Corporate Taxes: Complete Fiction!

The concept of corporate taxes is that when a wealthy corporation gets lots of money some of that money should go to the government. The argument is that a company has lots of money and can therefore afford to pay the government a lot of money.

The problem with that concept at is that contrary to what the US supreme court believes, corporations are not people. The people corporations always get 100% of their money from are everyday people like you and I after all the accounting is complete. Even a corporation that only sells to other corporations ultimately gets their money from the product buyers. For example. A steel company sells steel to a car company to get their money. Then the car company sells their car to the dealership to get their money. And finally the dealership sells their car to us, at the end of the line where all the money corporations get eventually comes from.

So, if corporations are taxed, then when we make a purchase from the corporation the price of the product is raised *exactly* enough, on average, to cover the cost of the corporate taxation. Since corporations are not charities (and there are actually some laws making a corporation acting as a charity illegal which well proves that), they are not going to take the money from their profits to pay the taxes as many seem to laughably hope for. It just doesn't happen that way... never has and probably never will.

Who stands to gain the most from corporate taxation and who stands to gain the least? A rich guy shops at Jaguar and pays a 5% higher price to buy his luxury car. A bum shops at Wal-Mart and pays the same 5% higher product price (since all corporations have the same tax rate) even though his income is zero. So what do you call a tax where you have to pay even when you have no income at all? A regressive tax.

So corporate taxes get you a system where the rich pay a flat tax and the poor pay a regressive tax.

You have presented a wonderful argument for eliminating taxes on corporations. With no taxes on corporations other countries' businesses will relocate here, bringing additional jobs and strength to our economy. We currently have one of the highest, if not the highest, corporate tax rates in the developed world. With it, politicians can claim to be taxing the rich while hiding the fact that the tax falls heavily on the poor and middle class earners.

reply to post by civilchallenger


Firstly, a flat tax is not regressive, it is progressive. The gent who buys a $80K car at a 5% tax rate pays $4,000 in tax and the bum who buys a $8.00 t-shirt at Wallmark pays 40 cents. That is a progressive tax. The only defination of "fair" with respect to tax policy is a flat tax. By definition, the more you make or spend, the more you pay.

What high corporate taxes do is limit the amount of cash on the balance sheet of a company. What does a company do with cash? They invest in plant and equipment, creating jobs. They hire people. Both of those activities increase the tax revenue to the government by virtue of the income taxes now being paid by those folks working.

Were corporate tax rates not an issue, it would make no difference where companies list their stock when they go public. The NYSE has been losing listings and the London exchange has been gaining listings for some time. Why, because it is financially advantageous to list outside of the US.

The US also has other defacto taxes on corporations that don't exist outside of the US. Sarbanes Oxley and onerous EPA regulations come to mind.

Corporate taxes also play into corporate locations in the US. Why are firms relocating to low tax states, if they simply pass the taxes on? I posted a thread yesterday about Catapiller moving out of Illinois. Why? because the tax rates are too high and the states they are looking at are right to work states, not unionized.

Think about it this way. You have a state with a high corporate tax, say Washington, which has an onerous Business and Occupancy tax. Idaho does not have the B&O tax and they have lower tax rates for corporations along with fewer regulations. Companies have been moving across the border to Idaho for a long time, the same way companies are moving out of California to Nevada and Arizona. What happens when you have a state with no sales tax that is next to a state with one? Folks drive over the border to buy large ticket items. You live in western Washington and want to buy a car? You drive to Oregon and buy it because it is 8.5% lower.

Even if firms are headquarted in the US and subject to US taxes, in the case of multi-nationals, the encorporate large entites outside of the US to avoid US corporate taxes.

Back in the 80s, NJ created an enterprise zone in the northern part of the state, in Jersey City. They eliminated the corporate income tax for firms who relocated from NY to NJ. Most of the back offices of Wall Street are now in NJ.

Corporate taxes matter

Originally posted by dolphinfan
reply to post by civilchallenger

 

You raise a number of good points. While its entirely true that corporate taxation destroys jobs and economies while of course reducing the tax base of a government to tax (such as Caterpillar in IL) I do not mention that because globalists will use that as an argument to expand the reach of government to become a world government. With one world government, you don't have to worry about corporations skipping out of town to a less barbaric state. Also, the point you made about less cash on the balance sheet for expanding the company and creating jobs does stand without a down side to the argument.

I disagree about the fairness argument though because while money can buy happiness, its on a curve in that for each and every dollar more you get you can buy less and less happiness. The 40 cents you take from a bum buying an $8 shirt has a greater value than the $4,000 you take from the football star buying an $80,000 Jaguar. Why? The bum will miss his 40 cents more than the football star will miss his $4,000 on the Jaguar. Therefore I believe it is worse to take 40 cents from a bum than $4,000 from a football star. I furthermore believe any time you take a person's money without their permission it can't possibly be said to be fair. So for me its a question of which is more unfair... a flat tax or tax on a curve. If you had to choose (given that there would be no negative consequences to you personally, both options would take equal effort, and the money will be burned) between taking 40 cents from a bum or $4,000 from a football star which do you chose?

There is another very major factor that a pure and completely flat tax is a bad idea. In one case you are taking away people's basic needs, while in another case you are taking away luxury items that are not needed. The 40 cent tax may be the difference between our bum getting a shirt or not getting a shirt at all. The $4,000 tax on the football star may be the difference between our start getting a Jaguar or instead getting a Mercedes. Obviously one of those cases results in a lot more suffering than the other.

If there must be a flat tax then surely the flat tax on bread should be lower than the flat tax on Jaguars, no?

Originally posted by civilchallenger
So corporate taxes get you a system where the rich pay a flat tax and the poor pay a regressive tax.

