Trump Is Said to Seek Cutting Corporate Tax Rate to 15 Percent

Their have been multiple studies that show that pricing is VERY minimally affected by income taxes. As you can see from the Consumer Price Index during the 70's nd 80's. You can note the huge increases in prices starting in 1980, the year Reagan CUT corporate taxes in half


Year Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Avg Dec-Dec Avg-Avg
1977 58.5 59.1 59.5 60.0 60.3 60.7 61.0 61.2 61.4 61.6 61.9 62.1 60.6 6.7 6.5
1978 62.5 62.9 63.4 63.9 64.5 65.2 65.7 66.0 66.5 67.1 67.4 67.7 65.2 9.0 7.6
1979 68.3 69.1 69.8 70.6 71.5 72.3 73.1 73.8 74.6 75.2 75.9 76.7 72.6 13.3 11.3
1980 77.8 78.9 80.1 81.0 81.8 82.7 82.7 83.3 84.0 84.8 85.5 86.3 82.4 12.5 13.5
1981 87.0 87.9 88.5 89.1 89.8 90.6 91.6 92.3 93.2 93.4 93.7 94.0 90.9 8.9 10.3
1982 94.3 94.6 94.5 94.9 95.8 97.0 97.5 97.7 97.9 98.2 98.0 97.6 96.5 3.8 6.2
1983 97.8 97.9 97.9 98.6 99.2 99.5 99.9 100.2 100.7 101.0 101.2 101.3 99.6 3.8 3.2
1984 101.9 102.4 102.6 103.1 103.4 103.7 104.1 104.5 105.0 105.3 105.3 105.3 103.9 3.9 4.3
1985 105.5 106.0 106.4 106.9 107.3 107.6 107.8 108.0 108.3 108.7 109.0 109.3 107.6 3.8 3.6
1986 109.6 109.3 108.8 108.6 108.9 109.5 109.5 109.7 110.2 110.3 110.4 110.5 109.6 1.1 1.9
1987 111.2 111.6 112.1 112.7 113.1 113.5 113.8 114.4 115.0 115.3 115.4 115.4 113.6 4.4 3.6
1988 115.7 116.0 116.5 117.1 117.5 118.0 118.5 119.0 119.8 120.2 120.3 120.5 118.3 4.4 4.1
1989 121.1 121.6 122.3 123.1 123.8 124.1 124.4 124.6 125.0 125.6 125.9 126.1 124.0 4.6 4.8
1990 127.4 128.0 128.7 128.9 129.2 129.9 130.4 131.6 132.7 133.5 133.8 133.8 130.7 6.1 5.4
1991 134.6 134.8 135.0 135.2 135.6 136.0 136.2 136.6 137.2 137.4 137.8 137.9 136.2 3.1 4.2
1992 138.1 138.6 139.3 139.5 139.7 140.2 140.5 140.9 141.3 141.8 142.0 141.9 140.3 2.9 3.0
1993 142.6 143.1 143.6 144.0 144.2 144.4 144.4 144.8 145.1 145.7 145.8 145.8 144.5 2.7 3.0

But also keep in mind that most "mom and pop" business' that the right claims this will help are s-corps, LLC's, sole proprietorships, partnerships etc, which all pay the personal rate, NOT the c-corp rate. And Trump is ONLY talking about lowering the corporate rate.

Almost every one of those studies showed that market prices are dictated much more by "what the market will bear pricing" than by cost driven pricing. i.e. competition pricing. Companies are already trying to maximize profits before costs are factored in.

One very quick and simple answer.....Defense

There are many more, but defense is half our spending anyway

 

No, I didn't mean that.
You said that.

Harming individuals for the benefit of others, even if the majority, is dispicable. Of course you like it best when you are the one benefitting, not the one being harmed.

 

You are confused. That is not what is meant by "double taxation."

Money is taxed when it is earned. When you earn $1, it is taxed. Go out to dinner and pay the waitress, that $1 is taxed again, as income to her. And so on and so on.

So yes, if you take your after-tax money, invest it, and generate income off of that investment, that income is taxed. That is NOT double taxation.

