US to have highest corporate tax rate in the world in 30 days

Discussion in 'Budget & Taxes' started by Hoosier8, Mar 1, 2012.

  1. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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  2. Someone

    Someone New Member

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    Yet still one of the lowest effective corporate tax rates in the developed world. Strange, that.
     
  3. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    Lower than China's 0%?
     
  4. Someone

    Someone New Member

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    A) As pointed out, their corporate tax rate is not 0%.
    B) "One of the lowest" is not the same thing as "the lowest."
    C) China is usually considered a "developing economy" in political science circles, not a "developed economy", which is usually reserved for states current passing into a postindustrial economic phase, or which have already passed into one. Industrial states like China, India, etc are somewhat different.
     
  5. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    Yeah, but made you look.

    Do you thing that having the highest corporate tax is beneficial to the US?
     
  6. Reiver

    Reiver Well-Known Member

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    As already said, it isn't!
     
  7. BobL

    BobL New Member

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    Corporations don't pay taxes, people do.

    Corporate tax is just another business expense passed on to consumers.

    Exxon's 4 Billion tax bill just gets aded to the price of gas.
     
  8. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    Very true. So do corporate taxes help citizens?
     
  9. Reiver

    Reiver Well-Known Member

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    Depends how they impact on other taxes and how they could impact on firm behaviour (and the search from inefficient economic rents)
     
  10. BobL

    BobL New Member

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    As I said, corporate taxes are equivelent to sales taxes paid by consumers. Yes, all taxes help citizens to some degree, but much tax money is spend foolishly or ineffeiciently or to benefit selected segments of society (selected by politicians, generally to buy votes). The money would be better spent by consumers directly in the marketplace who would pick the best way to spend it without an agenda to get reelected.
     
  11. Reiver

    Reiver Well-Known Member

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    You're wrong over the equivalence. A sales tax can be passed on to the consumer (the level dependent on demand elasticity). We can't say the same with corporation tax
     
  12. BobL

    BobL New Member

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    I respectfully disagree. All business costs, including taxes, are passed along to consumers. Sales taxes are very visible. Other costs such as rent, property taxes, unempolyment insurance, labor and material costs (and income taxes), are all part of the price of the product of service sold. Just because a cost is not itemized on the invoice does not mean it was not built inot the price.

    I stand by my original statement.
     
  13. Reiver

    Reiver Well-Known Member

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    It doesn't matter what you think on this one; by definition they cannot be equivalent. A sales tax can be understood within a supply and demand framework, with the sharing of burden dependent on the firm's demand schedule (as it becomes more inelastic it can pass on more of the tax to the consumer). Such analysis cannot be used for taxes on profit. Its no longer about a shift in marginal costs. There's no debate in it
     
  14. Terrant

    Terrant New Member

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    For the most part this is true. It is still supply and demand that has the strongest influence on prices though. A corporation can build the costs into their pricing as much as they want, they will still lose sales if their price is not at equilibrium.
     
  15. sunnyside

    sunnyside Well-Known Member

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    There are many ways to generate revenue through taxes, the issue is who is affected and importantly what behaviour does it affect and how.


    Corproate taxes affect people inside the united states, but they are different from a host of other taxes in that they also serve as a tax on money leaving the country and going to foreign investors.

    Thus they have an effect on foreign investment.

    Too little in corporate taxes and you can be "exploited" and could get something akin to a trade deficit where more dollars of corporate profit are leaving the country to foriegn investors than are coming into the country to US nationals that have invested in foreign countries.

    Too much however and you drive away foriegn investment at the least, and quite possibly one drives away jobs as well, though that would be dependent on a host of other factors.

    Since unemployment seems to be considered to be a contender for the greatest problem in the united states at the moment, a high corporate tax rate would seem bad.

    A very high corporate tax rate combined with a host of loopholes via croney capitalism is just all around a bad situation.
     
  16. Someone

    Someone New Member

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    The fact that a businesses's profit is being taxed does not fundamentally change the price elasticity of the products it is selling. In other words, the market won't bear higher prices just because the business is paying more taxes. Unless, of course, you assume that businesses are not using market-determined pricing and just use cost plus pricing instead--which has its own troublesome implications.
     
  17. BobL

    BobL New Member

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    I stand by my statement that corporate taxes aer passed on to consumers. Product/service prices (over the long term) cannot be less than business costs plus a reasonble after tax profit. Figure it out.
     
  18. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    Maybe not immediately but it will eventually as all costs are passed on. At some point the market is saturated and all costs will go up as business as a whole tries to regain it's margin.
     
  19. Reiver

    Reiver Well-Known Member

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    You can repeat basic errors to the cow comes home, but it won't impact on the fact that you are completely wrong. We can refer to burden sharing with sales tax because it effectively refers to a supply curve shift (with the price change dependent on the nature of the demand curve). A profit tax does not directly impact on the profit maximising decision and therefore the chosen price. Bit obvious really!
     
  20. Someone

    Someone New Member

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    Unlikely. There will always be someone willing to accept paying 33% of his profits in taxes rather than 27%; that competition will force a business from being able to pass on the cost of taxes on profits.
     
  21. Someone

    Someone New Member

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    So you reject supply and demand and the market? You believe that prices are driven entirely by cost plus? Certainly true for small businesses, less so for larger ones. Cost plus has problems for traditional capitalist interpretation however. Especially as it relates to labor.
     
  22. geofree

    geofree Active Member

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    You are wrong on this point. The ‘land value’ portion of property taxes cannot be passed onto consumers. The supply of land is fixed, so the only effect a land value tax has is to reduce the exchange value of land…it makes land cheaper to purchase.

    This has been known for over 200 years.

    After implementation the land value tax is considered a burdenless tax. You can learn about it here: http://en.wikipedia.org/wiki/Land_value_tax


    "Economists are almost unanimous in conceding that the land tax has no adverse side effects."— William Vickrey, Nobel laureate in Economics (1996)
     
  23. geofree

    geofree Active Member

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    Land value taxes cannot be passed to consumers, producers, renters or anyone else.

    Land value taxes only reduce land prices. If land value taxes are raised to 100% of the lands value, then the land will lose all exchange value, while the commodities coming off the land won’t increase even a penny in price.

    Land value taxation was to be the sole source of government revenue under the original U.S. constitution ... that is before the special interests got involved.
     
  24. Reiver

    Reiver Well-Known Member

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    LVT was the sole source? It certainly cannot be now (and that has been the case for yonks, despite what internet Georgists blag). The neutrality argument is also deliberately exaggerated. Previous analysis, for example, has shown that we can reject that view once we model uncertainty within a framework of with risk averse individuals.
     
  25. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    They will be passed on to the consumer if possible as a price increase, which does happen in some cases where business hopes competition follows suit, or the business may just drop out of the market, affecting supply and raising prices that way for all competitors.

    Since business has a mandate to maximize profit, other things will be done to make this happen, from reducing manpower to reducing future growth, both of which are affects that are passed on to the public as something other than a price increase. On the other hand, business may try to purchase other businesses to maximize profits, but again, this usually means that manpower is reduced. This all affects demand but in this case, demand reduces as people are laid off and unable to purchase more.

    Another affect is that to increase profit to acceptable levels if taxes are increased, business will move to friendlier countries and leaving behind the worker here.

    So yes, higher business taxes are passed on to the consumer, but not always as a price increase.
     

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