So I haven't posted anything meaningful in awhile and since I got hammered watching the heat game and playing golden tee at a local watering hole I thought I would throw something up to encourage a little dialogue.
So apparently, a bunch of commodities trading companies (among other things, I know) are being sued by Argentina for tax evasion. This shouldn't really surprise anyone (the 'tax evasion' not the law suit) but I was curious as to what you all thought about taxes as they apply to corporations. This wannabe hipster and I got into a verbal altercation (meaning I told him he was a pinko commie fag) about if and how corporations should be taxed. It seems to me that if they are working within the framework of whatever country they are working in, they should be in the clear for tax purposes. After all, were this not the case, many a tax lawyer/accountant/generic Jewish guy would be out of work.
So what do you think WSO?
This is the article: http://www.guardian.co.uk/business/2011/jun/01/ar…
PS I am pretty hammered so fuck your grammatical errors. Die in a fire.
Argentina is playing with fire here. They need the tax revenue just like everyone else in the world, yet they run the risk of pissing the people off who control their food supply. What happens when these traders push Argentinian grain out of the world trade markets, that should be an interesting shit strom to see go down.
Corporations pay a lot of taxes. Problem is, you never see this in the news. What you see is GE and some half ass'd story that gives you partial truths.
What people fail to realize is that we all try and minimize our tax roles. This idea that companies are evil giants is childish.
The true travesty is that over half this country pay no Federal taxes.
As well you should.
Btw, why have you been a bit inactive lately? I guess you've been dealing with depression stemming from Tpain's vow to quit autotune forever?
Happy and ANT, where you been?
If they want tax revenues then why don't they structure the tax code so as to limit corporations ability for evasion? Lower the rates, ditch the tax free zones, and remove any tax credits and subsidies.
Argentina's government is the one that writes the tax code yet they're the very same ones bitching about corporations taking advantage of it.
Corporate taxes are a fallacy. Capital gains are fine, but corporate taxes force the burden of the tax onto the consumers in a normal, somewhat elastic good. If the tax was removed the cost levied by the businesses would be less. I've said it a lot before, Corporate taxes are just a way for the Democrats and populists to "stick it to the man" while the stupid public thinks that they are gaining from it. So 50% of America pays no direct taxes, but everyone suffers as a result of these indirect taxes. I could go on and on, but if you look at the numbers around 23% of a final finished goods' cost in the market is because of indirect corporate taxes.
I don't get it, what do costs (including taxes) have to do with pricing. Prices are driven by demand, in the most simple case let's say a company can sell 50 units at $100 and 100 units at $75. Obviously it will sell at $75. Why would it change its price if its taxes increase?
A similar logic applies to wages. Companies will pay the least amount in wages that they can to fulfill their labor needs, regardless of their costs. Why would higher taxes affect wages? Income taxes leave less money for reinvestment and payouts to shareholders. The way income taxes maybe affect employees is through reduced reinvestment, how much depends on where the company is in its life cycle. The impact on employees is a little murky and indirect, i.e. low reinvestment will lead to low growth, which will lead to less job growth and less job security / opportunities for employees - instead of an effect on wages directly caused by a "pass on" effect of taxes.
Exactly, and if these benefits didn't outweigh the cost of double-taxation, then there wouldn't be any corporations around anyway. It's not like people are legally forced to incorporate their companies.
OK, so if a company can sell, cost-neutral at $75 with no taxes built in, if taxes increased then either the company would raise their price or b driven out of business. The resulting wave of bankruptcies would limit supply, bringing the equilibrium price to the level with taxation. Few companies, can sustainably operate at a loss (unless it is a non-core business).
On the other hand, if a product was being sold with 23% embedded taxes for $100 and the taxes evaporated. Competition would drive down the price of the good i any relatively elastic market. Obviously for monopolies and inelastic (sin) goods this may not be the case- but overall this occurs. And who foots the bill of the increased taxes- the consumer.
My observation works the best as markets approach perfect competition, but even with profit built in due to proprietary tech or brand name, the squeeze on margins will result in a price change because the ability to have such margins would belie the fact that the demand was less price elastic than a comparable good.
