the equation. The taxes are thus borne by the users of the specific goods / services. Don’t consume much? – Don’t pay so much. Profligate consumers pay for their ways. I’m a severe minimalist – works for me.
Corporations are a target of lawsuits when they compromise law, not because they are, without justification, “easy prey”– and individuals, sole-proprietorships, and partnerships are also sued everyday. The reason larger corporations often face aggressive litigation is because it is easier to collect from entities that have big insurance and / or large pools of assets making collections possible – compared to the limited resources of individuals, which make individuals less “worth going after”. There is no difference, however, as to actual responsibility. Unincorporated physicians, for instance, are also a strong target for litigation because they always have huge malpractice insurance coverage.
Minimizing taxes is not “unproductive work” to the corporation. And that is precisely one of my points. The nature of these corporate entities is to profit at all costs. There is no obligation to personal responsibility – “business is business” has become an acceptable out in our culture. Massive corporations enjoy the protections and services of our national infrastructure and identity – yet bear absolutely no burden to our security and welfare. Massive corporations are sitting on enough assets to cure the threats to our current economy. While I do not suggest that they should sacrifice themselves to do so, the point is: they won’t do it no matter they enjoy national protections: - there is no patriotism. If corporate structure is to be free of such responsibility while enjoying the benefits then let them at least pay a fee for doing so.
To give corporations a free ride out of fear that they will abandon us (by leaving themselves or their assets in foreign countries is tantamount to paying extortion – and paves the way for a modern fascist, feudal-like society.
No, I am not a communist. I despise communism about the same as I do fascism. No I am not a political liberal, either. I frankly don’t even believe in democracy, which is proving itself weak by virtue of expecting / requiring competent analysis, decision-making, and involvement by an incompetent citizenry.
The corporation is run by corporate officers as well as employees. The profit goes to the owners, or shareholders.
It goes like this:
Revenue is brought in and the costs are subtracted. This amount is profit which is taxed.
The owners are paid. This is also taxed.
The employees are paid. This is taxed.
In every scenario I've mentioned the money is being taxed twice. First, it is taxed when the corporation gets it. Then it is taxed a second time when it is passed off to the employee or the shareholder / owner.
That is incorrect. Salaries and bonuses, as well as employer contributions to retirement and medical plans, are all deductions and the corporation pays no tax on those amounts - they are written off against corporate income.
That is incorrect. Salaries and bonuses, as well as employer contributions to retirement and medical plans, are all deductions and the corporation pays no tax on those amounts - they are written off against corporate income.
Are you suggesting a corporation pay taxes on these items, which are expenses?
Income tax = tax on income. Income = revenue minus expense.
Most corporations DO pay payroll taxes.
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