Your argument is confusing in that you don't offer any research or evidence to support your opinion. First of all the argument that taxing corporations actually leads to a regressive tax on poorer people, I just don't see. For the reason that I think there are a lot of other tax policy issues that have a much larger effect on poor and working class people in relation to what corporations and the rich pay. Let me explain, first of all because of the tax code, a lot of corporations and rich people actually paid a lot LESS (as a % of income) than people on the bottom rungs of the economic ladder. G.E. for example, one of America's largest corporations, which makes a lot of household goods that Americans buy, paid a whopping $0 in taxes last year despite a "global pretax income of more than $14 billion" (Source). Bank of America, despite having losses in the U.S. has a 2009 global pretax income of $4.4 billion and still managed to get a $1.9 BILLION dollar refund from uncle sam (and of course paid no taxes). Ford Motor Company had pretax income of 3 billion, however it's effective tax rate was 2.3% in the U.S. Hewlett Packard made 9.4 billion with an effective tax rate of only 18.6%. Verizon, 11.6 billion in income with a tax rate of 10.5%. Boeing pretax income 1.7 billion with a tax rate of 23%. Many corporations pay below the 35% rate, many rich PEOPLE pay far below their tax bracket by using some of the same loopholes, Warren Buffett famously blasted the U.S. tax system that allows him to pay less taxes than his secretary and cleaner.

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent

(Source)

A 2008 report by the Government Accountability Office, found that 83 of the 100 largest publicly traded companies had subsidiaries in jurisdictions listed as tax havens (Source) The same report also found that nearly two thirds of all U.S. companies and 68% of all foreign companies doing business in the U.S. paid no federal income taxes AT ALL!

The Government Accountability Office (GAO) examined samples of corporate tax returns filed between 1998 and 2005. In that time period, an annual average of 1.3 million U.S. companies and 39,000 foreign companies doing business in the United States paid no income taxes - despite having a combined $2.5 trillion in revenue.

(Source) (Source)

I think your assumption of a "regressive" tax on poor and working people via taxes on corporations (and thus higher prices for goods we pay) is predicated on the assumption that corporations pay more in taxes, when in fact, the opposite is true...we have a regressive tax system in this country because POOR people and WORKING people are effectively put into a higher tax bracket than the rich and corporations. Corporations and rich people enjoy a larger percentage (as compared to income) of the tax breaks in this country as well as government largess via corporate welfare; roughly 92 billion spent in fiscal year 2007 (Source). For comparison sake, this is about roughly 20% of defense spending, or 30% of medicare spending (~650 billion, 440 billion respectively)

There is a study that was done (Piketty, Saez) which tracked historical income distribution in the U.S. and compared it to tax returns filed. Basically a "regressive" tax system would mean that as you make more money, you pay less taxes. A progressive tax system means the opposite. All the evidence and sources that I've posted (above) so far seem to point to the U.S. instituting a more regressive tax policy over the years. Now obviously, you have to look back as history, and the Piketty/Saez report, does just that. Comparing pre-1914 wealth concentration, with todays, roughly similar wealth concentration (See Chart) they state:

...the change in the tax structure may be the most important determination of long run income concentration"

(Source)

The same paper also states that executive compensation and pay also have had a large and important impact on the wealth gap.

I think a big misconception about income, is that in the U.S. people often say that obscene salaries are "deserved" because these people "work harder" and are more "valuable" to society. However another paper on the same subject notes:

that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.

(Source)

From the same paper:

As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers).

I think it's hard to square that those top 15% of the population, which generally includes "investor class", financiers, bankers, etc. are somehow magnitudes "more valuable" than 85% of the rest of the population which includes doctors, teachers, inventors, engineers, firemen, police officers, and so forth. And the effect of tax policy on wealth?

As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier.

How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay.

(Source)

And again, just as I pointed out earlier, with the corporations, the numbers taken from actual income tax filings, bear out the fact that those highly profitable corporations and rich folk pay far less than their supposed 35% tax bracket simply for the fact that their earnings do not come from wages and salaries earned through work, but through investments and capital gains which are easily funneled through to tax havens and other various tax loopholes that are taken advantage of. Now all of this would be fine and dandy, if it were encouraging good behavior, producing jobs adding wealth, etc. But it's already been shown, that for the average working family, wages have been stagnant for 30 years despite significant productivity gains and longer work week (Source) And favoring tax breaks and bailouts for large corporations and the rich does not make sense considering that small business provide the majority of private sector jobs (Source)...so the argument that tax savings for the larger richer corporations will provide more jobs does not square with the data that smaller businesses are the ones creating the majority of the jobs, and furthermore, in these large rich corporations much of the government largess has simply gone to obscene bonuses and executive compensation as well as lobbying and political contributions. (Source)

Finally, another argument that I hear offered a lot is that rich people pay way more taxes than the poor and middle classes and thus the poor and middle classes should be paying a more "equal" share. However, as I pointed out, this logic fails when you consider that the 35% tax bracket is not the effective tax rate paid by most of these rich corporations and people. Furthermore, I think it is only logical to expect that those top 20%, who own 85% of all the wealth, also pay 85% of the taxes, this is just basic math...however, again, when you consider this, the wealthy actually pay far less when you consider their percentage of income, when compared to the rest of us "regular" folk, again, see all those examples of highly profitable corporations with effective tax rates of 0, including the example of Buffett and his secretary, which, by the way is not the exception, but the rule.

In conclusion, I believe our system of taxes has been getting increasingly more regressive, however, it is NOT for the reasons that you stated (which was due to corporate taxes)...actually I believe just the opposite, that the rich are paying less taxes than the poor and middle classes because they are easily able to take advantage of tax havens and loopholes, in addition to the majority of their income being made from NON-wage/salary sources meaning they get taxed at the 15% (usually less) tax rate. And again, I do not think less taxation at the top is good considering recent trends in inequality between rich and poor as well as wage stagnation/deflation (aka race to the bottom) for those who work for a living...this is not a good thing as it lowers the standard of living for all of us.

reply to post by meeneecat


Would you suggest that a 50 cent tax per gallon on gasoline may result on average in anything but an approximately 50 cent higher cost for gasoline per gallon? If so, why would any other tax that certainly can also be accounted to be a certain number of cents per gasoline have any other effect?

