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by cuspycode 1900 days ago
Agreed. Instead of taxing the profit of a corporation, just tax the payment of dividends from that profit. The total tax burden can still remain the same if that's what people desire, but the end result will be more transparency as you say. I think Estonia has exactly this policy, or at least they did last time I checked.

It also removes the incentive to mess around with stock buybacks, which is good because the extra liquidity can be put to better use within the company.

For very small companies (such as my own) it would also remove the bureaucracy involved in saving profits from one fiscal year to the next.
2 comments
yonaguska 1900 days ago
> just tax the payment of dividends from that profit

My dividends are already being taxed as income. I agree with you, but good luck trying to convince Big Gov that they need to eliminate a revenue stream without picking up a new one.

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marcusverus 1900 days ago
> Instead of taxing the profit of a corporation, just tax the payment of dividends from that profit.

This would be regressive, though. Why not tax the individual via a progressive cap gains tax?

> It also removes the incentive to mess around with stock buybacks, which is good because the extra liquidity can be put to better use within the company.

If a company can't think of a good use for their profits, do we really want to force them to keep the money within the organization? This seems like a recipe for bloated budgets and bigger Christmas parties, but I'm not sure that we could expect much benefit otherwise.

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cuspycode 1900 days ago
> This would be regressive, though. Why not tax the individual via a progressive cap gains tax?

How would it be regressive? According to Wikipedia[0], most corporate tax rates are proportional (i.e. "flat"). Just replace that with an equivalent rate on payout of dividends. Capital gains tax for the recipient is an entirely separate question.

> If a company can't think of a good use for their profits, do we really want to force them to keep the money within the organization?

In such situations they can pay dividends of course, which are taxed in my proposal. The point is that there is no point in buying back stocks instead of paying dividends.

[0] https://en.wikipedia.org/wiki/Corporate_tax#International_co...

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