Spooky Obama

[Dylflon]

Originally Posted by Professor S

2) Eliminate the corporate tax. Corporations do not pay taxes. People do (investors, employees, or customers) so let them pay taxes with their income and not provide corporate loopholes so they can hide their income.

I agree with your tax points in that first page post. However, I feel that the rich could take a tax hit of over 25% and it still not be punishment for success. I think in the 50s the wealthiest members of the country had a tax hit of over 90%. I'm not saying go that far but still, everyone seems to think the 50s were great.

As for the corporate tax: isn't the problem that CEOs and high ranking employees of companies claim smaller incomes to avoid taxes? They are able to tie up their money in stocks and other things that are not taxed. Is there a way to tax stocks so that the rich are taxed accordingly?

Also, since corporation are by law seen as individuals now, shouldn't a certain percentage of a company's profit be taken as taxes? Or at the very least corporations could be given tax breaks for reinvesting some of their profits in the community.

[Professor S]

Originally Posted by Dylflon

I agree with your tax points in that first page post. However, I feel that the rich could take a tax hit of over 25% and it still not be punishment for success. I think in the 50s the wealthiest members of the country had a tax hit of over 90%. I'm not saying go that far but still, everyone seems to think the 50s were great.

On the face, this is true, but dig a little deeper and there are a lot of caveats.

1) No one paid 90%+ tax rates. They put money into tax shelters. The intent of the high taxes was to force corporations into investing in their companies. You can argue that worked, but there are mediating factors below.

2) During the 50's and early 60's the rest of the capitalist industrialized world was still putting the pieces back together from WW2. The US was the world's manufacturer. Also, communists didn't participate. Now China and Russia are becoming trade behemoths.

3) Even with a 90% tax rate, and being the world's manufacturer, taxes as a percentage of GDP topped out at about 22%, the same revenue rates generated in the 1990's with a 38% top tax rate. Again, its not about rates, its about GDP.

As for the corporate tax: isn't the problem that CEOs and high ranking employees of companies claim smaller incomes to avoid taxes? They are able to tie up their money in stocks and other things that are not taxed. Is there a way to tax stocks so that the rich are taxed accordingly?

Sure, tax all personal revenue/income at the same flat rate. This way no one is rewarded for hiding money and the government doesn't get the screw everything up by creating artificial demand for various investment products. Also, only tax income/revenue ONCE, and never twice.

Also, since corporation are by law seen as individuals now, shouldn't a certain percentage of a company's profit be taken as taxes? Or at the very least corporations could be given tax breaks for reinvesting some of their profits in the community.

Let me clarify: Corporations are NOT (or should not be) people in and of themselves. They are a entity controlled by and for people. As for taxes, they are simply passed on to the consumer. Taxes don't impact much in the way of corporate decision making because all corporations share the same burden. There is no incentive to absorb the cost.

Tax breaks or incentives for specific corporate actions can be disastrous. A large part of our recent troubles were caused by incentives given from the government through Fannie and Freddie to banks for handing out high-risk loans to people who couldn't afford them. This was in an effort to encourage reinvestment in the community. Banks made loans they never would have considered making without intervention and central planning.

In the end, much of these good intentions end up creating a snowball of mal-investment that creates crashes.

Last comment: Many people are currently misunderstanding capitalist concepts with corporatist concepts. Much of what people find objectionable and unfair about what is going in between government and industry is not capitalist. Capitalism is about profit and LOSS, loss being just as important. Today we are a system of profit, bailout, intervention, and stimulus. They are corporatist ideas.

[Bond]

Originally Posted by Dylflon

I agree with your tax points in that first page post. However, I feel that the rich could take a tax hit of over 25% and it still not be punishment for success. I think in the 50s the wealthiest members of the country had a tax hit of over 90%. I'm not saying go that far but still, everyone seems to think the 50s were great.

World War II. Our economic policies could have been complete garbage in the 50's and we still would have seen remarkable growth.

As for the corporate tax: isn't the problem that CEOs and high ranking employees of companies claim smaller incomes to avoid taxes? They are able to tie up their money in stocks and other things that are not taxed. Is there a way to tax stocks so that the rich are taxed accordingly?

CEOs & Co. will siphon off their money to offshore entities to evade taxes. Moving money into investments isn't really the problem, those earnings are taxed at a fairly high rate.

Also, since corporation are by law seen as individuals now, shouldn't a certain percentage of a company's profit be taken as taxes? Or at the very least corporations could be given tax breaks for reinvesting some of their profits in the community.

It already is. You're looking at standard double taxation of dividends paid out to shareholders. Stories like GE paying no taxes for a fiscal year are only true because the tax code is bonkers.