Originally posted by civilchallenger
reply to post by meeneecat

 

Would you suggest that a 50 cent tax per gallon on gasoline may result on average in anything but an approximately 50 cent higher cost for gasoline per gallon? If so, why would any other tax that certainly can also be accounted to be a certain number of cents per gasoline have any other effect?

edit on 27-3-2011 by civilchallenger because: (no reason given)

Of course a 50cent tax on a good will raise the price, that is simple math. What you are talking about is a flat sales tax on a product. say 2.79 per gallon + 50 cents = 3.29. But what is your point? The OP was suggesting that taxing corporations would raise the price of goods, placing a burden on people who buy those goods. Essentially the OP is arguing a version of the "trickle down theory" that we should cut taxes on corporations in hope that it will transfer over as savings for regular people. I argue, that there's no evidence that this "trickle down" economic tax model has anymore than a negligible effect on middle class, poor and working Americans through the OPs "higher cost of goods" theory. There are plenty of other tax issues that have a much bigger effect on "regular" people and that favoring rich people and large corporations over the middle class and poor has a far more "regressive" effect on society. There is evidence that lowering taxes on wealthy corporations and the rich to the extent that the U.S. has done, has produced a more unequal society (I cite several sources/evidence), it's money that now cannot be spent elsewhere; on schools, medicine, research, infrastructure, small businesses etc. Also, the assumption that large corporations and the rich pay "high taxes" is flawed, I put forth plenty of evidence to back that up as well.

I'm not exactly sure what your question was, since it was phrased very awkwardly and didn't really ask a specific question about the OP, so I'm not even sure if I answered it properly. But I'm assuming you are in agreement with what the OP is saying.I'm not going to repeat myself, but my argument is the same, and I post many many links to back up what I say. Please reread my post including the articles in the links that I reference...and if you still have the same question, I would be happy to elaborate.

Originally posted by meeneecat

I'm out of time for today but will ask for some clarification for tomorrow. You claim to cite sources that lowering taxes on wealthy corporations produces more income for the rich. To me that's a bit like claiming 1 + 1 = 3. I believe the exact opposite... that higher corporate taxation leads to little change in money for the rich and a significant lowering of money for the poor. I would like you to detail your source claiming that lowering corporate taxation results in the rich getting richer (or that raising it results in less money for them).

The important variables involved are corporate profit margins in comparison to corporate tax rates over time. By your theory corporate profits decrease with corporate taxation. By my theory corporate taxes almost no effect whatsoever on corporate profit margins. I assert that as corporate income taxes increase, corporate profit margins remain identical, because all costs of running a business are always passed on to the consumer... every time in every circumstance for every expense.

When people start a business, they make a risk-return decision. The return must be a certain minimum amount of money in order to make risking a certain amount of money worthwhile. Corporate taxation by default will decreases the return for an investor if nothing else changes. Therefore the risk (start-up capital for example) must also decrease by a similar proportion to make the investment worthwhile. But more realistically since risk is normally a fixed number, product prices increase to maintain the return to the same number as before corporate taxation came into play.

The information I'm presenting isn't well described as a trickle down effect. A trickle down effect means there is general benefits to the top and those benefits are trickled down to the bottom. I claim that every last cent of corporate income taxes is on average 100% paid for by customers of a corporation, and so corporation owners end up with absolutely none of the benefits in their own pocket, because it is *all* passed on to the consumer. The top gets no benefits to a decrease in corporate taxes except for the same benefit of reduced product prices enjoyed by the bottom rung of income earners. In other words, corporate taxation has zero effect on corporate profit margins, and complete effect on corporation product prices.

I believe corporate income taxes are the second greatest burden on the lowest rung of income earners resulting in someone earning $7 an hour having roughly $1,500 per year less money. The greatest burden is the outrageously insulting percentage of money people in such a bracket pay to social security & other social programs.

I'm in agreement with you that a lower capital gains tax does not result in the poor benefiting much. In fact they would hardly benefit at all from such a change. However, I would disagree that the gap is relevant at all. If you have a huge gap with a tiny amount of people in a state of poverty that is much better than a tiny gap where nearly everyone is in state of poverty. Therefore the gap between rich and poor is totally irrelevant to me, whereas the actual percentage of people in poverty and their level of poverty is what matters a lot to me.

Originally posted by civilchallenger
I'm out of time for today but will ask for some clarification for tomorrow. You claim to cite sources that lowering taxes on wealthy corporations produces more income for the rich. To me that's a bit like claiming 1 + 1 = 3.

No, it's really not like 1+1=3. It's actually basic math. Say a 10% vs 30% tax. Obviously being taxed at the lower rate means in the end you have more money (again, with which tax rate do you end up with more, $100 - (0.10 x $100) = 90 or $100 - (0.30 x $100) = $70) . The government needs to get it's money from somewhere, handing out tax cuts to people is an expense (i.e. it reduces the overall revenue collected by the government and it has to be paid for somehow). The GAO office calculated that the Bush tax cuts cost twice to two and a half as much as the health care plan just enacted (Source). And again, the majority of the tax cuts went to the top 20% of earners, not the bottom 80%...(I posted my source for this already in my previous comment, in case you missed it, here and here)

Originally posted by civilchallengerI believe the exact opposite...that higher corporate taxation leads to little change in money for the rich and a significant lowering of money for the poor. I would like you to detail your source claiming that lowering corporate taxation results in the rich getting richer (or that raising it results in less money for them).

With all do respect, I really don't like it when people claim that I did not back up what I said, when I most clearly posted links to studies, charts, research, including data taken from the governments own sources on tax revenue...Again, reread my comment and the links that I referred to. For convenience I will repost some of what I said here.

Firstly, the idea that corporations and the rich pay a higher tax rate than those in the tax brackets below them is not necessarily true. Evidence being that the majority of rich people do not make their income through wages and salary (income) but through capital gains and investment:

that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.

Source

This is important because capital gains, certain types of executive bonuses, investments, etc. are not taxed at 35%, but at 15% or below. Furthermore, the rich, far more than the working classes are easily able to take advantage of tax loopholes and tax shelters and thus pay a far lower tax rate on their wealth than those in the supposedly "lower" tax brackets. Again:

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent

(Source)
and

Originally posted by meeneecatA 2008 report by the Government Accountability Office, found that 83 of the 100 largest publicly traded companies had subsidiaries in jurisdictions listed as tax havens (Source) The same report also found that nearly two thirds of all U.S. companies and 68% of all foreign companies doing business in the U.S. paid no federal income taxes AT ALL!

