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I hate to break it to you but most Americans are morons and most highschools offer economics but dude, it's a hard class with math and stuff....sooooo you want it to be a mandatory class for graduation?
Because that won't happen because it will destroy graduation rates which is unacceptable or they'd have to dumb the class down to levels where those passing STILL wouldn't get your point.
Basically, we're having a conversation that the majority of Americans are either unwilling or incapable of ever having.
It's a grim fact.
So, ask yourself. Is this a nefarious government plot or are Americans lazy and stupid because they historically could be?
Plus, the teacher's unions like big government and fight tooth and nail to not teach students about the ills of big government. The students come out of public schools thinking the taxes they pay will benefit them as soon as they get into the job market.
Ordinary people can't use the 50 million myriad ways that big corporations use to not pay taxes.
Middle class person making $100K will be paying taxes.
Corporation making $100M can use one of the 50 million loopholes and oh look, they're paying zero income tax here.
What was that about Warren Buffet saying his secretary pays more taxes?
The income tax laws are written to enrich cronies.
I realize you never studied economics - but since this is an economics forum, I'll try to help you understand.
One of the fundamental lessons of economics is that the entity that bears the statutory burden of a tax has nothing to do with where the burden of that tax ultimately falls. "Statutory burden" means the entity that must fill out a tax form & send it off to the IRS.
Any statutory burden of a tax on a corporation is allocated as follows:
X% is borne by customers in the form of prices higher than they otherwise would be
Y% is borne by employees in the form of total compensation (and hours worked) lower than they otherwise would be
Z% is borne by business owners (shareholders) in the form of profits lower than they otherwise would be
...where X+Y+Z=1.0 (that is, X%+Y%+Z%=100.0%)
Sooo... corporations merely collect & forward tax revenue to the IRS. The burden of that statutory tax is always allocated to a combination of customers, employees, and business owners (shareholders). To the extent a corporation is able to minimize a tax burden, that just means customers didn't have to pay a higher price, employees get paid more (and work more), and business owners (shareholders) make more profit.
There quite literally is no place else for the tax to flow: it must go to a combination of the three.
I may not of done the clearest job explaining this concept. If you didn't understand me, here are a few hyperlinks that you can follow to get more detail or perhaps a better explanation.
Sooo... corporations merely collect & forward tax revenue to the IRS. The burden of that statutory tax is always allocated to a combination of customers, employees, and business owners (shareholders). To the extent a corporation is able to minimize a tax burden, that just means customers didn't have to pay a higher price, employees get paid more (and work more), and business owners (shareholders) make more profit.
There quite literally is no place else for the tax to flow: it must go to a combination of the three.
There quite literally is - the business could spend it on something else, like R&D. No price cut, no pay raise, and no profit increase.
There quite literally is - the business could spend it on something else, like R&D. No price cut, no pay raise, and no profit increase.
If you'll re-read my post, you'll see I was referring to a static statutory tax burden. I believe you're referring to a change in tax - specifically to a tax decrease where that tax decrease could be spent on, for example, R&D.
I believe you're confusing after-tax cash flow with location of the tax burden. Spending on R&D, as an example (or plant & equipment or inventories or... etc, etc, etc) can be financed via after-tax cash flow from operations as in your example. It can also be financed in numerous other ways..
At the end of the day, all of the tax burden falls on actual people - none of it falls on the business, regardless how operations are financed. The people who bear the burden are a combination of customers, employees, and business owners (shareholders). When the business owners have more after-tax profit, they can choose to consume some of it (dividends to shareholders) or they can choose to reinvest it in the business (R&D, etc) or a combination of both.
I realize you never studied economics - but since this is an economics forum, I'll try to help you understand.
One of the fundamental lessons of economics is that the entity that bears the statutory burden of a tax has nothing to do with where the burden of that tax ultimately falls. "Statutory burden" means the entity that must fill out a tax form & send it off to the IRS.
