The disruptive nature of high business tax

[politicomind]

A current problem is high business taxes leads to the slowing of economic growth. As the government captures profit from big business and transfers it to war and the poor, a situation arises in which those business have less money to invest in research, facilities, and expansion. The penalty is less jobs for the poor to work at but more transfer payments for the poor to buy the bare essentials.

Another problem is less money in banks, meaning that as money is taxed and invest in war equipment and meals for the poor, the money is not put into banks and then is also not being lent out to others. The reaction is higher interest rates, as in less money in the coffers, means more loan-seekers competing for the same money and having to pay higher interest rates. This also slows the economy because high interest rates increase the likelihood of business failure or enough trepidation on the part of the loan-seeker, that he does not even venture into a new project.

The only aspect that works is to allow big business to keep their money and either save or invest it in growth.

The reason that growth is more desirable than saving is that banks must hold 25% of the money they have and cannot lend it out under federal guidelines. Thus, the greater amount that businesses keep and invest in business growth, the greater the benefit to the economy. Big businesses that keep a low percentage of cash to assets are the ones that stimulate job and economic growth the most. YET, it is a politically negative sentiment to allow big business to keep their money or to invest it. A more popular sentiment of the American people is tax the corporations more heavily than the people. But the people then are voting for their own unemployment, their own lack of low interest lows, and their own support of unemployment and welfare programs.

To keep the American economy healthy and to support that it continually grows we must create policy that encourages businesses to keep on growing not to punish them for good money management and successful ideas.

 

[Iriemon]

A current problem is high business taxes leads to the slowing of economic growth. As the government captures profit from big business and transfers it to war and the poor, a situation arises in which those business have less money to invest in research, facilities, and expansion. The penalty is less jobs for the poor to work at but more transfer payments for the poor to buy the bare essentials.

Another problem is less money in banks, meaning that as money is taxed and invest in war equipment and meals for the poor, the money is not put into banks and then is also not being lent out to others. The reaction is higher interest rates, as in less money in the coffers, means more loan-seekers competing for the same money and having to pay higher interest rates. This also slows the economy because high interest rates increase the likelihood of business failure or enough trepidation on the part of the loan-seeker, that he does not even venture into a new project.

The only aspect that works is to allow big business to keep their money and either save or invest it in growth.

The reason that growth is more desirable than saving is that banks must hold 25% of the money they have and cannot lend it out under federal guidelines. Thus, the greater amount that businesses keep and invest in business growth, the greater the benefit to the economy. Big businesses that keep a low percentage of cash to assets are the ones that stimulate job and economic growth the most. YET, it is a politically negative sentiment to allow big business to keep their money or to invest it. A more popular sentiment of the American people is tax the corporations more heavily than the people. But the people then are voting for their own unemployment, their own lack of low interest lows, and their own support of unemployment and welfare programs.

To keep the American economy healthy and to support that it continually grows we must create policy that encourages businesses to keep on growing not to punish them for good money management and successful ideas.

I disagree with many of the factual assertions you make as well as conclusions you draw. But I agree that a corporate tax is not an effective revenue generating system. Corporations are organizations. A tax on their profits is effectively passed on to consumers in terms of higher prices, or a decrease in investement, or profit, or some combination thereof. The people who benefit from the corporations -- shareholders, management, employees, should be taxed, according to the benefit.

It doesn't make sense to put a heavy tax on a corporation's profit, but then let the CEO collect his multi-million salary tax free. Take the tax on the corporation, and tax the CEO.

 

[ashurbanipal]

A current problem is high business taxes leads to the slowing of economic growth.

Really? I hadn't heard...

As the government captures profit from big business and transfers it to war and the poor

In case you weren't informed, it goes hand over fist to the war, and relatively little to the poor. Then again, it also seems to be the case that lots of big businesses are making quite a bit of money off that war, so paying taxes to perpetuate it seems like a good investment--too bad a large number of people have to die violent and painful deaths for those fat-cat CEO's to make their bonuses.

a situation arises in which those business have less money to invest in research, facilities, and expansion.

Well, maybe senior management at those cash-poor companies could sell off their fifth house in the bahamas and their slowest three luxury jumbo jets to raise funds?

The penalty is less jobs for the poor to work at but more transfer payments for the poor to buy the bare essentials.

I don't know where you're from, but one of the biggest news stories here on planet earth has been the outsourcing of jobs from America to Asia and Africa. There are plenty of jobs; American companies are offering them to Indonesian workers at the rate of a dollar a day.

Another problem is less money in banks

If there's less money in banks, why is M3 money supply expanding at such a rapid pace?

meaning that as money is taxed and invest in war equipment and meals for the poor, the money is not put into banks and then is also not being lent out to others.

The Fed prints money which it lends to banks at rates it sets. The Fed can print as much as it likes, more or less. The department of the treasury sets the money multiplier for the various types of accounts. As you can see from this chart:

Image:Money-supply.png - Wikipedia, the free encyclopedia

There is no shortage of money. You may notice in fact that even though M1 supply has remained steady, M2 and M3 have grown substantially.

The reaction is higher interest rates, as in less money in the coffers, means more loan-seekers competing for the same money and having to pay higher interest rates.