And to close the loop on a separate argument, there is NO reason for that income to be taxed at a significantly lower rate than labor income. I actually agree with the argument that people should have a tax incentive to invest income rather than sit on it. Fine. But even in that case, 15% is far more than an incentive to someone in the 35% bracket -- it's a giveaway. Between the extra income and the generous tax treatment we give to investment losses, you could incentivize investment with a significantly higher rate.

Again, your own situation proves we do not "punish" success, You are whining about having to pay 30 cents in taxes on your last dollar instead of 25 cents. That is not "punishing" success.

This isn't hard. What is more moral:

• Taxing a person at a slightly higher rate on their millionth dollar of income;
• Forcing a poor person to choose between taxes and rent so that the wealthy person doesn't have to pay a slightly higher rate on their millionth dollar of income

Even a kindergartner knows the answer. Do you?

And then when you throw in the logical point I have made -- that the people who have succeeded the most in a given system should pay more to support that system -- it's not just moral, it's fair.

I thought we were keeping our morals to ourselves?

Given that the largest entitlements go to the wealthy and middle class, I'm not sure what your point is here.

I assume you are once again engaging in lazy stereotyping, and are talking about welfare programs.

#1, most people who receive some form of welfare are employed. They are the working poor, not lazy spongers.

#2, our largest entitlements are not welfare -- they are Social Security and Medicare, which everyone participates in.

#3, even the word "entitlement" reflects a self-serving lie. You know what one of the biggest federal subsidies is? Home mortgages. The mortgage deduction costs the federal government something like $250 billion a year. And that doesn't go to the poor, because to get that deduction you have to make enough money to both own a home and itemize.

Here is the reality: You are wealthy, in part, because you were given huge help by the system you live in. You receive significant tax subsidies despite your wealth. And you are sitting there bitching about how unfair it is that the poor don't pay more taxes to support this system that helped you grow wealthy, and you are complaining about the tax-supported programs that help THEM, while ignoring the tax-supported programs that help YOU. You wouldn't switch places with them even if you could, but BOY is it unfair.

It's really quite the spectacle.

And don't get me started on the other advantages you have, such as the fact that as a business owner or investor you get to largely self-report your income, as opposed to a wage laborer, who has their income reported directly to the IRS by their employer. And all the games business owners can play with their expenses, turning non-deductible personal expenses into deductible business expenses. Or how the owner of a pass-through entity can control their taxable income by deciding how much of their income is salary, how much is taking of profits, and how much is retained, untaxed, in the business.

See this? It's the world's tiniest violin....

Where on Earth did I say that? Are you really claiming that the poor are better off than you? That you would trade places with them if you could? Stop talking nonsense.

Have you ever actually read Adam Smith? The genius of a capitalist system is that it recognizes that self-interest is a powerful drive, and harnesses it. The failure of systems like Communism is that they ignore human nature.

But the point -- especially of the government in a capitalist system -- is to HARNESS that self interest for the common good. The government's job is not simply to provide subsidized services to enable the wealthy to grow wealthier: it is to provide a system that incentivizes people to innovate and work and grow the economy, and harnesses the result (in the form of tax revenue) to help everyone. And "helping everyone" includes providing assistance to the people left behind, or whom the system is failing, because that is what civilized people do. And also to increase social mobility, so that the circumstances of one's birth don't totally determine the outcome of their lives. AND to spread the economic benefits so that everybody shares in them. Because otherwise, what is the point? If you have an economy where the top 1% own 99% of the income and wealth and everyone else lives in abject poverty, what purpose is being served?

So yes, we have a MILDLY progressive tax system that does a mediocre job of spreading economic benefits across the population. People are incentivized to work hard and innovate and get wealthy, and in return we take a slightly higher percentage of their millionth dollar to help take care of the needy and help other people follow in their footsteps. Oh the horrors.

That is transparently bullshit. Conservatives support a system where nobody but the successful individuals benefit.

And as I have demonstrated, this is also transparently bullshit. The current system allows people to be successful, as proven by the fact that people ARE successful. The fact that you exist disproves your own claim.

Denying that you owe part of your success to the system you operate in is not "personal responsibility."

 

In economics, every action has winners and losers. You don't get the luxury of NOT choosing, because not choosing is also a choice.

The only question, in economics, is whether a given choice produces more winners than losers.

For example, you seem to think that "tax everyone at the same flat rate" is some sort of default position that doesn't produce winners and losers. But it does. So you are committing the same harm that you claim is despicable. You are arguing for harming the poor in order to help the wealthy. I agree that that is "despicable". It also demonstrates the flaw in your logic.