Any statutory burden of a tax on a corporation is allocated as follows:
X% is borne by customers in the form of prices higher than they otherwise would be
Y% is borne by employees in the form of total compensation (and hours worked) lower than they otherwise would be
Z% is borne by business owners (shareholders) in the form of profits lower than they otherwise would be
...where X+Y+Z=1.0 (that is, X%+Y%+Z%=100.0%)
Sooo... corporations merely collect & forward tax revenue to the IRS. The burden of that statutory tax is always allocated to a combination of customers, employees, and business owners (shareholders). To the extent a corporation is able to minimize a tax burden, that just means customers didn't have to pay a higher price, employees get paid more (and work more), and business owners (shareholders) make more profit.
There quite literally is no place else for the tax to flow: it must go to a combination of the three.
I may not of done the clearest job explaining this concept. If you didn't understand me, here are a few hyperlinks that you can follow to get more detail or perhaps a better explanation.
SportyAndMisty, beyond whatever an enterprise is legally required to pay, the manner that they distribute their revenues are entirely at their managers' discretion.
Nothing within the quoted post contributed any additional information or insight to this discussion.
I realize you never studied economics - but since this is an economics forum, I'll try to help you understand.
One of the fundamental lessons of economics is that the entity that bears the statutory burden of a tax has nothing to do with where the burden of that tax ultimately falls. "Statutory burden" means the entity that must fill out a tax form & send it off to the IRS.
Any statutory burden of a tax on a corporation is allocated as follows:
X% is borne by customers in the form of prices higher than they otherwise would be
Y% is borne by employees in the form of total compensation (and hours worked) lower than they otherwise would be
Z% is borne by business owners (shareholders) in the form of profits lower than they otherwise would be
...where X+Y+Z=1.0 (that is, X%+Y%+Z%=100.0%)
Sooo... corporations merely collect & forward tax revenue to the IRS. The burden of that statutory tax is always allocated to a combination of customers, employees, and business owners (shareholders). To the extent a corporation is able to minimize a tax burden, that just means customers didn't have to pay a higher price, employees get paid more (and work more), and business owners (shareholders) make more profit.
There quite literally is no place else for the tax to flow: it must go to a combination of the three.
I may not of done the clearest job explaining this concept. If you didn't understand me, here are a few hyperlinks that you can follow to get more detail or perhaps a better explanation.
To my mind, the important part of the Warren Buffett tax issue is that he is rich and his income is taxed in a different category at a much lower rate than earned income.
I would imagine Warren Buffett's 'secretary' gets paid pretty big money. All earned income. Let's call it $250K. 35% tax bracket and an effective tax rate of about 30%. Warren Buffett has capital gains and dividends as his income sources. Those are taxed at 20%.
Circling back to the title of the thread, the employer part of Social Security/Medicare payroll taxes is paid with pre-tax dollars. That doesn't show up as employee income just like employer contributions to health insurance and other benefits don't show up as employee income. Since I don't pay tax on it, it lowers my tax bill compared to being self employed paying both sides of it.
It’s at 20% because the profit was already taxed at the corporate level. That share of profit comes to the individual and is taxed AGAIN.
A wage is earned and “guaranteed”. There’s no risk of loss.
A return on investment like gains or dividends is a person using their money...that was earned at one point in some way and probably taxed...and investing it into a company that may or may not destroy that money. If it is profitable (they took on risk)....the entity pays tax on those profits. And the individual pays taxes AGAIN on their share of the profit. Providing incentive to invest is just intelligent tax policy. I’d love for anyone to explain why wages should be taxed at the same rate as this investment income?
The idea that the poor poor wage earner is somehow getting screwed because wages are “taxed higher” than investment income sources is idiotic.
They’re treated differently with very good reason. Merely looking at the marginal rate is ignoring the larger, complete picture.
Last edited by Thatsright19; 06-07-2018 at 11:38 AM..
exactly. Yes, it's a tradeoff but the idea that employers would just increase wages by the amount they pay in payroll taxes rather than keeping that money as profit is laughable.
Employers wouldn't voluntarily pay higher wages. However, the idea is if everyone had to pay for all of their own fringe benefits, they would demand higher wages to compensate.
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