Don't Raise Corporate Taxes!

Author: bmdrocks21 ,

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  • bmdrocks21
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    bmdrocks21
    There have recently been calls by politicians such as Bernie Sanders to raise corporate income taxes, and this is a very foolish proposition. He would like to see it raised to 35% https://www.cnbc.com/2019/10/14/bernie-sanders-would-raise-corporate-tax-rate-to-35percent-ban-stock-buybacks.html

    Lies in the media have been spread about "corporate windfall profits", making these propositions seem great to those who don't truly understand how businesses operate in the context of the economy. The public perception of profits as of 2015 was that companies have a 36% profit margin. The reality is that, based on 212 industries combined, the average profit margin is 7.5% and the median profit margin is 6.5%. When you have these liberal politicians and media pundits constantly lying, this is exactly what you get: people believe corporate profits are 5x what they actually are, and then they support policy positions based off of this misinformation. https://www.aei.org/carpe-diem/the-public-thinks-the-average-company-makes-a-36-profit-margin-which-is-about-5x-too-high/

    Additionally, consider exactly what happens when you tax a corporation, outside of the obvious effects of making America a less attractive country to start a business or invest in. How will these new taxes affect consumers? Corporations consider taxes to be just like any other item that costs them money- an expense. To adjust for these expenses, they will raise prices for their products. So, consumers end up paying the tax issued by the corporation. I will not pretend that this works in reverse as a sort of "trickle down economic" effect either. The only thing that will reduce prices for consumers is competition. You stimulate competition by eliminating barriers to entry and free up markets shackled by high taxes and expensive indirect costs such as regulation that small businesses and startups have difficulties complying with. They may not have the capital or lawyers necessary to make sense of thousands of federal, state, and local regulations.

    Now, for anyone who disagrees, I would like to ask you: how do you believe a $15 federal minimum wage, more mandated family time off, more expensive regulatory compliance, and other such programs associated with the Democrat platform will make America a place that any foreign company wants to create jobs or a country in which our current companies will be able to remain globally competitive? Do you believe that this will have no effect on long-term economic growth, unemployment levels, or inflation caused by rising costs of products?

    For anyone who doesn't want to raise corporate taxes, let me know anything I missed or if there are any misrepresentations of my position that I might have made.

    Thanks to anyone who reads my mini-rant. Hope you have a nice day! :^)
  • ethang5
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    --> @bmdrocks21
    We cannot have a redistribution of wealth in the country unless we Raise Corporate Taxes.

    Corporations have all the money, and poor jobless illegal immigrants don't. So, take the money from the successful, hard working, innovator, and give it to the non-contributor, and all will be well.

    What could be clearer?
  • bmdrocks21
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    --> @ethang5
    Oh my goodness, you’re right! It is so unfair that working people get money and non-working people don’t.

    I am surprised no one has legitimately argued against me. Guess everyone here believes in low corporate taxes?
  • dustryder
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    I do note that the context for raising the corporate tax rate is to restore it back to the pre-Trump %35, rather than randomly raising it to %35 at a whim.

    In which case I think the prudent measure would be to examine the effects of the lower corporate tax rate under Trump and weigh the relative benefits to the negatives.


  • bmdrocks21
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    --> @dustryder
    Well, getting into specific tax rates is a very technical measure that I am not sure we are prepared to get into. I am saying that this is the case based on economic maxims.

    Corporate tax codes have lots of deductions that impact company incentives and lots of other things, so comparing the two tax codes based on rate alone is apples to oranges. Additionally, as I mentioned, competition is an important factor on prices, which impacts the ability to retain jobs.

    Keeping everything else constant, raising taxes on corporations would be bad. That is my position.
  • ethang5
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    --> @bmdrocks21
    What about "legal" loopholes that allow corporations to escape paying taxes, should those be closed?
  • bmdrocks21
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    --> @ethang5
    I am in favor of very simple tax codes with few to no deductions. I don't like resources being wasted to escape taxes, and I believe everyone should pay their "fair share".   
  • ethang5
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    --> @bmdrocks21
    The supreme court just agreed that Trump can deny green cards to immigrant applicants who have used the country's welfare system. Do you agree or disagree with that supreme court's decision?
  • Greyparrot
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    --> @bmdrocks21
    Raising of taxes historically have ALWAYS come with a corresponding increase in the number of loopholes sold by politicians to the highest bidder.

