Tax reform: Are you really a believer?

  • Article by: Paul Gutterman
  • Updated: May 23, 2013 - 6:55 PM

In any such reform, corporate taxes would have to go.

  • 38
  • Comments

  • Results per page:
windigolakeMay. 23, 13 7:26 PM

This article is laced with inaccuracies. The writer doesn't know about the accumulated earnings tax that taxes excessive corporate income that is not distributed to shareholders. He also notes that while we have one of the highest corporate tax rates, we have one of the lowest effective rates due to deductions, loopholes and excessive tax credits. When our top ten biggest companies pay less than 10% of their profits in tax (and many pay zero or get Treasury Department rebates), our "high tax rate" is meaningless. A better solution would be to lower the rates and simplify what could be deducted. And we should quit allowing American corporations to deduct the salaries for jobs outsourced abroad and to depreciate facilities in foreign countries that have been moved there while closing US factories and workplaces. In addition, corporations should be taxed on their worldwide income and given a credit for taxes paid to other countries. That's how individuals are taxed unless they hide their income in countries without tax treaties with the US. Making up a quarter of a trillion dollars by punishing homeowners, many of whom qualified for their mortgage in part because of the deduction is folly. The corporate tax should be lowered, simplified and administered even-handedly.

15
2
hermajestyMay. 23, 13 9:40 PM

It seems counter-intuitive, but high corporate taxes (high REAL corporate taxes) encourage investment in facilities and R&D and hiring of employees. How? Because those activities are deducted from taxable income. With low corporate taxes, the game becomes "please the shareholders at all costs and feed the piggies in the executive suite, no matter how much customer service suffers, no matter how many people we have to lay off, no matter how shoddy our products become."

19
3
hermajestyMay. 23, 13 9:49 PM

By the way, I just saw a letter in the Letters column in which the writer claimed that raising corporate taxes only causes companies to raise prices.

Wrong, unless they're bad at arithmetic.

Unless the price increase is offset by increased tax-deductible expenditures, increasing income from higher prices either increases a company's taxes or is a wash. Play around with some numbers yourself to see what I mean.

13
5
chuckdancerMay. 23, 1311:06 PM

Corporations are people according to the Supreme Court and should be treated like people. Pay your taxes.

17
2
pumiceMay. 23, 1311:42 PM

From the article: "$287 billion in taxes paid by corporations last year ... represents more than 10 percent of all federal revenue." Ten percent!!! In 1950, however, corporate income taxes accounted for over 26% of federal tax revenue. Individual income taxes have held relatively steady--accounting for slightly under 40% of federal tax revenue in 1950 and slightly over 40% now. So who paid the difference? Workers! Payroll taxes accounted for 11% of federal tax revenue in 1950 and account for 40% now. Paul Gutterman suggests that corporate income taxes "have to go" and that we should "embrace" the idea of offsetting lost revenue by limiting the ability to deduct home mortgage interest.

14
3
potter101May. 23, 1311:53 PM

windigolakeMay. 23, 13 7:26 PM This article is laced with inaccuracies. The writer doesn't know about the accumulated earnings tax that taxes excessive corporate income that is not distributed to shareholders. He also notes that while we have one of the highest corporate tax rates, we have one of the lowest effective rates due to deductions, loopholes and excessive tax credits. When our top ten biggest companies pay less than 10% of their profits in tax (and many pay zero or get Treasury Department rebates), our "high tax rate" is meaningless. A better solution would be to lower the rates and simplify what could be deducted. And we should quit allowing American corporations to deduct the salaries for jobs outsourced abroad and to depreciate facilities in foreign countries that have been moved there while closing US factories and workplaces. In addition, corporations should be taxed on their worldwide income and given a credit for taxes paid to other countries. That's how individuals are taxed unless they hide their income in countries without tax treaties with the US. Making up a quarter of a trillion dollars by punishing homeowners, many of whom qualified for their mortgage in part because of the deduction is folly. The corporate tax should be lowered, simplified and administered even-handedly.*****************************Couldn't have said it better. Also one other thing Business that are none profit that compete with for profit business should loose that non profit designation yesterday. The idea that business doesn't have to pay taxes on profits out of the country that isn't brought back to this country is insanity. There is many companies that have more cash in other countries then here. Are we crazy.

14
1
capsule2May. 24, 13 7:03 AM

Who actually "owns" the dollar?

1
0
my4centsMay. 24, 13 8:00 AM

windigolake - The reason some corporations pay little or no corporate tax on their profits is because government (politicians) have rigged the system in favor of that particular business. If the United States were to start taxing corporations on their worldwide income, then few, if any, multinational corporation would remain in the country. Going the other direction and eliminating the tax would bring more production and jobs back to the United States instead. hermajesty - high corporate taxes do NOT encourage investments and R&D. What encourages investments is the potential for high returns. It is always the corporation's goal to please the shareholders, and investments are made in order to earn more money for those shareholders.

1
11
sundialMay. 24, 13 8:17 AM

Here's what I believe: The system is rigged to favor the wealthy. I also believe we've used the tax code to subsidize business, homeowners, and do social engineering. I say start from scratch and do this exercise: 1. Determine the legitmate role of government, then cost that out. 2. Raise just enough revenue to fund the legitimate role of government through a progressive income tax and a tax on the transer of wealth. 3. Eliminate all deductions, exemptions and subsidizes. Gore everyone's ox. I also believe this will never happen. Too many people make their living off the complexity of the tax code.

2
7
pguttermanMay. 24, 13 9:32 AM

Hard to write about complex topics in 750 words, but the point of the article is that the only reason we have a corporate tax is it is politically expediant. People love the corporate tax because they think it is free money and less taxes on them. But it is hugely complicated and creates an unlevel playing field for businesses. The article is trying to challenge the universal theoretical belief in tax reform with the reality of creating a true fair and equitable system.

4
7

Comment on this story   |  

ADVERTISEMENT

  • about opinion

  • The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.

  • Submit a letter or commentary
Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT