[chongli]

Why is it so naturally assumed to be acceptable for a business to do it?

Because a business isn't a person. Taxing a business is taking real money away from payrolls, money that would get taxed again anyway once it was paid out.

Corporate income tax only makes sense when you look at it as a barrier to entry for competition in the marketplace. Big companies like Netflix know how to avoid taxes. Small companies don't. Thus corporate income taxes help to protect big companies from disruption by small ones.

[kelnos]

The actions that most companies took after the corporate tax cuts were passed proved that taxing a business does not in fact take money away from payroll. When you give that money back to businesses, they either bank it, do share buybacks, increase their dividends, and occasionally re-invest in capital expenditures or give some employees a pitiful one-time bonus that in no way reflects the magnitude of the tax break they've been given.

[deeviant]

Except a large portion of revenue does not go to workers, but to shareholders, who pay far less taxes then those who strain their backs in creating said revenue.

[chongli]

Lots of people love to throw around the word "shareholders" like it's a pejorative. The word seems to carry connotations of greedy old Uncle Scrooge, Uncle Pennybags, or some spoiled Saudi Prince. That's a highly distorted view.

Lots of "shareholders" are people's retirement funds, pensions, and the like. When those funds finally pay out, they get taxed as income just like for everybody else.

[celtain]

Even including stocks owned through retirement and pension funds, 84% of stocks are owned by the wealthiest 10% of Americans, and roughly half of all households have exactly $0 invested in the market.

Saying that Uncle Scrooge and his buddies own all the stocks is not much worse than implying that normal people own a significant share of the market through their retirement accounts.

[objektif]

Most stocks hold by Americans are owned by the top 10%. Unfortunately this libertarian trickle down fantasy of trickle down economics is not correct.

[Spivak]

This is a stupid argument. Say we have 100 people in our economy, 90 of them $50k, 9 of them make $200k, and 1 person makes 1 million. Everyone invests 10% of their income in 'stoks' which cost $5/each.

Each of the 90 people invest $5k and have 1000 stoks.

Each of the 9 people invest $20k and have 4000 stoks.

The millionaire invests $100k and has 20,000 stoks.

The top 10% have 99.96% of the stoks.

It would be weird if the richest people didn't own most of the stocks. It doesn't necessarily mean there's a problem.

[FireBeyond]

Except it's not 10%, or 1%. It's stats like "3 hedge fund makers make more than 140,000 teachers". The problem isn't disparity, it's the absolute mind boggling nature of it.

[objektif]

Yeah his example is comical in the sense that it kind of shows the nature of the problem.

[objektif]

So you don’t see the problem in your little example?

[spullara]

For companies like Netflix that don't pay dividends, none of it is going to shareholders.

[AjithAntony]

All of a corporations actions are to create shareholder value. Retaining earnings and investment in growth does that too. If it wasn't you'd get some activist investors rallying for a takeover.

The underlying issue seems to be whether it is ethical for a business owner to make money.

[e1g]

Except for outliers like Apple, it is atypical for shareholders to get more of revenues than the workers.

Payroll, benefits, offices, etc are easily >50% of revenue in virtually all ventures (including diamond trade and definitely your favourite tech unicorn)

[andrepd]

[citation needed]

[throwaway190102]

No, The only portion of revenue that goes to shareholders would be that of profits, and Netflix doesn't pay dividends so none of that money goes to shareholders. It goes to capital re-ivestment, or the workers in the form of bonuses and the like. The sharholders in a company like netflix only make money when the companies shares become more highly valued (usually from that profit re-investment).

Also implicit in this statement I think, is the assumption that shareholders don't provide as much value to the business, or perhaps the economy writ large. Arguably the investors at least initially play a more crucial role than any employee no mater how back-breaking their work because without starting capital most businesses don't even get started in the first place. But in general all aspects of the business contribute to success, Shareholders, employees, and executive. I don't think moralizing one class over another is useful to this sort of conversation.

[JDiculous]

> Taxing a business is taking real money away from payrolls

By that same logic, taxing personal income is akin to taking money away from the goods/services/investments that that person would've spent that foregone income.

There's nothing special about businesses that warrants them special privileges.

[Spivak]

The special privilege is that a business is a group of people all of which get taxed individually.

Money goes into the business, gets taxed, and then goes to employees and taxed again or to shareholders as profits and taxed again.

Why tax twice?

[AlexTWithBeard]

Taxing a business is taking real money away from payrolls

Correct me if I'm wrong, but I think payroll expenses are not a part of profit, so no double taxation here.

[pathseeker]

>Correct me if I'm wrong, but I think payroll expenses are not a part of profit, so no double taxation here.

The point is that any money that exits a corporation gets taxed again somewhere.

So if a company does really well one year and makes a profit, it gets taxed on that profit even if it keeps it in the bank. Then they use that remaining profit to pay payroll next year and then employees or owners get taxed again.

[throwaway190102]

I don't think that's quite how that works.

But your point on double-taxation is certainly valid in some contexts.

[shimms]

Some jurisdictions (Australia) have input credits that offset tax already paid on dividends. If a company has paid 30% tax on a profit and distributes dividends to shareholders, the individual pays tax on it at their marginal tax rate less the tax already paid by the company (fully franked dividend).

Franking credits minimise the double taxation issue in these instances.

[AlexTWithBeard]

Will never happen in the US: too reasonable.

[pathseeker]

It is exactly how it works. Apple has been taxed on the profits that make up their giant cash balance. Once that is paid out to investors through dividends or to employees through payrolls, it will get taxed again.

[throwaway190102]

You're right about dividends, but payroll comes out before profit calculations.

[JDiculous]

Sales tax is a double-tax. So what?

[anonymous5133]

Double taxation is unethical.

[dlp211]

Double taxation is generally a bad idea. What you think is double taxation is not.

Double taxation is the concept where a dollar could, in theory, be taxed at over 100% from the aggregation of taxes owed on it. There are to my knowledge only two real examples of double taxation in America. The first happens due to the new cap on SALT deductions. The second is with regards to FICA taxes.

[throwaway190102]

You are correct. Payroll is part of expenses.

Oversimplified:

Profit = $Revenue - $Expenses

Tax = $profit % $Tax_rate

[nikanj]

Citizens United v FEC disagrees with you.