That's got nothing to do with how interest rates are set. Interest rates do not automatically go up if money supply goes down, and vice versa. The two things are independent of each other. A wise Federal Reserve Chair does not necessarily raise interest rates in the face of contracting money supply. There are a number of other factors to consider.

This also slows the economy because high interest rates increase the likelihood of business failure or enough trepidation on the part of the loan-seeker, that he does not even venture into a new project.

It also stems inflation, which is typically why the interest rates are raised.

The only aspect that works is to allow big business to keep their money and either save or invest it in growth.

Nonsense. Businesses should be taxed at a fair rate, and can do quite well paying reasonable taxes.

The reason that growth is more desirable than saving is that banks must hold 25% of the money they have and cannot lend it out under federal guidelines.

The current reserve requirement is 10% of demand deposits (and around 10% of other types of deposits and instruments).

Thus, the greater amount that businesses keep and invest in business growth, the greater the benefit to the economy.

How does this relate to the reserve requirement?

Big businesses that keep a low percentage of cash to assets are the ones that stimulate job and economic growth the most.

Do you have some kind of information that backs this up? Even if you do, what does this have to do with fractional banking?

YET, it is a politically negative sentiment to allow big business to keep their money or to invest it. A more popular sentiment of the American people is tax the corporations more heavily than the people. But the people then are voting for their own unemployment, their own lack of low interest lows, and their own support of unemployment and welfare programs.

I think rather we are voting against people like Dennis Kozlowski and Jeff Skilling getting to keep more money than they already are for their empire-building adventurism.

To keep the American economy healthy and to support that it continually grows we must create policy that encourages businesses to keep on growing not to punish them for good money management and successful ideas.

Absurd. Businesses have grown quite successfully in the past with even higher tax rates. Big American Businesses have shown a psychotic tendency to distort information for their own gain. I'm sure that quite a number of CEOs complain about having to pay corporate taxes and they invent ideologies such as yours to justify exactly that. But if allowed to keep that money, the last thing they'll be doing with it in today's world is creating jobs in America.

The idea behind corporate taxes is that corporations are often responsible for some of the more deleterious effects of civilization on common property. The taxes they pay are essentially fees paid to clean up their messes--not that government uses them that way any more.

 

[agaglio]

A current problem is high business taxes leads to the slowing of economic growth. As the government captures profit from big business and transfers it to war and the poor, a situation arises in which those business have less money to invest in research, facilities, and expansion. The penalty is less jobs for the poor to work at but more transfer payments for the poor to buy the bare essentials.

Welcome to socialism...

I'm sure that quite a number of CEOs complain about having to pay corporate taxes and they invent ideologies such as yours to justify exactly that. But if allowed to keep that money, the last thing they'll be doing with it in today's world is creating jobs in America.

You're completely and totally wrong. It's obvious that the CEO's "greed" (as you call it) would lead them to put that money into their business so that they could gain more money. When businesses expand, they create more jobs.

The taxes they pay are essentially fees paid to clean up their messes

What messes?

 

[Monkey Mind]

The only aspect that works is to allow big business to keep their money and either save or invest it in growth.

No, businesses should pay their taxes and contribute back to the society that allowed them to exist and grow in the first place. If anything, the tax code is biased in favor of corporations. A corporation can deduct pretty much everything, and the tax rates are generally lower than the comparable individual rate.

It doesn't make sense to put a heavy tax on a corporation's profit, but then let the CEO collect his multi-million salary tax free. Take the tax on the corporation, and tax the CEO.

That's not how corporate taxes work - CEO salaries are not tax-free. The CEO's salary is deductible to the company but taxable to the CEO. If any profits are retained by the company those are taxed too at the corporate tax rates.

 

[Feela]

No, businesses should pay their taxes and contribute back to the society that allowed them to exist and grow in the first place. If anything, the tax code is biased in favor of corporations. A corporation can deduct pretty much everything, and the tax rates are generally lower than the comparable individual rate.

Dude that is a massive understatement,if it wasn't for massive and constant state intervention corporations wouldn't exist.

 

[Monkey Mind]

Dude that is a massive understatement,if it wasn't for massive and constant state intervention corporations wouldn't exist.

Well yes technically there would be no such thing as a corporation if the state hadn't created corporations as legal entities. Other than that though, I think any corporation worth its salt could do just fine without help from the state.

I'm not sure I understand what you mean by massive and constant state intervention.

 

[Iriemon]

Originally Posted by Iriemon
It doesn't make sense to put a heavy tax on a corporation's profit, but then let the CEO collect his multi-million salary tax free. Take the tax on the corporation, and tax the CEO.

That's not how corporate taxes work - CEO salaries are not tax-free. The CEO's salary is deductible to the company but taxable to the CEO. If any profits are retained by the company those are taxed too at the corporate tax rates.

I was not purporting to express that is how it works, but trying to illustrate why IMO it makes sense to tax the individuals that benefit from the corporation as opposed to the corporation itself.

 

[agaglio]

No, businesses should pay their taxes and contribute back to the society that allowed them to exist and grow in the first place.

