Alfalfa
Well-Known Member
The CEO of the company I work for consumes around 15% of the entire payroll for one of the largest companies in the state. Bet yours is the same. They don't have money for raises after that!
Negative effective tax rate for many companies
- Thread starter Alfalfa
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The CEO of the company I work for consumes around 15% of the entire payroll for one of the largest companies in the state. Bet yours is the same. They don't have money for raises after that!
this guy makes a great point in his podcast about the salary structure of big business and how companies could pay high wages to everyone if they wanted - - to paraphrase
"fast-food companies could pay $20 per hour minimum wages to all their employees - MacDonald's might not be able to do it and stay in business, but the good thing about capitalism is that someone else will find a way to do it - it's not like we have to worry about running out of hamburgers."
He also gives an interesting history of the change in corporate philosophy beginning with Milton Friedman in the 1970's
KCRW - To the Point podcast - Dec. 20
https://www.kcrw.com/news/shows/to-...economic-inequality-means-the-next-revolution
"fast-food companies could pay $20 per hour minimum wages to all their employees - MacDonald's might not be able to do it and stay in business, but the good thing about capitalism is that someone else will find a way to do it - it's not like we have to worry about running out of hamburgers."
He also gives an interesting history of the change in corporate philosophy beginning with Milton Friedman in the 1970's
KCRW - To the Point podcast - Dec. 20
https://www.kcrw.com/news/shows/to-...economic-inequality-means-the-next-revolution
idestroyedthetoilet
Well-Known Member
Well said.
When was the last time you looked corporate tax receipts and calculated % of federal level and % of GDP? Whitehouse.gov has some downloadable tables that are very useful and insightful. Google federal budget + pick a year and you'll find them easy enough.
I've never looked. Sounds like you have. Can you summarize?
Archie Moses
Well-Known Member
While these companies celebrate I'm sitting here thinking how much Trump impacted my company.
I work for a manufacturer and we import steel and aluminum. Nothing like having your prices go up 25% overnight.
I work for a manufacturer and we import steel and aluminum. Nothing like having your prices go up 25% overnight.
J
JAZZGASM
Guest
These articles are purposefully written to inflame their readers, many whom are unaware of how corporate tax law works. If you look at the U.S. corporate tax rate vs our similarly situated countries, and outside of France, which has a ridiculous 33% corporate tax rate, our corporate tax rates are at or higher than most (much higher that Switzerland and Germany, which was surprising when I researched some of this for a client a couple years ago), and that is without taking into account the 3.8% medicare surcharge tax on C-Corps dividends. So if we raise corporate taxes, it will act as a quasi-tariff against our own companies that want to export sales, which will make such items even more expensive when we have an issue with that already.
One could question why we have corporate tax at all. Most C-Corp profits are paid in wages to avoid double tax anyway. S-Corp owners pay tax on all net income. There are a lot of games that can be played through the corporate structure to avoid paying taxes. Some are logical (offsetting losses from a limited range of years makes sense, as most businesses are cyclical), some are not, like transfer price abuse. One of the most logical tax planning tools available to company owners is the Employee Stock Ownership Plan, which provides a number of tax deferring options. First, a 100% S-Corp ESOP pays zero tax on income. Second, an owner selling his shares to an ESOP can purchase replacement property (similar to a 1031 like-kind exchange in real estate) and not pay a penny on the sale of his stock. If the selling shareholder holds the replacement property until death, his/her heirs get a step-up in basis to the value of the replacement property on death, and no taxes are every paid on the sale of the business. Why does Congress allow such a large tax break? Because the ESOP transfers ownership to the employees through the ESOP retirement plan, which provides broad based ownership and retirement benefits to employees when, as a country, the average person has far too little put away for retirement.
I think we need a more transparent tax system, not all these different levels and types of tax. A one time tax on income, with few if any deductions outside of those at low income level, and stop all the games. It would put me out of a job, but I'd still vote for it. Many residents of coastal states have a total tax burden of greater than 50% of their income, which puts them in line with very socialist countries like Germany, but without all the great benefits citizens in those countries receive.