The Government Accountability Office (GAO) examined samples of corporate tax returns filed between 1998 and 2005. In that time period, an annual average of 1.3 million U.S. companies and 39,000 foreign companies doing business in the United States paid no income taxes - despite having a combined $2.5 trillion in revenue.

(Source) (Source)

And also this

The 400 highest-earning taxpayers in the U.S. reported a record $105 billion in total adjusted gross income in 2006, but they paid just $18 billion in tax, new Internal Revenue Service figures show. That works out to an average federal income tax bite of 17%--the lowest rate paid by the richest 400 during the 15-year period covered by the IRS statistics.

Source Source

Again, my point here is that the assumption many people make that the rich pay "high" taxes, which is one of the assumptions that the OP bases his argument on, is specious at best. Again, from the IRS's own tax data, that the top 400 wealthiest Americans only paid a tax rate of 17%. Considering an average American making a $50,000 salary would pay a 25% tax rate, this, again, just like the example of Buffett and his secretary, that billionaires are paying a lower tax rate than most teachers and police officers. The other major point being, again, from the government's own data, that two thirds of U.S. corporations, despite having incomes of 2.5 trillion, paid NO TAXES whatsoever.

Second point, essentially what you are arguing is a form of "trickle down" economics, that the poor and middle classes will benefit from tax breaks for the rich/corporations, corporate welfare and other government "breaks" to the wealthy.

Proponents argue that economic growth flows down from the top to the bottom, indirectly benefiting those who do not directly benefit from the policy changes. However, others have argued that "trickle-down" policies generally do not work,[3] and that the trickle-down effect may be very slim, if indeed it even exists at all.[4]

Today, "trickle-down economics" is most closely identified with the economic policies known as Reaganomics or supply-side economics. Originally, there was a great deal of support for tax reform; there was a dual problem that loopholes and tax shelters create a bureaucracy (private sector and public sector) and that relevant taxes are thus evaded. During Ronald Reagan's presidency, the Democratic Party-controlled House, at the urging of President Reagan, cut the marginal tax rate on the highest-income tax bracket from 70% to 28%.

Source

I argued in my above comment that since the enactment of these tax policies (a tax cut for the wealthy from 70% to 28%, and again combined with the evidence that the effective tax rates for the richest are actually much lower) that real wages (wages when compared to inflation) for working people have since stagnated and decreased over the past 30 years despite gains in productivity and increased work week. Source (Source)

Another thing I looked at in my previous comment was the growing inequality and wealth distribution in this country.

As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier.

How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay.

(Source)

And this:

Trickle-down theory also predicts a positive correlation between inequality and economic growth, the idea being that income disparities strengthen motivation to get ahead. Yet when researchers track the data within individual countries over time, they find a negative correlation. In the decades immediately after World War II, for example, income inequality was low by historical standards, yet growth rates in most industrial countries were extremely high. In contrast, growth rates have been only about half as large in the years since 1973, a period in which inequality has been steadily rising.

Source

Also, look at the following chart that compared marginal tax rates and income distribution and you see an obvious correlation, (now I'm fully aware that a correlation does not imply causation, however there is other strong evidence that shows tax policy has had a hand in income inequality)

Chart 1: Showing tax rates vs. income distribution
Chart 2: Showing as pay for executives and the rich increased wages for everyone else stagnated and decreased
Chart 3: Shows the "wealth ratio" of the top 1% compared to everyone else, and the trend increasing over the years of the Reagan and Bush tax cuts.
Chart 4 & Chart 5 & Chart 6: % change in income distribution since 1974 (shows a decrease for everyone except the highest quintile)
Source Source

The following post examines government data, including tax cuts when compared to GDP and income growth and concludes:

Overall, data from the past 50 years strongly refutes any arguments that cutting taxes for the richest Americans will improve the economic standing of the lower and middle classes or the nation as a whole.

Source

Before I post anymore historical data, I'm going to address the following points you make, which by the way, you have given no data or evidence to back up, so it's a little hard to see where you are drawing your conclusions from, but I'll try and work with it regardless.

Originally posted by civilchallengerThe important variables involved are corporate profit margins in comparison to corporate tax rates over time. By your theory corporate profits decrease with corporate taxation.

I have not proposed any theories here. I am responding to the OP theory that corporate taxation has a "regressive" effect on poorer and working class families. Another way of putting this is that tax cuts for the wealthy will "trickle down" as benefits for the poor and middle classes. But just for the record, I did not suggest that "corporate profits decrease with corporate taxation", in fact if you re-read my comments, you will see (again, see the little math problem that I proposed earlier in this comment) that I think it's obviously a case of simple math where revenue - X = profit. Where taxes is X, lowering this variable means higher profit. Here's a chart documenting corporate profit since 1980: Source and here's one showing the revenue generated by corporate taxes as a percentage of GDP: Source The first shows corporate profits increasing since the 80's, and the second showing revenue generated through corporate taxes (via government tax returns) decreasing. (Again, keep in mind, that although corporate profits have increased, wages for working americans has stagnated and decreased during the same period...this is another effect of the "wealth gap" where just about all increases in national wealth have gone to the top 1% of Americans.)

Originally posted by civilchallengerBy my theory corporate taxes almost no effect whatsoever on corporate profit margins. I assert that as corporate income taxes increase, corporate profit margins remain identical, because all costs of running a business are always passed on to the consumer... every time in every circumstance for every expense.

Can you please post some evidence to show how this is true? Because from what I know, this is not necessarily true. Still, It's hard for me to comment on this theory if you don't show the real world data that you are basing this conclusion from. I've stated, and I'll state again, that there are a lot of other things that have an even larger effect on the price of goods we buy than corporate taxes (inflation, reduced/stagnant wages, wealth gap, trade deficits; i.e. specifically U.S./China deficit and the fact that most of the consumer goods we buy come from China), and as I'm proposing above the total net NEGATIVE effect that low corporate taxes have had on society as a whole has canceled out any positive net savings when it comes to any cost (if there is any) that is passed on to goods. Furthermore, as I've stated many times, your theory is predicated on the assumption that corporations and the wealthy have been paying "high" or "increasing" amounts of taxes. I have posted tons of evidence why the opposite is true.