How did society allow them to exist? The business's contribution to society is the product it produces. Without the product, society would be lacking something it wants or needs. Not only do you want the business's product but you want it for a price that is lower than the business can afford. You greedy greedy man.

 

[ashurbanipal]

You're completely and totally wrong.

Hmmm...we shall see.

It's obvious that the CEO's "greed" (as you call it) would lead them to put that money into their business so that they could gain more money.

Is that obvious? I don't necessarily think so.

When businesses expand, they create more jobs.

Not always. It's clear that job expansion recently has been overseas, not here.

What messes?

Read David Korten's book "When Corporations Rule the World" for dozens of examples of social, political, and environmental malfeasance on the part of many corporations. Corporations have (at least lately) taken to socializing their costs while privatizing their profits.

 

[Monkey Mind]

How did society allow them to exist?

Well you see, a long time ago these guys got together and wrote up some laws that created the construct of corporate personhood.

The business's contribution to society is the product it produces.

Some businesses. Others don't create any products per se, or the ones created don't provide any benefit to society. Some even cause deleterious effects to society.

Without the product, society would be lacking something it wants or needs.

Really. So society needs real estate speculators, day traders, cigarettes... reality television?

Not only do you want the business's product but you want it for a price that is lower than the business can afford. You greedy greedy man.

:rofl That comment appears to have been pulled directly from your a$$. Care to dust it off and elucidate for those of use who aren't privy to whatever substances you've been abusing?

 

[Feela]

Well yes technically there would be no such thing as a corporation if the state hadn't created corporations as legal entities. Other than that though, I think any corporation worth its salt could do just fine without help from the state.

I'm not sure I understand what you mean by massive and constant state intervention.

That is incorrect,corporations require massive cost mitigation to be able to exist,the truth is they get much more from the gov't directly and indirectly than they give.

Read Part two this entitled,Capitalism and the State: Past, Present and Future .It gives a wonderful description of the constant intervention needed to sustain corporations and capitalists in general.
Studies in Mutualist Political Economy

 

[Monkey Mind]

I was not purporting to express that is how it works, but trying to illustrate why IMO it makes sense to tax the individuals that benefit from the corporation as opposed to the corporation itself.

I think it's perfectly fair that both are taxed. Corporate status brings with it certain benefits, for which the price is corporate taxes. If you want a business structure that doesn't have corporate taxes, there are others available. For example S Corps, Partnerships, Sole Proprietorships. Each has its uses.

 

[Monkey Mind]

That is incorrect,corporations require massive cost mitigation to be able to exist,the truth is they get much more from the gov't directly and indirectly than they give.

You obviously don't know much about corporations. What you said above doesn't even make sense. You sound (heh, look) like you're parroting something that you've heard about a subject you don't fully understand.

Read Part two this entitled,Capitalism and the State: Past, Present and Future .It gives a wonderful description of the constant intervention needed to sustain corporations and capitalists in general.
Studies in Mutualist Political Economy

Unnecessary. I don't need to read about someone else's corporation because I run one of my own. It's a small business, just two employees, but a corporation nonetheless. Trust me there is no intervention whatsoever by the state, other than a monthly demand for large amounts of taxes.

I think I know what you're really referring to - corporate welfare, corruption of the political process by large moneyed interests, etc. But you speak in generalities which belie the truth, which is that corporations run the gamut from mom and pop stores all the way up to Exxon-Mobil.

 

[agaglio]

Well you see, a long time ago these guys got together and wrote up some laws that created the construct of corporate personhood.

Haha, you're saying businesses exist because of the government. Right. :roll:

Some businesses. Others don't create any products per se, or the ones created don't provide any benefit to society. Some even cause deleterious effects to society.

What business could possibly be around that doesn't create a product or service that society wants?

Really. So society needs real estate speculators, day traders, cigarettes... reality television?

If you read my statement that you quoted, I said "needs or wants"
Yes, society wants cigarettes, reality television, day traders, and speculators. If society didn't want them, they wouldn't be in business.

That comment appears to have been pulled directly from your a$$. Care to dust it off and elucidate for those of use who aren't privy to whatever substances you've been abusing?

I said that because, not only do you want the product from the business, you want to steal their money by taxing them.

 

[agaglio]

Nothing in your entire post provides evidence for your views.

Not always. It's clear that job expansion recently has been overseas, not here.

Oh, But I thought you wanted jobs for everyone! Shouldn't everyone be entitled to a job! :roll:

Outsourcing is a good thing. It creates competition and raises living conditions around the world. Maybe it will put an end to monopolistic unions.

Read David Korten's book "When Corporations Rule the World" for dozens of examples of social, political, and environmental malfeasance on the part of many corporations. Corporations have (at least lately) taken to socializing their costs while privatizing their profits.

Why don't you give some examples from the book instead of citing the book as evidence?

 

[Iriemon]

I think it's perfectly fair that both are taxed. Corporate status brings with it certain benefits, for which the price is corporate taxes.

Who derives the benefits?

If you want a business structure that doesn't have corporate taxes, there are others available. For example S Corps, Partnerships, Sole Proprietorships. Each has its uses.

Though not for major corporations.