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Apple Paid $6 Billion in Federal Income Tax in 2012, 1/40 of All U.S. Corporate Income Tax Collected
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http://mjperry.blogspot.com/2010/01/paul-krugman-extols-europes-economic.html
Sweden would rank somewhere between Maine (42) and Montana (43), below Michigan. Only tiny Luxembourg (the "Delaware" of Europe because of its corporate legal system) would rank in the top half (at #1). Finland would be between Alabama (45) and South Carolina (46).
http://en.wikipedia.org/wiki/List_of_countries_by_average_wages
So, why do corporations object to higher corporate income taxes?
First, dividends are taxed as ordinary income. There is no preferential tax treatment. I think you are referring to capital gains, which are only realized upon the sale of equity.
Second, can you prove that statement about how $X in the hands of a corporation that has a profit motive, shareholders, and probably high salaries/bonuses for executives does a better job using that money than the government which has no profit motive, no shareholders, and public employees.
$X Million dollars building a road that benefits an entire community is better than $X Million dollars buying a $Y machine and giving dividends and bonues equal to $Z.
Companies often have different classes of stock, including preferred shares that are only available to certain classes of people.
Why are gains income treated any differently than any other income? Why do investors get a tax break?
Yes, that's what happens when you have a system where education is easier accessible (and free of charge), where vacation isn't a luxury, where the employers aren't calling two weeks after you've given birth to check when you're coming back and where the term "working poor" is pretty much unknown, credit cards aren't used and abused (and oh, don't forget about the whole difference in spending on "defence" and the fact that US medical care costs in the lines of two to three times as much as the same thing in the most expensive countries in Europe) - you will have a higher output.
Does that translate to Sweden having a "not very high living standard" in comparison to the US? Only if you have no idea what you're talking about... The other option is that you believe someone who can afford two flat TV:s but can't buy a fresh vegetable to save his life without driving over an hour has a higher standard of living than someone who can only afford one, but has "free" health care.
Not that I'm religiously celebrating Sweden or claiming it's superior to every other country (I've lived there and wouldn't want to move back). But comparing numbers the way you're doing says very, very little about reality.
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Because it will either eat into their profit margins or force them to increase their prices which will, for a lot of companies, mean a decrease in profits.
Qualifying dividends are taxed at a lower rate (equal to the capital gains rate). Part of the reason for the differential rates is to reflect the fact that corporate income is subject to taxation. If we eliminate the corporate income tax, then logically we should also eliminate the preferential rates paid by individuals.
Because they have to pass it along to their customers and their customers might walk and go find something else. You're motivated as a business to keep your prices down and competitive so that you'll do more business. Then here comes government and forces you, through higher tax rates, to raise your prices anyway. You're producing the same product, it doesn't cost any more to produce and market it, but you have to charge more anyway.
Actually, I take it a step further, eliminate ALL taxes and switch exclusively to a sales tax system.
Eliminates the need for tax returns, reduces the size of the IRS, etc.
Sales taxes are regressive.
And if you only have sales taxes you'd encourage massive amounts of smuggling.
I went through a couple more pages and didn't see a response, so here goes.
2 years ago, they dropped the SS rate by 2%. So they're just putting it back to where it was. Employers have been paying the extra 2% (6.2%) all along.
There is a such thing as "qualified" dividends, which have a lower tax rate, which is what I was referring to. Also, my post was in response to someone who claimed that the extra money that came from a lower tax rate would accrue only to the higher ups, who would structure the payment as a dividend in order to not only keep all the extra money from lower tax rates all to themselves, but also to pay a lower tax rate. I refute both claims as utterly false.
Let's say that the tax rate gets cut. The extra money will be used as some combination of higher salaries, shareholder distribution, and MAYBE lower price, though relatively unlikely.
Let me address the possibility of distributions. I feel that many on this forum consider the "shareholders" as part of the group known as the "1%," those greedy, bloodsucking snobs who are only after money. The belief that these are the only ones who will benefit from lower tax rates seems to form the basis for opposing lower corporate tax rates. I'm arguing that that notion is not entirely true,p.
Look at it this way. Let's look at Apple for example. Most of Apple stock is owned by institutional shareholders such as mutual funds, hedge funds, etc. Entities such as pension funds invest in these funds. Individuals also invest in mutual funds. The beneficiaries of pension funds are middle class folk, the "99%."
Preferred shares aren't called "preferred" because of who can buy them. They're called preferred shares because of certain characteristics that make them superior to common shares. First of all after creditors preferred shareholders get first dibs over any remaining profits before common shareholders. This means that if there's a dividend payment preferred shareholders have to get theirs first before common shareholders can get theirs. So it's because of seniority in the financing hierarchy that preferred shares are called "preferred."
Anyway you slice it it's unlikely that executives will be able to create a class of stock that they pay themselves a dividend on and make it so that the stock can only be purchased by them. One of two things will happen. Either shareholders will sue the company because the executives are pocketing something that should be going to common shareholders or the IRS will classify the dividend payment as a salary and tax it accordingly.
Lastly, as for investors getting a tax break, that's because it was decided that it would be helpful to the economy to encourage people to buy and sell stocks. Taxes are designed to influence certain behaviors. For example, cigarette taxes are designed to reduce smoking.
I wasn't citing a specific statistic. I was arguing definitions. Employers that grant pension put the contributions in a pension fund, which is allocated into various investment vehicles so that retirees will get their pensions when they retire. The people who typically get pensions are teachers, firefighters and other public employees, people under union contracts, etc. To my understanding, these kind of people are considered middle-class folk.
My point was that most pensions are owned by the rich.
What do you mean by "owning pensions?" Are you talking about the people who manage pension funds or people who receive payments from these pensions?
the biggest problem with the pensions is the goverments and companies were not really setting the money aside for them. Everything collected was put into general funds. Well when you do not set aside money you have problems.
In Texas the teachers orginizations are fighting the state tooth and nail to prevent Texas Teacher retirement from being moved into general funds. Right now it is seperat from the general funds and guess what it is considered to be very healthy. I can promise you if it got moved into the general funds the state would then try to cut retirement screaming cost. Now the cost getting out of control is more due to the fact that they are not setting the money aside.
Ok it makes sense now. If corporations price their goods based on all of their costs and taxes incurred, then a lower corporate tax would lower the cost of the product.
Yeah but I'd rather pay a higher price then another tax. Other countries have high tax rates too, like Norway. If we lower the corporate tax rate we also get the problem of less money flowing into the government, further reducing the quality of roads and schools etc. Papa John's complained that they would have to raise the price of each pizza by 3 cents to offset the additional cost of mandatory healthcare passed by the affordable healthcare act. I don't mind the 3 cents, not a big deal.
There are also other taxes and tariffs on goods imported from other countries. Not to mention the high shipping cost. So you aren't necessarily saving money by buying a product from a country that has a low corporate tax rate.
But I definitely see your point.