Originally posted by civilchallenger
The information I'm presenting isn't well described as a trickle down effect. A trickle down effect means there is general benefits to the top and those benefits are trickled down to the bottom. I claim that every last cent of corporate income taxes is on average 100% paid for by customers of a corporation, and so corporation owners end up with absolutely none of the benefits in their own pocket, because it is *all* passed on to the consumer.

Again, you need to post some evidence as to why you think this is true. Listen dude, I was a business major in college, you don't need to explain economics to me. Pricing is based on more than corporate taxes. Specifically, there are elastic and inelastic goods with respect to pricing...a 100% tax that was passed on to consumers, with respect to certain goods that are highly elastic, would have, in turn a significant effect on demand (since there is an inverse relationship between price and demand). Case in point:

PEDs, in combination with price elasticity of supply (PES), can be used to assess where the incidence (or "burden") of a per-unit tax is falling or to predict where it will fall if the tax is imposed. For example, when demand is perfectly inelastic, by definition consumers have no alternative to purchasing the good or service if the price increases, so the quantity demanded would remain constant. Hence, suppliers can increase the price by the full amount of the tax, and the consumer would end up paying the entirety. In the opposite case, when demand is perfectly elastic, by definition consumers have an infinite ability to switch to alternatives if the price increases, so they would stop buying the good or service in question completely—quantity demanded would fall to zero. As a result, firms cannot pass on any part of the tax by raising prices, so they would be forced to pay all of it themselves.

Source Source

So your assertion that 100% of a tax would be passed on to consumers is only true is a good were perfectly inelastic. In the real world, and if you talked to anyone in a basics economics course, there are very few goods, if any, that can be termed "purely inelastic" or "purely elastic". Most pricing strategies are influenced by a variety of variables, and even so, not all are always what one would consider "rational"...an example being a "loss leader" or certain "market saturation" strategies despite negative effects on short term profitability (i.e. starbucks as an example)

Originally posted by civilchallengerI believe corporate income taxes are the second greatest burden on the lowest rung of income earners resulting in someone earning $7 an hour having roughly $1,500 per year less money. The greatest burden is the outrageously insulting percentage of money people in such a bracket pay to social security & other social programs.

This seems more like your personal opinion, rather than actual reality. At least I would like to see some evidence and sources to where you are drawing this conclusion from. This seems to be a better analysis of where the money goes for the average American family: Source (Where cost of housing comes in at number #1) Also I fail to see how social security and "social programs" like medicare is a burden since it is in actuality an investment that one collects in retirement. Unless you are willing to send your social security checks back to the government and tear up your medicare card when you are retired, I find this statement very hypocritical. Also, placing a blanket criticism on every "social program" also seems hypocritical to me considering that every citizen in this country personally benefits from some of these services including public roads, police & fire services, education, government and public hospitals, the VA, and so forth. I don't agree with everything that my tax money is spent on, but it's a fact of life that the taxes we pay keep our society running, and there is a reason, that first world countries like the U.S., Japan, the U.K., Germany, etc. have the types of social programs that they do, and it's also part of the reason that all these countries have better education, health care, infrastructure, technology, research programs, etc. than the various countries in Africa, Middle East, etc.

Originally posted by civilchallengerHowever, I would disagree that the gap is relevant at all. If you have a huge gap with a tiny amount of people in a state of poverty that is much better than a tiny gap where nearly everyone is in state of poverty. Therefore the gap between rich and poor is totally irrelevant to me, whereas the actual percentage of people in poverty and their level of poverty is what matters a lot to me.

Yes, except that when I gave those statistics on the wealth gap, they were also accompanied by the percentages of population in each category. And the trends show an increasing rate of poverty in this country, a decreasing middle class, accompanied by a consolidation of wealth in the hands of a few, making this an issue that is very relevant to all of us, at least if we care about our children having the same opportunities as we did, unfortunately many are already predicting that generation X will be the first generation to be worse off than their parents, and similarly boomers will be worse off in retirement than their parents.
(Below links to charts on shrinking middle class, poverty & wealth inequality
Source Source Source Source

reply to post by meeneecat

The reason I have not posted any facts and figures yet is because it makes more sense to first agree on which facts and figures are relevant to the idea. Most of the time I debate with someone on a point I ask them if specific figures would be relevant, and they usually tell me that no, they would not be relevant. So the disagreement is normally not on the facts and figures but rather which ones are the most relevant.

You've posted a huge number of citations which while all important, I agree with them all and am not surprised by any of them. But I don't agree they are the most important statistics in relation to the OP. I actually do understand that in America we do not have a tax system where the rich pay more than the middle class and poor, and your sources show that very well. You won't get an argument for me about how foolish it is to give tax breaks to the rich with the goal of decreasing poverty. I agree with you that tax breaks for the rich help out the rich a lot, but do not help the poor.

The only way corporate taxes can amount to a tax on rich people is if corporate profit margins go down as a result of corporate taxation. Do you agree on that point? So for example, lets say year 1 the average corporation is taxed 0%, and their profit margin is 10%. By year 10 the average corporation is taxed for 50% of profits, and their profit margin is now 5%. That would be overwhelming evidence that the impossible happened and that corporate taxation actually decreased corporate profits. Correct? But if profit margins remained squarely at 10% despite a dramatic change in corporate tax policy, it would be overwhelming evidence that corporate taxation does not effect corporate profits? No?

Corporate profits depend on tax-financed public goods: healthy and educated workforces; good infrastructure; publicly enforced respect for contracts and property rights, and so on. When corporations avoid or evade tax, legally or illegally, they free ride on the backs of the rest of us. Stop taxing them, and you savagely undermine political community.

Just had a conversation yesterday where someone mentioned the same proposal that corporate taxes are fictional. I just said "hmmm, interesting" as I didn't have much knowledge in the matter. So I thought about it a bit, googled it, and found this thread.

civilchallenger, I understand your idea to be that if we increase corporate tax by 20%, then the price of goods produced by that corporation will increase by 20%.