The only way to judge whether a given economic choice is moral is to compare it to the alternatives. As I have done, and as you are trying very hard to refuse to do.

 

But you are trying and that is worthy of giving you some credit......but I keep remembering Mark Twain.

 

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The corporation should not be taxed twice. Either tax the income at the aggregate level or tax it at the individual level, but taxing it at both levels is taxing the income twice.

 

Do you believe that corporate taxes are eventually passed on to shareholders, or to consumers?

 

I'm not sure what you mean by "passed on".

 

Well, you think things are double taxed. Many opponents of corporate taxes also say it is pointless, because taxation is a cost, and a corporation's costs are simply passed on to customers (in the form of higher prices). I'm just curious what your opinion is on that.

 

No, that's not my point. My point is that a corporation is a group of people who collectively own a business. So you can either have the group of people file one single return for that business, or have each of them include their share of earning on their own individual returns. But if you have them do both then you are taxing the group for the same income twice.

 

I am ok with tax rates for corporate entities being 0 because they simply charge consumers more. What I'd like to see is a law enacted at the very same time that mandates all corporate entities reflect a reduction in the price of their products to equal the absurd tax savings they will get, instead of simply shelling it off to their board members.

Deregulation by Reagan is the reason there are so many ****ing poor people today anyway.

 

Okay, cool.

The double taxation argument isn't a slam-dunk, but it probably is the strongest argument against a corporate tax. Unfortunately, it runs up against some significant practical arguments.

1. it's easier to tax a single corporation than hundreds of thousands of shareholders. More bang for the buck, and less opportunity for lying and tax avoidance. On top of that is reporting requirements: If we push it all down to the shareholders, a corporation would likely be required to report individual stock ownership and dividend information to the IRS, much like we do with W-2s for wage income.
2. Without a corporate tax, the profits are only taxed when the profits reach the shareholders, in the form of either dividends or the sale of appreciated stock. Problem is, that means a sizable chunk of such taxes would be deferred for decades or even NEVER taxed. For instance, most stock is owned in tax-protected accounts like 401(k) plans, and won't be taxed for decades. If a person dies, their estate is tax-exempt up to $5.4 million (or with no limit, if the GOP gets their way and eliminates the estate tax), so shares of stock become a great way to pass on never-taxed wealth completely tax-free.
3. If and when those profits ARE eventually taxed, they will be taxed at significantly lower rates -- either the capital gains rate, or the tax rate of a retiree pulling money out of their 401(k).
4. all of this produces a giant hole in federal tax revenue that would need to be plugged somehow -- most obviously, by raising the personal income-tax rate.
5. because the corporate tax is largely paid by the wealthy (who own the vast bulk of stock outside of retirement accounts), #4 would result in a big shift of the tax burden from the wealthy to the poor and middle class.

Those are big problems to solve. And while the double-taxation argument has some merit, the reason I say it's not a slam-dunk is because at best it's an indirect taxation -- first a company's share price or dividend is reduced because of taxes, then the shareholder has to pay taxes on their dividend or capital gain. But since they're only paying taxes on the reduced amount, it's dubious whether that is truly double-taxation -- and it also means the effect is relatively small. Especially because our tax system provides fairly generous treatment of investment losses, so that a lot of tax that is nominally owed is never paid, because it is offset by claimed losses elsewhere.

 

This doesn't seem to actually be true, because companies do not have price-setting power in most cases. The market sets the price of goods, not companies.

 

For essential services and goods, their is always the opportunity of price gouging certainly in the short term.

 

It sounds like you lean towards having the group pay in the aggregate rather than the individual level. Personally, I haven't decided which I prefer, aggregate or individual. But to have the group once as a group and then as individuals for the same income, is clearly double-taxation and should be eliminated.

 

Well, some companies have more price-setting power than others. But it's not a valid argument as a general case. For the most part, companies have very limited price-setting power. That's the whole POINT of free markets.

 

Yes in terms of group vs. individual.

I'm not convinced it's really double-taxation, for the reasons stated. Or that the double-taxation argument is so strong that it outweighs the other considerations I listed. It also may be that some minor double-taxation is unavoidable in this instance, because the alternatives are worse.

