[btmorex]

That may be true, but the simple fact is that it's a lot easier for a large corporation to minimize its taxes than it is for a small business or individual. For example, a company like apple can afford to pay 10 people full time to move around money and assets in order to minimize taxes. Those people will save Apple far more than it costs to employ them. A 5 person company not only can't match that effort, but if they tried they would find that the necessary expertise cost more than the actual tax savings would bring. That gives large corporations a pretty significant advantage in the marketplace.

[JabavuAdams]

Your example is just an economy of scale. The same could be said of engineering support infrastructure.

[jbooth]

The difference being the tax situation is created by laws, and engineering is governed by reality.

The laws shouldn't create a situation where big, slow-moving corporations get huge built-in advantages over smaller, more innovative companies (I know apple is more innovative than many big companies but stay with me here). Particularly, they shouldn't be getting those advantages by paying a bunch of blood-sucking lawyers and accountants to move money around and create nothing. The law should, if anything, be providing support for smaller businesses.

[dedward]

You mean smaller businesses that create fewer jobs?

[jbooth]

No, I mean the small businesses that have created almost all of the new jobs over the last 20 years. A few here and a few there. Some of them got really big.

Go check out bls.gov.

[zamfi]

Can you give a more specific link to the bureau of labor statistics?

Assuming you're using the typical "500 employees" definition of small business, US census data doesn't seem to bear you out. For the period 1988 to 2003, see table 2c here: http://www.census.gov/epcd/www/smallbus.html

The percentage of paid employees employed by organizations with 500+ employees increased in the period 1988 to 2004, to 49.1% - as the total number of employees has increased by 30%.

Are we looking at different things?

[jbooth]

Everybody says it all the time. Maybe they're all wrong, but probably you are. I don't mean to be rude but I'm not writing a book report here and am not going to spend my morning looking for charts.

Consider that Google's now a very large employer but were a very small business 10 years ago. The way you view that and similar cases probably influences the outcome quite a bit. Small companies get big, they get bought out, or they fail. Either way they created jobs for a little bit, and all 3 of those cases wouldn't be captured by the single year snapshot of data you linked to (why 2002?).

[Ryan-R]

I think the point he is trying to make is that the current tax laws favor big businesses because, let's face it, the government is run by those businesses.

[dedward]

While I'm not arguing the system is perfectly fair - those large corporations also create jobs, and pay a huge amount of tax in raw numbers. People look at the percentages and say "Ohh look how they cheat...." - but look at the raw figures, and see where the tax dollars are really coming from.

Joe average 9-5 worker doesn't create jobs, or employ hundreds or thousands of people, and he does get tax breaks for certain things in his everyday life (dependants, mortgage payments, whatever) - a large corporation occupies a completely different place in the economy, and can indeed take advantage of different things.

(joe average 9-5 worker, even if a staff of 10 tax wizards helpded him out, wouldn't be able to save much on his income tax legally - because his financial situation is simple)

[mikecane]

>>>Joe average 9-5 worker doesn't create jobs, or employ hundreds or thousands of people

And where would all the companies be that sell to Joe Average if Joe Average was out of work? How many of those jobs would vanish for all those other Joe Averages?

Joe Average also doesn't create books or movies or music -- but we depend on him to spend his money so those who do can keep doing so.

Spit on Joe Average and you are cutting your own throat.

[patrickk]

Big companies can employ tax specialists, attorneys and accountants, certainly, to do all these things - it's definitely an expense that a small company can't afford.

But small companies have advantages too - being nimble and able to innovate much quicker than big companies, to name just two. It's important to recognise these advantages and exploit them as well as possible.

Also it's worth bearing in mind that Apple was once a small company in a garage too. They had to grow big and become profitable before they could hire people to minimise their tax bill.

[jack7890]

Couldn't the differential tax rates for big corporations vs. individuals account for this?

An example with invented numbers: if the US Govt wants to tax corporations at 30% and individuals at 25%, but corporations are 10% better at avoiding taxes, than the actual corporate tax would be 33.33%.

[cjy]

But big companies also receive more scrutiny from regulators. The small business can take advantage of tax loopholes and is much less likely to be audited. There are always gray areas when it comes to taxes and small business don't have to spend as much energy/time defending themselves.

[dejb]

On the other hand a lot of very small business can often operate by 'cash in hand' which bypasses most taxation.