I can possibly see that occurring if that corporation had a monopoly in their sector. But otherwise, the prices should still be driven by supply and demand. They don't have room to increase it by an unlimited amount. I'm under the assumption that tax would affect all corporations who make over a certain amount. If the price were raised too much, while some of their competitors would do so as well if they're over that amount, they'd be giving a huge advantage to smaller companies who fall under that amount. The smaller competitors wouldn't need to raise their prices which would force the larger ones to maintain their pricing. Of course if the smaller companies were greedy the could still raise their prices to just below those affected by the tax.

Originally posted by civilchallenger
reply to post by meeneecat

 

The only way corporate taxes can amount to a tax on rich people is if corporate profit margins go down as a result of corporate taxation. Do you agree on that point? So for example, lets say year 1 the average corporation is taxed 0%, and their profit margin is 10%. By year 10 the average corporation is taxed for 50% of profits, and their profit margin is now 5%. That would be overwhelming evidence that the impossible happened and that corporate taxation actually decreased corporate profits. Correct? But if profit margins remained squarely at 10% despite a dramatic change in corporate tax policy, it would be overwhelming evidence that corporate taxation does not effect corporate profits? No?

I understand what you are saying, I did some quick research on this before, I was also curious to see if there was any relation between corporate taxes and profit margins. I posted a couple charts in my previous comment, again I don't know if you missed it or not, so I'll repost them here for clarification. It shows that since the 1980's (roughly since the start of the Reagan tax cuts, and on through the Bush tax cuts) that corporate profits have shown an upward trend (with predictable dips down during recessions). The other chart I found illustrates corporate tax returns (i.e. the amount of money the government collected from corporations paying taxes) which predictably goes down since corporate tax rates were also reduced during this time. When he took office Reagan reduced the top marginal tax rate from 70% to 50% and then again in 1986 he reduced it from 50% to 28%. Clinton raised this rate to 35%, and it was again lowered under Bush to 30% (although again, as I explained in my comments before, the effective tax rates are actually much lower)

The charts below show trends for both revenue from corporate tax returns and corporate profits since the 1980's.
Corporate Profit Margins 1980-present:
static2.businessinsider.com...
Tax Revenue (as taken from corporate government tax returns):
andrewsullivan.theatlantic.com...

Again, if you compare the trends, it shows corporate profit going up as taxes were simultaneously lowered during the same period. Thus in response to your question:

The only way corporate taxes can amount to a tax on rich people is if corporate profit margins go down as a result of corporate taxation. Do you agree on that point?

I think it's safe to assume that, while correlation does not imply causation, there is probably an effect on corporate profits with regards to taxation rates. In this case corporate profits increased as taxes were lowered. However, I would also caution that there were other major policy changes that were going on during the 80's and 90's that was started under Reagan, continued under Clinton and Bush, which was a policy of deregulation, specifically in the financial sector. Another major policy change was the expansion of NAFTA and a globalist agenda of "free" trade agreements. During this same time we can see how the role of the financial sector as a % of GDP increased significantly (Source), while at the same time, the manufacturing sector of the U.S. economy declined (Source). While it's probably safe to say that lower taxes has an effect on increasing profits during the past few decades, it's hard to say if this was a significant factor...or if there were other variables that has a larger effect such as trade agreements, deregulation, and a series of "financial bubbles" followed by a "correction". I see what you are saying with reference to the question you asked, but I'm just not sure how relevant this is to the OP's original point, which was the theory that a corporate tax would be passed on in the cost of goods making it a regressive tax on the poor and middle classes (again, I don't agree with this theory, but it's my understanding of what the OP said).

Again, back to one of the points I made in my previous comments, it is true that the economy has expanded significantly since the 1980's. Corporate profits are part of this measurement and they have also increased as tax revenues to the government have decreased. However, I would caution again assuming that this increase in corporate profits and decrease in corporate taxes has necessarily been a "good" thing for working Americans (i.e. wage earners as opposed to "investment class"; i.e. people who make majority of their wealth through capital gains & investments). Like I said, since the 1980's there has been a trend of stagnating and decreasing wages for the average American worker despite productivity gains, while the debt ratio of those same Americans has increased significantly. Again, as I understand it, the OP argues that taxing corporations would be "regressive" because the "cost" of this tax would be passed onto average Americans in the form of higher prices of goods. I posit, that the effect of corporate taxes on goods is still minimal, if any, citing other factors that have a much greater effect on the "average american's" ability to afford goods such as trade deficits, stagnant wages, societal "cost" of tax cuts for the rich (i.e. adding to the deficit and placing a higher tax burden on the poor and middle classes), inflation, wealth gaps...and then of course the fact that pricing strategies account for the "elasticity" of a good, and given that very few goods are purely inelastic, you will not be able to find a real world example where a corporate tax is passed on 100% (or even close thereto) to the consumer...other factors such as raw materials, labor cost, and market climate will, in the end, have a far greater effect on pricing.

I find this to be an interesting conversation, and I hope I am being clear enough with my thoughts, again I'm happy to elaborate if not. Although I studied business and economics in school, I admit that there is a lot I do now know and there is a lot that many economists do not know. I frequently read up on the subject, but I've found in this area of study, since we are dealing with the real world, there is always unknown variables and things that cannot be controlled for (unlike doing, say, a tightly controlled experiment in a lab). Economics crosses over into socio-politico fields and so we are also dealing with elements of human behavior and society...I personally feel it's very complicated in that respect and that, when dealing with the real world, things can rarely be boiled down into a simple equation like they are presented in the text books, so I hope you understand that this is what I mean when I say things like "there are a lot of other variables that also effect X"...it's because the world of business, government, society, and economics are all overlapping in one grey area, and it's the best I can do to try to make sense out of all these factors (thus all the numerous charts and data I have posted to try and illustrate all this).

reply to post by civilchallenger


I like the idea of consumption taxes. Depending on how much you spend and buy this equates to a drain on humans lives (people have to work) and a drain on resources. No taxes should be paid up to say what it takes for the average person to survive at a minimum. However, once a person crosses that threshold their taxes should go up exponentially. Yeah, I know, some people might say a person has a right to make profits and become rich...well when the rich use more resources, more human labor, then they can pay higher taxes. Because in the end we are all working our butt off trying to survive while the guy or corporation that consumes the most and drains our life and backs rarely lifts a finger. I am ranting a bit here and this opinion is not refined...but that's my opinion.

Originally posted by dolphinfan
reply to post by civilchallenger

 

Firstly, a flat tax is not regressive, it is progressive. The gent who buys a $80K car at a 5% tax rate pays $4,000 in tax and the bum who buys a $8.00 t-shirt at Wallmark pays 40 cents. That is a progressive tax. The only defination of "fair" with respect to tax policy is a flat tax. By definition, the more you make or spend, the more you pay.

Actually your analysis is off since you cannot simply conclude that it's "progressive" because the more a person spends the more tax that is paid. Whether or not a tax is regressive you need to analysis the effect on different income levels (aka "classes"). You cannot compare one guy buying an expensive good and another guy buying a cheap good and say it's "progressive" because more expensive goods are taxed more. Let me explain. Both person A and person B are going to buy an $8 T-shirt at Wallmart. Person A is really poor and only made $80 that week. Person B is wealthy and made $8,000 that week. Both pay a tax of 10% on the shirt ($8 x 0.1 = 80cents). 80cents is admittedly not that much, however as a percentage of each person's income for the week, it is obviously a much larger chunk of the poor guys income (1.0%), than the rich guy (0.01%). In other words, the poor guy has an effective tax rate of 100 times more than the rich guy.

Here's another example, person A is very poor and makes $20,000 dollars a year, however he has to feed his family of 4 and this necessitates him spending $400 a month on food, he also must spend $200 a month on utilities, $300 on medicine for his sick daughter and another $200 on transportation for a total of $1100/month or $13,200/year (he also pays 400 in rent which is untaxed and so unrelevant for now) person B is wealthy and makes 800,000 a year, and he also spends the same amount on taxable necessities each month for just himself (lets just assume for the sake of argument, that where person A & B lives, the government instituted a flat tax on all goods and they both happen to spend the same each month). They both pay a flat tax of 20% on the goods they bought, this works out to be $2,600 a year for each person. For the wealthy person, this is not a large burden for him as it is only 0.325% of his total income. However, for the poorer person, this tax burden is much larger at 13% of his total income. Thus a "flat" tax is a perfect example of a "regressive" tax, as poorer people end up having a larger tax burden as percentage of income when compared to wealthier people.

This is a quote from the wiki on "flat taxes"

Some taxes other than the income tax (for example, taxes on sales and payrolls) tend to be regressive. Hence, making the income tax flat could result in a regressive overall tax structure. Under such a structure, those with lower incomes tend to pay a higher proportion of their income in total taxes than the affluent do.

Source

Originally posted by dolphinfanWhat high corporate taxes do is limit the amount of cash on the balance sheet of a company. What does a company do with cash? They invest in plant and equipment, creating jobs. They hire people. Both of those activities increase the tax revenue to the government by virtue of the income taxes now being paid by those folks working.

I'm not going to repost all my evidence, since I have already many times in this thread (you can go back and look at the citations to see what I'm talking about) but just a quick response to what you are claiming...again, in my previous comment I posted that the gains in wealth made by corporations over the past 30 years have not gone to the average American worker. Wages for the average worker have stagnated and declined despite productivity. These large corporations and multi-nationals tend to spend their tax savings and gov't welfare on things such as hiring lobbyists and on obscene executive pay packages, via bonuses and "golden parachute" type deals (again I posted evidence, showing what Wall Street & the car companies did with all the government money they recently collected at the expense of taxpayers - evidence shows it was NOT used to hire people or make smart investments, but again, was used on multi million dollar executive bonuses and gov't lobbyists). Also, I pointed out and cited evidence that the majority of jobs are created by small businesses, not large corporations. Small businesses that are run by average americans making a fair salary, not wealthy executives making millions. Thus one can argue that the money is not well spent by handing it over to the rich and large corporations, but rather we should be supporting small businesses and fostering competition, not propping up "too big to fail companies" and encouraging monopolies and oligopolies. Then there's, the myth that these corporations and rich folk are being burdened by "high" taxes. I already posted a report from the GAO showing that the majority of U.S. corporations paid NO taxes in the year the report came out despite having combined revenues of over 2 trillion, also, a report taken from the IRS analyzing tax returns, also shows that the top 400 earners in the U.S. had an effective tax rate of only 17%. So here you have evidence, that this country's millionaires and billionaires are afforded a lower tax rate than that of average americans like police officers, firefighters, teachers, engineers, etc. who pay on average 20-25% tax rate. Again, this is regressive tax policy, and I do not see how it is beneficial to society.

Originally posted by dolphinfan Why are firms relocating to low tax states, if they simply pass the taxes on? I posted a thread yesterday about Catapiller moving out of Illinois. Why? because the tax rates are too high and the states they are looking at are right to work states, not unionized...

It's not that companies are moving out of states that we are loosing jobs, it's that companies are moving out of the country. This has decimated our manufacturing base...however to place the blame on corporate taxes and unions completely misses the point...yes, we have been loosing jobs to the rest of the world because of cheap labor overseas, however, this does not mean that the U.S. needs to engage in a "race to the bottom" with the rest of the 3rd world. We should not be so willing to give up our way of life and our ethics just because some other countries use child labor and cheap slave labor. What needs to be re-evaluated is these so called "free trade" agreements and neo-liberal economic policies that have lead to the decimation of our manufacturing base. There are examples of 1st world countries that have successfully been able to keep and grow their manufacturing base, all while paying employees good wages with good benefits and while instituting a progressive tax code (for example, in Germany, where they have a very strong manufacturing base, there is a 25% tax on capital gains, and BOTH foreign and domestic corporate profits are taxed at 15%, unlike in the U.S. which only taxes domestic corporate profits). A race to the bottom however, is not the answer.

Educational wise this has to be one of the best threads I have read in a long while. Being a 'bottom rung' wage slave myself for most of my life, struggling to cope,, even with my half-decent, limited intelligence, I need clarification. I Am finding it here with those wiser than myself. So, thanks everyone for the information. I will be coming back to read and reread these posts again and again . Plus printing out a few for the boss, should make for good water cooler conversation. Or a pink slip maybe,,,,?

