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People invest in Firm A, expecting some kind of return on their investment. Firm A goes about its business, paying wages (and other deductible expenses that aren't taxed, as you correctly point out). What's left over is profits. Profits then get taxed. The remainder from that exercise gets paid out in dividends.
If investors were expecting a higher return - especially if a new increase in corporate taxes ate into that return - the firm is going to have to increase profits in some way, likely through cutting costs or passing the burden of the tax along to the consumer.
This isn't radical teabaginomics. I'm merely taking this from a mainstream (or, if anything, left and progressive-leaning) economics professor.
To briefly make the point I was trying to make at the start with a comparison to Sweden - low corporate taxes (at least there) are the foundation of the Nordic welfare state. They provide for employment and economic growth while government revenues are raised through higher personal income taxes and consumption taxes (the U.S. is rather unique in not having a broad-based consumption tax). There are very good reasons to prefer lower corporate tax rates as part of your tax mix - though no doubt none of last week's party-goers had them in mind.
Thanks a lot for all of that.
I still have difficulty seeing corporate taxes as a share of GDP as a proxy for what they really pay - your source even mentions that in the U.S. non-corporate taxes make up a larger share than other countries (so that 3.3% may be coming from a smaller population). A ridiculous analogy: if you took everything just one guy owned, sure, that tax would make a pretty tiny percentage of GDP but it would also be a huge rate for that one guy.
But I will readily concede the point, and I see that Paul Krugman has numbers very similar to your own using this same proxy (corporate taxes paid as percentage of GDP) to determine how much corporations actually pay. I think the main thing that all of this back-and-forth proves is that the rate is ridiculously non-transparent. But thanks again for digging up sources and data.
Wait so you think that taxpayers should be able to use 50% of their tax payments to buying something? Why would anyone not do that? They can either get something or not get something? It would also be crippling on a macro-scale, a clear Problem of the Commons.
There's already a mechanism for buying and selling stocks, its called the NYSE. If that isn't good enough, they could sell them in the manner that Treasury notes are sold (scheduled single bid auctions).
QEDMF xbl: PantsB G+
I'm getting socialist goosebumps.
They tried to bury us. They didn't know that we were seeds. 2018 Midterms. Get your shit together.
Ok, that study is absolutely horrible for a number of reasons (think hard about how they structured it), plus that economics professor apparently doesn't know much about barriers to entry - it exists for the movement of capital as well. Actually he comits the cardinal sin of assuming perfect information flow... which is a ridiculously stupid thing to do when talking about world economics. Also, virtually nobody gets the 'world rate of return'... its like comparing basket performance of the S&P... the vast majority of fund managers never beat it.
Plus he doesn't factor in a massive amount of useful data, like vol trading, investor goals and 'animal spirits'.
eg omg Thailand is getting 1000% return! will invest there. Actually no you can't because of barriers to entry. Also it goes up 1000% one year then down 2000% the next. Actually looking at what he is saying its fairly obvious he is an academic...
Really, not the best links to put up. At least not compared to Zilo's stuff, which is mathematically is streets ahead of those links and much more reasonably aligns with respect to overall taxation burden.
QEDMF xbl: PantsB G+
Share buyback from the issuing company. It's not like they're going to want to have all that extra stock out in the market diluting its value.
Yeah, if the corporations being taxed could charge more or pay less, they already would. How big the profit margin is only matters if it goes into the negatives and forces a shutdown.
You don't tax negative income. Only profit.
It can be taxed to be less profitable, but not unprofitable.
Regardless, our corporate tax rate as written is fine, it's just that there are a gazillion loopholes that make actually paying the full amount highly unlikely. Obama doesn't have to raise the rates, just plug the holes like he said he will.
No, they don't. The logic says that there is zero, absolutely zero, nada, zilch, none, no ability for firms to shift a corporate income tax to workers. They have zero incentive to do so, they have every incentive to pay workers as little as possible
What you're not seeing is that labor is a market. And that means that your employers should be paying the market rate. And the market rate has very little to do with the rate of corporate taxes[it can increase and decrease demand, but that isn't going to do much, considering what we know of wages]
the piece you linked is laughable. In one sentence he claims that Canadian tax rates don't change the world rate of return and in the second he claims that Canadian corporations have the ability to increase long term profits across the board[This is basically saying that Canadian firms can individually change the prices of whatever good they're selling, the exact opposite claim that he made a few lines earlier] by increasing prices and cutting workers.
The crazy part in the logic is that if canadian firms can make this money by simply moving the cost onto consumers, why they aren't doing that right now?. A: Because they cannot. A tax increase might reduce the number of firms in the market if all of their capital gets pulled and that might have some effects on the costs, but its unlikely. [especially if the reason for going overseas was cost, imports would increase which would keep costs to consumers roughly as low as it was earlier, offsetting the reduction in supply from domestic producers]
Now, he may be progressive on some things, but his data and analysis doesn't really support his propositions.
For instance on the second link there are a lot of graphs with the independent variable being social spending. But social spending is not what we care about, we care about tax rates. Anyone can simply increase their social spending by shifting their government spending further towards social spending. What you care about is the level of taxation that is required to support that amount of social spending.
For instance, the U.S. could take all the money it spends on military per year and move it to social spending. Then we would shoot way up on that graph and we would look fantastic, like a perfect model of income and social spending. Almost as good or better than the states [Norway] that have oil. Ironically if we did this our friends might have to increase their military spending and decrease their social spending, but i will just ignore any subsidization effect there. The point is that social spending is a combination of two different factors, your tax rate AND the amount of money you allocate to social spending. This makes it almost useless as an independent variable. Unless he was trying to say "governments don't have to purchase non-social goods", but duh.
edit: The real irony is that you're linking all these things supporting consumption taxes. And consumption taxes are good at incenting savings. but right now, that is the last thing we want to do, we want to incent consumption, not savings. And so consumption taxes are counter productive to that effect.
You can still cause a long term shutdown. Accounting profit =/= economic profit. But moving the capital isn't so easy and you're going to take a big principal hit
The problem with the government -just- selling off the stock on the stock market is that the massive sell-off would devalue the stock, thus repeating the problem. If, instead, the government traded the stock to individuals, many would simply keep it. I know I would. I mean, why not?
I got around $1k in tax refunds this year, I would have taken it in stock, just to have some fucking stock.
Because most people like their money in money form?
QEDMF xbl: PantsB G+
They wouldn't dump it all at once unless they are retarded. Could either just sell it back to the company or sell it on the market pieces at a time.
The government isn't going to dump stock into the NYSE, and if you want stock then take your 1k and buy some.
psssh, I already blew that $1k on blow and hookers.