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Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

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Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

I always find it funny how people keep clamoring that wages need to go up. All you're doing is permitting the same problems to continue, only with larger numbers. Why not look at inflation, and possibly reducing the bases that make things so expensive to begin with?
 
Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

The Sicatoka said:
OK, the neural spark just fired so it really hasn't been thought through ...

What if the only thing in this country that could be income taxed is an individual (not corporations). And, what if every dollar that comes into an individual's hands in a reporting year, no matter the source (income, interest, cap gain, dividend, lotto, whatever) was taxed. Income is income (source agnostic).

Yes, the tax rate would sound very large to generate the revenue. But, if the corporation isn't paying workers but instead paying dividends, uh, whups, money still taxed as income to someone.

The hidden benefit: There's no longer incentives for corporations to manipulate tax code (aka buy politicians) as tax code now only affects individuals.

OK, blow up the notion. I'm sure there's an aspect I'm overlooking. (One thing I see is the company that had a big year doing a big stock buy back, unless, .... the stock bought back shows up as income to the seller.)
Click to expand...

Companies would sit on the cash ala Apple and use it to pay for lavish "expenses" for the C-suite and Board of Directors. The other catch is company to company transactions, in your system, are never taxed. So everyone becomes a corporate entity.

Kansas tried this - they all but killed the income tax for S-corps and other small business entities. It ended up with people like college coaches creating a shell LLC that gets the majority of the pay, and out of which they pay the majority of their expenses, tax free.
 
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Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

The Sicatoka said:
What I like in here is the tacit way to get corporations out of the "buying politicians to manipulate the tax code for us" game. The tax code would affect "We the People" and maybe all of us would take notice. Democracy! :)
Click to expand...

Actually, I think that would have the opposite effect. It would be easier to spend "speech money" if it's not taxed.
 
Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

unofan said:
Companies would sit on the cash ala Apple and use it to pay for lavish "expenses" for the C-suite and Board of Directors. The other catch is company to company transactions, in your system, are never taxed. So everyone becomes a corporate entity.
Click to expand...

If they're buying stuff for the C-suite and the BoD, someone's selling it --> income somewhere. If they're buying a house for a C-suiter to live in isn't there a way for that to be treated as income?

However, yes, individuals subject to individual tax would try to find ways to become "incorporated". Still, wouldn't they need some personal income? (This scenario is why I asked folks to find the hole in the idea. Crowd sourcing! :) )
 
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Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

unofan said:
Companies would sit on the cash ala Apple and use it to pay for lavish "expenses" for the C-suite and Board of Directors. The other catch is company to company transactions, in your system, are never taxed. So everyone becomes a corporate entity.

Kansas tried this - they all but killed the income tax for S-corps and other small business entities. It ended up with people like college coaches creating a shell LLC that gets the majority of the pay, and out of which they pay the majority of their expenses, tax free.
Click to expand...

Yeah, that's the problem. And it probably doesn't change the speech issue because they'd still spend on it to eliminate regulations.
 
Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

Now this is a radical thought

"Abolish the corporation as a legal entity. There will be no more publicly owned companies. All businesses must have a majority owner and all owners are responsible for the debts of the company in proportion to their share of the company. The days of companies run by individuals with no real stake in the business are over. No longer will people at the top make decisions that destroy a company without suffering the consequences. No longer will people be able to walk away from a disaster they caused with a pocket full of money.

People own companies. Owners run companies. Owners enter into agreements with other owners who they trust to deliver essential goods and services. Companies can't own companies. Owners remember things. They have to view every deal from a long term perspective because the health of the company is the source of their economic health. They have to live with the history of decisions they have made. Their reputation and the reputation of their company is one and the same. They have to work to build trust. Corporate executives come and go. There's no history of decisions that will follow them. The reputation of the company is not their reputation since there's always a scapegoat who can be blamed for any failure. There isn't a need to build trust because they won't be around to get the benefits of it. They don't care about the long term because they are rewarded by the short term.
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The Sicatoka said:
If they're buying stuff for the C-suite and the BoD, someone's selling it --> income somewhere. If they're buying a house for a C-suiter to live in isn't there a way for that to be treated as income?

However, yes, individuals subject to individual tax would try to find ways to become "incorporated". Still, wouldn't they need some personal income? (This scenario is why I asked folks to find the hole in the idea. Crowd sourcing! :) )
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Unofan LLC buys all my goods and food from omnicorp using money paid to it by Sicotka Corp. for legal services rendered.

Where does the individual get involved?

And again, you don't need to crowd source, just read up on Kansas under Brownback. This particular conservative utopian idea was tried with all the others and failed spectacularly.
 
Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

unofan said:
Unofan LLC buys all my goods and food from omnicorp using money paid to it by Sicotka Corp. for legal services rendered.

Where does the individual get involved?
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Don't those three entities have people on the payroll (making stuff, delivering stuff)?

Like I said, yes, we'd have to find a way to keep the individual from "incorporating".
 
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The Sicatoka said:
Don't those three entities have people on the payroll (making stuff, delivering stuff)?

Like I said, yes, we'd have to find a way to keep the individual from "incorporating".
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Or you could just tax corporations like we do now and not have to worry about it.

And you act like businesses never buy things from other businesses. Business purchases make up a not insignificant portion of the economy. When Apple buys processors from Intel, why shouldn't that transaction be taxed just like me buying food from McDonald's?

You asked where the problems would be, I pointed them out. And we have real world examples of how it happens.
 
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unofan said:
Not if we eliminate the corporate tax, which is the scenario Sic proposed.
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Well, in theory, if you don't tax corporate profits, there is no incentive to off shore your profits.

However, I don't believe in grandfathering in this case. Old money brought home gets taxed at 15%.
 
Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

unofan said:
Or you could just tax corporations like we do now and not have to worry about it.

And you act like businesses never buy things from other businesses. Business purchases make up a not insignificant portion of the economy. When Apple buys processors from Intel, why shouldn't that transaction be taxed just like me buying food from McDonald's?
Click to expand...

What you're describing there is the Value Added Tax that's very popular in European countries. The problem with that, as people love to point out here about our current sales tax, is that it's highly regressive. And it's a sinister sort of regressive because it also goes through a compounding interest process due to the layering of all the pieces used to create something like an iPhone. So a very low VAT creates a very large tax.
 
Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

St. Clown said:
What you're describing there is the Value Added Tax that's very popular in European countries. The problem with that, as people love to point out here about our current sales tax, is that it's highly regressive. And it's a sinister sort of regressive because it also goes through a compounding interest process due to the layering of all the pieces used to create something like an iPhone. So a very low VAT creates a very large tax.
Click to expand...

I'm simply pointing out the flaws in not having businesses pay any taxes under the guise that it all winds up in an individual's hands at some point. I'm not intending to advocate for a VAT or an expanded sales tax.
 
Re: Business, Economics & Tax Policy 5.0: Can a blind nut find a squirrel?

ScoobyDoo said:
180,000 a year isn't wealthy. No one is saying it is. 150 single, 300 couple. Also, no one is saying to tax them to death once they reach that level. Only to tax anything that goes above that. Right now even with the 180,000 they are paying FICA on all of it.
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Its amazing how normally smart people don't understand marginal tax brackets as a concept.

Otherwise smart people think that if you make $1 more than the threshold to go from the 25% to 30% bracket, your entire income gets taxed at the higher rate rather than just the last dollar.
 
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