I don't think corporations should pay taxes at all. Besides "corporations" do not exist, the corporation is the people who work for it so the people they are really taxing are the workers at the firm and the shareholders. Those "taxes" would be going to capital improvements or paying employees higher wages or paying more to the shareholders.
Argentina is already a basket case with 24% inflation.
PS Happypantsmcgee where do you live?
No way man. I'm not going to get into the whole argument again (search some other threads for it), but corporations do exist as separate entities SPECIFICALLY BECAUSE of the government. If not for the government granting the corporation a charter, and therefore granting it limited liability, the organization would simply be a partnership. A corporation exists because the owners want to limit the liability to the amount they invest in the firm, unlike a partnership where liability, at least for one partner, is unlimited.
The government isn't "taxing" the employees and the shareholders. It is "taxing" the corporation itself, since that corporation needs that government in order for it to exist in the first place. This is why corporations are double taxed.
Okay let me explain it another way for you. The govt granted a business a charter (separate entity) for legal purposes and so that the "shareholders, employees, managment, investors" would not lose everything they had if said corporation were to do something illegal. Imagine what it would be like if every employee of Enron could be sued for the actions of a few?
Let me ask you, where do these "corporations get money" if not by the product of their employees and investors? You can skirt around facts and make them fit your thought process but that does not make them correct. The simple fact remains that if the US govnt did not take away this money from "corporations" aka all shareholders and employees of a firm then all that capital would flow into higher wages, capital improvement and dividends/payments to investors.
Lets do a quick history lesson. The first corporations were granted in the early 1800's in the US and were not taxed at all. In fact the US govnt did not have a personal income tax until the Civil War and that was due to the high cost of the war. That personal income tax was abolished in 1872. Personal income taxes and corporate income taxes did not really come about until 1913 with the 16th amendment (coincidentally the same year the Federal Reserve was created). What did the govnt do before it stole most of the money it "earned" from individuals?
Taxation is just another word for theft and was never supposed to be apart of the Federal Government according to the constitution.
This is the same argument about government and how people think government is this legal entity that exists somewhere out in the world. All government is is the actions of people who run that government just like all corporations are are the collective efforts of the employees/investors of the firm.
You will one day realize that the "government" pushed for a business to be labeled as a corporation in order to steal its larger revenue stream. It was very forward thinking by Govnt to "grant" corporations immortality because then they would be able to "tax" this corporation forever instead of allowing states to abolish corporations at a whim. You will soon realize that most of the fundamental concepts of modern economics are built on fallacies, kinda like the risk free rate in the CAPM and Black-Scholes models or Modern Monetary Theory.
Let me put this another way, did Enron go to jail when IT was found to be fraudulent? If Enron had not collapsed but was still found fraudulent would it be a corporation under existence today?
You can argue semantics with regards to legal law all you want but the simple fact remains that if a corporation is found to be a fraud the Executives creating that fraud (aka the corporation cannot create it because it only exists in principle) are the ones who go to jail. Just like it is the executives, employees, investors who are DOUBLE taxed by the US govnt.
Also remember those investors are double taxed for the simple concept that the money they hae invested in the firm has already been taxed once as regular income that will now be taxed again as capital/profit in said firm. All monies are taxed whenever they change hands because the Income Tax system is set up like the fractional reserve system.
Your move because the Knight just checked your King.
Agreed. No corporation pays taxes. Taxes can only be payed by people. So the question then becomes what is the best way to tax people. Frankly, I'm a believer in the fact that if you tax something you get less of it. So I am naturally opposed to corporate income, personal income, capital gains, and dividends taxes. I'd much rather see most of our taxation be consumption based. But that said, when politicians see big chunks of money (ie, corporate income statements), they get too hungry to resist grabbing their share.
(Just playing devils advocate)
Bäh, Argentina sucks. Maybe they could claim some transfer pricing fraud, but if its well done, its legal, its good.
The right to incorporation--and all of its many benefits--is a gift from the public.
I still don't think so, because taxes are levied on residual income after everything else. Why would companies have to raise the price or be driven out of business? If a company is profitable it will keep around 60% of its profits, if it's not profitable it will pay less taxes in the future. Income taxes (specifically) have no bearing on operating decisions and don't cause companies to go bankrupt. What they do is limit the amount of income that can be reinvested (to increase growth) or paid out to shareholders.
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