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Businesses in America will never pay a 28% tax rate. That would be an enormous rise in taxes for most companies. Heck, the 30 biggest lobbyists in favor of cutting corporate taxes don't pay any taxes anyway. The fact which most people don't seem to understand is that taxes are only levied on profits. So it is key to understand what expenses are subtracted from revenue to determine taxable profits. That's where the the shenanigans creep in. People in business understand the rate doesn't matter.
2/3 of US Corporations already pay NO federal taxes. Yet they use all of the infrastructure paid for by individual income taxes to run their business. Cutting corporate taxes does NOTHING but line the pockets of executives. It used to line the stockholders pockets, but even that doesn't hold any more. If you want to use the tax code to stimulate the economy, cut INDIVIDUAL property and income taxes to zero and watch DEMAND soar. DEMAND is the only thing that will incent business to grow. That comes from consumers. Sorry, supply side economics does not work. Only demand side does.
The most important thing that must occur is not with taxes at all, it is attitude. The attitude that the United States is just another country on a list of options for United States companies must end. Whatever it takes for this attitude adjustment to penetrate the thick skulls of the corporate chieftains is what is going to have to happen. We can talk about tax rates after that is accomplished. Whatever it takes.
Let's try this: (1) Eliminate corporate income taxes for "new C" corporations that agree to have dividends and capital gains taxed at regular individual tax rates, (2) For all other "old C" corporations, continue lower tax rates on dividends and capital gains but gradually, over five years, eliminate special tax rules so that in 5 years taxable income = GAAP income. Got it so far? OK. Now assume jo1glex, pitythefools and chuckdancer have retirement accounts (pensions, 401K, 403B, IRA, Keogh, etc.) Would you advise these three individuals to invest in (1)the "new C" companies, (2) the "old C" companies or (3)US Treasury Bills, Bonds and Notes? I'm very interested in your answers, and theirs, if they have an opinion.
Mr. Wieffreing misses the main problem, a corrupt congress. Congress gives tax breaks to those providing reelection money. Eliminate bribery and we have a chance to fix the tax system.
We have the second highest official corporate tax rate of industrial countries. The truth is we have the second lowest EFFECTIVE corporate tax rate in the world. The last thing we need to do is cut corporate rates further. We need to end loopholes and subsidies to very profitable corparations like oil corporations. Tax cuts don't create jobs they take needed tax money away and contribute to the deficit.
pitythefools, you obviously have it all backwards. Mr Wiffering, you seem to be making the same mistake. If 2/3's of all businesses already pay no tax, but you want to leave them the same or worse yet, get rid of all credits and deductions, but only lower the rate to 28%, how could this be considered a fair or business friendly environment. pitythefools - demand is helpful, but doens't do much good if all the demand is satisfied by Chinese rubbish. It doesn't matter how low the individual rates are if business aren't here producing things and employing people. The economy is measured by Gross Domestic Product. If you don't have any products, you've to nothing. Go ahead and lower the corporate tax rates to 0%. Businesses will return to the US. Businesses will return their capital to the US. Manufacturing will boom as companies compete for the best talent.
People who think corporations pay any taxes are kidding themselves. When the government levees taxes against them they simply consider it another cost of doing business and pass it along to their customers in the form of higher prices. So YOU are paying more everytime the democrats raise corporate taxes.
I think we should cut the corporate tax rate to zero and tax personal income from corporations at the ordinary income rate. This would reduce the cost of compliance which is routinely estimated to be at least equal to the actual taxes due. Corporate tax attorneys and accountants are smart folks and can be retrained to do something productive. Small companies today can incorporate and only pay taxes when they take income out of the corporation. Tax compliance along with regulatory compliance are a bigger cost (often with questionable benefits) than the taxes corporations pay...and therefore a man-made constraint on our economic growth which every politician claims he or she wants.
First of all, didn't we just decide that corporations are people, in which case we have a select group that have been singled out to receive special compensation from the rest of us, ergo this is just another form of welfare. I would have no problem providing business with incentive to invest and grow, but that isn't what they do anymore. Instead they just pocket the money at the top, make the workers be more 'productive' and look for more ways to pay even less in taxes(see offshore accts) and still try to move every job they can overseas. You would have to roll back 40 years of destructive de-regulation, changes in the tax codes, and greed filled business practices to have any affect. Another solution would be to go back to, say 70% corporate tax. When it's that high incentive to re invest and grow, along with more hiring and higher wages is already built in. This is the way we should really go.
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