[phlo]

Sorry, I might not have made that point clear: they wouldn't be taxed at all. Not at the corporate level, that is.

As far as I can tell, money will exit corporations in three ways: 1) salary, 2) shares and 3) payments for goods/services, mostly to other corporations. Income and capital gains taxes will take care of 1 and 2. The company won't owe taxes, but whichever natural person receives the money will. As for 3, my proposed system would be captive: because it doesn't charge corporate taxes, corporations won't have any motivation to try and move their earnings to other corporations (as they couldn't be taxed any lower).

[bduerst]

This type of tax plan will incentivize wealth aggregation in corporations, while increasing the cost of employees and goods/services.

You want companies to spend, to increase economic cash flow and generate jobs, which is why existing corporate taxes are on net income, not revenue or costs.

[twoodfin]

Why would shareholders want a corporation to aggregate wealth?

[bduerst]

Investors want a return, and this new tax plan makes it more expensive to move money out of a corporation, even for regular operational expenses.

Corporate income tax today allows for companies to pay employees and buy goods/services without increased tax cost. It incentivizes cash flow into the economy and job generation by taxing whatever is left over (net income) after doing business.

[kuschku]

And how do I tax a shareholder living in US if I’m the UK government? I have no ability to do so.

[phlo]

One possibility might be to charge capital gains whenever shares are traded. Then require shares to only be traded at exchanges with an agreement to report trades (or anonymously collect capital gains and send them your way, for privacy). Another (probably worse) alternative might be not to tax them. The US will, and in exchange you get to tax UK shareholders of US companies.

[mike_hearn]

You don't. But then again why would you - that shareholder gets no services from the UK government so there's no moral case for them to pay tax to a foreign country.

[sbov]

I disagree. The company which operates in the UK benefits, so the shareholder - who actually owns a part of the company - does too.