I'm surprised, based on the many movements against the very rich, that there isn't more of a push to get rid of sales tax, which has a much larger overall impact on the poor. I wonder what would happen if we aggregated every tax you pay and just took it out of your income. I think many people would not be happy when they see the overall impact on their pocketbook that taxes cause, and some you don't even know you pay. For example, some states have a gross receipts sales tax (not an income tax) between business before it even gets to a store. Delaware, Nevada, Ohio, Texas, and Washington have these taxes, and Oregon likely will soon. So a supplier of seed pays tax on sale to a farmer. Farmer pays a tax on sale to distributor, distributor pays sales tax on sale to grocery store, and then grocery store charges you a tax if the state has a sales tax. The result is higher prices at each level the item changes hands, which all get passed on to you.
One could question why we have corporate tax at all. Most C-Corp profits are paid in wages to avoid double tax anyway. S-Corp owners pay tax on all net income. There are a lot of games that can be played through the corporate structure to avoid paying taxes. Some are logical (offsetting losses from a limited range of years makes sense, as most businesses are cyclical), some are not, like transfer price abuse. One of the most logical tax planning tools available to company owners is the Employee Stock Ownership Plan, which provides a number of tax deferring options. First, a 100% S-Corp ESOP pays zero tax on income. Second, an owner selling his shares to an ESOP can purchase replacement property (similar to a 1031 like-kind exchange in real estate) and not pay a penny on the sale of his stock. If the selling shareholder holds the replacement property until death, his/her heirs get a step-up in basis to the value of the replacement property on death, and no taxes are every paid on the sale of the business. Why does Congress allow such a large tax break? Because the ESOP transfers ownership to the employees through the ESOP retirement plan, which provides broad based ownership and retirement benefits to employees when, as a country, the average person has far too little put away for retirement.
I think we need a more transparent tax system, not all these different levels and types of tax. A one time tax on income, with few if any deductions outside of those at low income level, and stop all the games. It would put me out of a job, but I'd still vote for it. Many residents of coastal states have a total tax burden of greater than 50% of their income, which puts them in line with very socialist countries like Germany, but without all the great benefits citizens in those countries receive.
I'm surprised, based on the many movements against the very rich, that there isn't more of a push to get rid of sales tax, which has a much larger overall impact on the poor. I wonder what would happen if we aggregated every tax you pay and just took it out of your income. I think many people would not be happy when they see the overall impact on their pocketbook that taxes cause, and some you don't even know you pay. For example, some states have a gross receipts sales tax (not an income tax) between business before it even gets to a store. Delaware, Nevada, Ohio, Texas, and Washington have these taxes, and Oregon likely will soon. So a supplier of seed pays tax on sale to a farmer. Farmer pays a tax on sale to distributor, distributor pays sales tax on sale to grocery store, and then grocery store charges you a tax if the state has a sales tax. The result is higher prices at each level the item changes hands, which all get passed on to you.
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idestroyedthetoilet
Well-Known Member
Sure but my memory isn't exact, and there's a wealth of data so I encourage everyone to look at the trends on all sorts of things like education spending and what have you.
Whitehouse.gov/OMB/historic-tables/
IIRC, corporate tax receipts are down from something like 3.7-3.8% of GDP to 1.7 or 1.8. They used to make up about a third of federal receipts (this was before FICA was a huge source, so their are some logical adjustments to make the comparison more apples to apples) and now account for under 1/10th. Basically, about 300 billion less per year now than in 1950.
Excise taxes are the other big declining revenue source, but we all pay those so I'm sure nobody wants to complain about them when it comes to discussing debt.
idestroyedthetoilet
Well-Known Member
Does this link work?
https://www.whitehouse.gov/omb/historical-tables/
I can't pull it up on my phone and no service at my desk so that's the best I can do.
https://www.whitehouse.gov/omb/historical-tables/
I can't pull it up on my phone and no service at my desk so that's the best I can do.