pdog
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Interesting. I’ll have to think about that. Is my thinking right that taxes are a form of liability insurance for society then? An extreme example - you could have somebody raise millions of dollars to create the next magical energy device. Investors may or may not know that what he’s doing is very dangerous. The guy blows himself and a city block up. Who pays the damages?His point was that investors receive certain advantages of investing in corporations, such as they have no liability in excess of their investment. For such priviledges, they should be willing to pay a price - the price of the corporate income tax. No one HAS to start a C-corp, they do it because it provides special benefits. They do it because they believe that the benefits exceed the price.
business owners today live in the corporation's housing, eat its food, drives its cars, fly its aircraft, attend school on its dime, and enjoy healthcare at the corporation's expense. the principals effectively live off of the corporation's costs, which are then deducted from revenues as expense items to reduce the corporation's tax liability, and yet you would further eliminate the expectation of corporations, which are more profitable than at any time in our history, from paying taxes to support the very economic engine that enables such profitability
From philosophical standpoint we are certainly on the same page. I strongly believe success is a product of a society – your economic engine. The corporations of our time were not created in a vacuum.
Admittedly, this does create a considerable problem with my logic (and a reasonable counter argument is a rare thing on this site these days .
I see your points and realize that the corporate tax might be the simplest form of regulation – it reminds me of the foreign oil/environmental debates – most people say forget regulation and subsidies towards alternative energy that have marginal effectiveness. Instead, simply start to raise taxes on oil and gas until industry figures out the best alternative – no regulation necessary.
With that idea, I guess I have to grapple with the notion that with a 0% rate, also must come regulation to keep corporations themselves from becoming the next big tax loophole.
However, is it really that hard? Cars and aircraft for “business use” might be a bit difficult, but isn’t it fairly easy to tell most businesses that they can’t directly pay for houses, lunches, and school? We’ve got 100k pages now that tell them how, when, and what to deduct – this can’t be any worse than that. Maybe they can reimburse/prepay the employee, but that would be counted as income, and eliminate any need for reporting beyond that. It wouldn’t be true reimbursement as progressive taxation would affect each person differently. But I would only expect that to force things into a “per diem” model instead of a reimbursement and that could be advantageous for both the business and the employee.
Corporate profits would be higher with no taxes. But imagine the simplicity. Revenue and expense are now irrelevant. All we have to care about now is that number the corporation has placed on an employee’s w2.