I'd also probably have more sympathy for this if the existing capital-gains rate wasn't already so low that it constitutes a giveaway all on its own.

Off the top of my head, here's one way we might address the double-taxation issue:

1. Tax corporate profits;
2. Raise the long-term capital gains rate to something more in line with the tax rate on labor, like 25%. Still low enough to incentivize someone in the higher tax brackets to invest, but no longer a giveaway.
3. Allow shareholders to claim their share of corporate profits as a deduction.

That way we get the simplicity of taxing the group, and the burden is on shareholders to claim a deduction, rather than on the government to audit them to see if they are properly reporting income. Thus costs and incentives line up nicely.

#2 is severable from the rest, but I think it should be done as a package deal because these things interrelate.

 

I agree, but, free markets are really a theory and a good goal.

 

Then it sounds like you would prefer the group's income to be taxed annually at the aggregate level, in which case this would not be a problem.

Another reason for group's income to be taxed annually at the aggregate level, which would eliminate this problem.

Again, wouldn't be a problem if the group's income was taxed annually at the aggregate level, which would eliminate this problem.

I agree that income tax revenue would be lower if we don't double tax incomes. I would also oppose raising the personal income tax rate. I would propose reducing federal expenditures that require such high income tax revenues.

Corporate tax is not paid by the wealthy. It's paid by corporations. Unless you are trying to say that only the wealthy own stock in corporations, which obviously isn't the case.

If we tax the group's income at the aggregate level rather individual's share of the income, the problems you listed above aren't problems. Except perhaps for the fact that less income tax revenue would be collected. However, I don't see that as a problem, I see that as a benefit.

 

I explained why that tax largely falls on the wealthy -- because they own the huge majority of shares outside of tax-deferred accounts.

We already run a $500 billion annual deficit. Blowing another huge hole in the revenue side of things isn't going to be fixed by cutting spending.

Until we eliminate the deficit, we can't afford significant additional revenue cuts. They have to be made up somehow.

 

If we choose to tax the group at the aggregate level rather than the individual level, it makes no difference who an individual owner is or whether he has shares in a tax-deferred account. The individuals wouldn't be being taxed at the individual level, only as a group at the aggregate level.

Until we eliminate the deficit, "raise taxes" is not a reasonable or even feasible way to deal with new expenditures.

So it sounds like your argument in favor of the double taxation of taxing the group as an aggregate and then also as individuals is that "we need the money". Well, lots of unethical things have been done in the name of "I needed the money", so I'm not going to buy into that justification.

 

Er ... raising taxes is the ONLY credible way to deal with new expenditures, with or without a deficit.

But we're not talking about new expenditures. We're talking about paying for what we already have expended. And you don't do that by further reducing tax revenues.

Let's say we were going to try to balance the budget through spending cuts alone. We're already $500 billion in the hole, so we would need to find $500 billion in cuts.

Eliminating the corporate tax, without raising other taxes to compensate, would mean we now have to find $900 billion in cuts.

That amounts to a 25% cut in spending, which would likely throw our economy into a deep recession.

Further, total discretionary spending is about $1.2 trillion. So a cut that deep would wipe out 75% of discretionary spending. Clearly, that's not feasible. So we would need to see deep cuts in defense and entitlement spending, which besides the economic effects, would be more or less politically impossible.

Judging something as "unethical" doesn't mean you don't have to deal with the practical consequences. Think double-taxation is unethical? Great, do away with it. But then come up with something to replace the revenue. Dismissing it with a hand-waving "just cut spending" is not actually a solution, as I detail above. We have tasked the government with certain functions; it takes a certain amount of money to perform those functions. We already underfund the government by $500 billion a year. We cannot simply pile on more debt, and until we have shown we can cut $500 billion, it's fantasy to think we can cut $900 billion.

At the very least, eliminating the corporate tax would have to wait until we DID cut spending that much. It is not responsible to say "let's eliminate the tax now, and maybe someday we'll cut spending to close the hole we just blew in the budget."

 

The goal should be to eliminate double taxation. If the government can't afford the loss of income tax revenue right now, then it should cut expenditure (perhaps gradually) until it can.

 

Or find alternative revenue sources. And given that we already run a $500 billion deficit, the only real option is to replace the revenue.