    It's why a flat tax with no loopholes will never be passed by crony politicians from either party. 5 mansions have to be paid somehow.
  • bmdrocks21
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    --> @Greyparrot
    Certainly having high taxes leads to more crony deductions. It makes it much more valuable to have loopholes meaning more lobbying
  • bmdrocks21
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    --> @ethang5
    I made a topic about this a few weeks back. I think it is a good idea to not let someone in the country if they will cost us more than they contribute.
  • ethang5
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    --> @bmdrocks21
    I made a topic about this a few weeks back.
    Link? Tks.

    I think it is a good idea to not let someone in the country if they will cost us more than they contribute.
    Then I know you were thrilled when Justice Santomyer (sp) panned the majority decision. Lol.
  • Discipulus_Didicit
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    --> @bmdrocks21
    The public perception of profits as of 2015 was that companies have a 36% profit margin. The reality is that, based on 212 industries combined, the average profit margin is 7.5% and the median profit margin is 6.5%.

    Just so I understand correctly, the idea is that Sanders wants to tax 35% of the net income and since the profit margins are lower than that it will be impossible to make a profit. Is that right?
  • Greyparrot
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    --> @bmdrocks21
    These are the exact policies that exported jobs overseas because people were not allowed by the American government to compete with stifling regulations, extreme taxes, and price/wage fixing.
  • bmdrocks21
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    --> @Discipulus_Didicit
    It will make profit margins even lower, meaning less capital accumulation, job creation, and investment unless prices are raised. 
  • Alec
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    I think we should abolish all federal taxes and replace them with a sales tax and a capitol gains tax of 10% each once we get our debt paid off.

    Thoughts?
  • Discipulus_Didicit
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    --> @bmdrocks21
    What do you reckon would be the ideal level of corporate tax given current profit margins?
  • bmdrocks21
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    --> @Discipulus_Didicit
    Well the lower the taxes and higher the competition, the better it is for consumers and international competition. I would put that and income taxes really as low as possible while avoiding deficits. Would have to reduce spending on federal programs first, though. Maybe 15% for both if I have to pick a somewhat arbitrary number.

    Because what you have to keep in mind is, there are two things that limit profit margins: competition and taxes. Limiting it through taxes is bad because it reduces competition, and you know all of the issues arising from that. Lowering taxes gives some smaller firms a chance by lowering that barrier to entry.

    Not to mention, by taxing companies, you are taking wealth from the productive portion of society and using it to feed a bloated bureaucracy. 
  • Discipulus_Didicit
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    --> @bmdrocks21
    Limiting it through taxes is bad because it reduces competition, and you know all of the issues arising from that. Lowering taxes gives some smaller firms a chance by lowering that barrier to entry.

    Agree with most of what you are saying (no surprise there) but I would think that they would have a kind of corporate tax bracket taxing more wealthy corporations a higher percentage the same way they do for individuals. Is that not the case? I honestly don't know.
  • bmdrocks21
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    --> @Discipulus_Didicit
    I have never heard of us having a tax bracket. I think it is 21% for all (but the deductions honestly make it a regressive tax). It said Illinois has brackets for corporations, though.

    Technically, there could be considered “brackets” now based on company type because some businesses like proprietorships, partnerships, and I believe S-corps/LLCs are taxed through individual income taxes, while corporations adhere to the corporate tax.

  • Discipulus_Didicit
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    --> @bmdrocks21
    I have never heard of us having a tax bracket. I think it is 21% for all (but the deductions honestly make it a regressive tax). It said Illinois has brackets for corporations, though.

    Sounds like a potentially good idea to me to implement a corporate tax bracket system of some sort. Depends on what other nations policies are in that regard since the largest corporations tend to be multi-national so any policies affecting those corporations would directly affect global trade. Something to think about at least.

    Technically, there could be considered “brackets” now based on company type because some businesses like proprietorships, partnerships, and I believe S-corps/LLCs are taxed through individual income taxes, while corporations adhere to the corporate tax.

    No. Those are merely different ways of organizing legal ownership of a company and have no inherent relationship with the size of that company in terms of assets or profitability. Any of those could be more wealthy than any corporation. In fact now that I am thinking about it once you get to the point where the bracketed income tax from your proprietorship exceeds the flat corporate income tax I think you could in theory just turn your proprietorship into a corporation with yourself as the majority and/or sole shareholder in order to bypass the extra taxation so if in reality the larger companies all tend to be corporations that could explain why.