So, back I go to start my 1st rereading, before I comment more fully. Wow, I am in awe.

reply to post by meeneecat

I will now reference information on corporate taxes over time to be compared with corporate profits over time (some in addition to the data you provided) so that readers can decide for them self what the effect of corporate taxation is on a corporation's profits.

I'm glad you were able to find chart of US corporate taxation shown at: andrewsullivan.theatlantic.com... showing government corporate tax revenues by year, because that is better than the data I found which simply had data summarized by decade at: www.cbpp.org... That report by the CBO included this text:

The share that corporate tax revenues comprise of total federal tax revenues also has collapsed, falling from an average of 28 percent of federal revenues in the 1950s and 21 percent in the 1960s to an average of about 10 percent since the 1980s.

The corporate tax revenue chart you link to (presented by The Atlantic) shows a very dramatic drop in tax revenues from corporations from the mid 1950's all the way to the mid 1980's. Over that period tax revenues dropped from roughly 5% of GDP to roughly 1% of GDP. I believe a percentage of GDP its a good way to measure corporate taxation because the share of GDP that consists of product sales can be expected to be fairly consistent. The changes have obviously been very large over the decades.

If corporate taxes were paid for out of the profits of (wealthy) corporations, then from the mid 1950's to mid 1980's we should see an increase in corporate profits during that period.

I found a chart of corporate profit margins from 1955 to 2006 from Hussman Funds at: www.hussmanfunds.com...
The chart is more difficult to read than the profit margin chart you linked to, but it goes back in time much further to the period of change where corporate taxation was going down dramatically in the 50s, 60s, 70's and some of the 80's. That chart features what could generally be described as a bowl shaped curve going from roughly 7.5% in the mid-50s, down to 5.75% in the early 1980's. That is a drop of roughly 23% in corporate profits despite the dramatic decrease in corporate taxes. That is a much more dramatic change when comparing the 80's to the present. I have not yet studied your charts in as much detail as I'd like but will do that when I next get a chance.

In the world of business, people make investment X to chase after return Y. Furthermore, there are usually a large number of people competing with you to chase after return Y. During that competition, either investment X will be bid up in price to match what would be competitive return Y, or return Y will go down to the level where additional investment is no longer attractive. That is capitalism at work. So, what happens when something impacts return Y in a negative way such as corporate taxation? Well what happens *if all else remains the same* is that investment X will then decrease to remain at attractive levels to investors. But by decreasing the investment you have maintained a similar profit margin. Profits should remain the same despite the corporate taxation.

Or more likely, not all else will remain the same. More likely, the accounting will change to match an increase that increase in business costs (corporate taxation)... with an increase in product price. The most significant thing about corporate taxation to a business is that competitors are going to see a similar hit on that expense line and therefore the most obvious move is to raise prices in hopes competitors will follow. Whenever an industry sees a new cost across the board its ordinarily an opportunity to raise product prices (or all cheat on your taxes in the same way).

ATS member phazei has pointed out supply & demand while you have pointed out price elasticity in much the same way as a serious barrier to the concept of passing on prices to consumers. Perhaps all of a business' customers will pay $x but not $x + another 5%. I imagine that would happen in some circumstances. And in other circumstances where prices are elastic and cost-based, the product cost is going to go up 5% to pay for corporate taxes but also another fraction to make a profit on the expense on corporate taxes. Furthermore, there is now an added risk to entry in that people who enter their market will have to pay added corporate taxes. That added barrier allows corporations to raise prices beyond the 5% mark in some cases. So yes you are going to have cases where the 5% increase in cost is going to translate into a related decrease in corporate profits. But you are going to have other cases where the 5% increase in expenses are going to lead to a greater than 5% increase in product price.

I believe this supply & demand / elasticity barrier is going to be very rare on the basis that if you look at what happens with the price of gasoline, cigarettes, and all other per-item taxes, is that people simply pay a higher price. I have not seen a case where sales fall off a cliff due to a tax increase.

I agree that an enormous number of complex issues come into play with product pricing. But there are certain principles that I believe can overshadow those complex issues when looking at the big picture. Its true that many pricing models do not directly include product cost at all but rather directly are based on the supply & demand charts. But in these cases I believe the supply curve is set by the risk-return chart that determines how many people will invest in that market and how much they will invest into it. That number of investors and amount of their investment is influenced in turn by corporate taxation... if they have to face the expense of corporate taxation they will want that to be offset by a higher percentage return.

Large corporations DONOT pay tax's.
For example: www.theatlanticwire.com...

GE didn't pay ANY taxes last year and actually RECEIVED millions.

The argument that the tax rate is too high is a strange one. More importantly, lowering taxes on rich people doesn't seem to work. We tried that for the past 8 years with Bush, how did that turn out? Meanwhile taxes were higher under Clinton, and we did pretty well. Actually, Bush, the big supporter of lower taxes for the rich and free markets, has the WORST job creation record since the great depression. What's up with that?

Originally posted by bobber
GE didn't pay ANY taxes last year and actually RECEIVED millions.

The argument that the tax rate is too high is a strange one. More importantly, lowering taxes on rich people doesn't seem to work. We tried that for the past 8 years with Bush, how did that turn out? Meanwhile taxes were higher under Clinton, and we did pretty well. Actually, Bush, the big supporter of lower taxes for the rich and free markets, has the WORST job creation record since the great depression. What's up with that?

Corporate tax is not in any way, shape, or form, a tax on rich people. Do you understand that corporations are not people? A corporation's money is derived from mostly the middle class, but also the poor and rich. Furthermore the charts and graphs I link to in my previous post on this page show that a corporations profits do not significantly change due to corporate taxes.

So, which accounting column do you suppose that corporate tax money comes from? I'll give you a hint: cost of goods sold! That column goes up because the cost of the goods goes up! Then they use that money to pay corporate taxation.

As for GE not paying taxes last year that is a major victory for the middle class and something that we should be happy about! Now we need to make sure none of the rest of them are taxed as well.