[chrisp_dc]

The argument I have heard is corporate profits are already taxed. The capital gains tax + corporate profit tax roughly equals normal income tax.

Personally, I'd prefer higher capital gains tax and lower corporate tax. I think it would be more transparent and easier to collect.

[XorNot]

And that argument is complete junk: https://i.imgur.com/QpvGlnV.gif

The money I spend of my income buying goods from other businesses is "already taxed" and then when those businesses collect it from me its "taxed again".

Mysteriously, the one form of taxation the already wealthy benefit from is very concerned about this happening.

[jariel]

The argument is not junk, there's value in understanding how taxes work through the value chain.

A little bit like a VAT, we don't want to tax, tax and tax some product that has a long and complicated line of distributors, rather, tax the final product, either using VAT rebates etc.. This is more economically beneficial.

With corporate and individual incomes, we think at little bit the same way - i.e. how the taxation will flow through via corp tax, income tax, dividend tax and cap gains.

In Ontario, if you pay small business corp tax and then a dividend, it's pretty much the same as if you were to take a salary and pay income tax. Obviously, this because the million or so small businesses out there would rig their outgoing cash flows one way or the other, depending on tax treatment.

While cap gains is a special situation, it does still form part of those block of taxes that should naturally relate to one another in terms of how net surpluses are taxed.

When you spend your 'already taxed income' on an entirely new product or service, then that's separate economic activity, and so it's taxed without consideration to your 'previously taxed income'.

[jjoonathan]

Ah, yes, double taxed: once at 0%, due to Ireland, and once at 15%, due to the special capital gains rate. I wish my income was double taxed like that! Where do I sign up?

[zepto]

What proportion of businesses are taxed like that?

[lostlogin]

Different scenario, but tech giants in the US have some amazing arrangements. I’m in New Zealand and their clever arrangements here see them paying minuscule bills on massive revenue

“In 2018 Google NZ Ltd (an entity of Alphabet group) paid income tax of NZ$398,341 – about 0.055 per cent of the estimated gross ad revenue “extracted” from the New Zealand market.”

Facebook, Apple and Amazon have all been in and out of the news here for their arrangements too.

https://i.stuff.co.nz/business/121505796/google-and-facebook...

[zepto]

You have to be a multinational by definition to do this, and yet the proposed taxes will hit most medium sized businesses.

“It will hurt Apple and Amazon” is not a problem. “It will hurt most growing businesses”, is.

[jjoonathan]

On account of where campaign finance comes from, I'm afraid politicians see it the other way around.

[klyrs]

Better question: what proportion of corporate profits are taxed like that? Because the cheesemonger down the street isn't pulling a Double Irish to avoid taxes on the ~0% of GDP that they're generating.

[zepto]

Agreed - I would like to know what the effect would be on regular businesses are growing, not a few giant multinationals.

If people care about this loophole, how about just closing it, rather than taxing everyone else?

[klyrs]

How do you close a loophole without bought politicians replacing one loophole with ten?

A bit of an "angels dancing on a pinhead" question, I'll admit

[User23]

Look up double Irish with a Dutch sandwich. Not really my area of expertise, but in the past at least basically all big tech companies used that strategy.

[zepto]

I don’t need to look it up, I know what it is.

The proposal would hit every business not just a few tech giants.

[jjoonathan]

Yeah, everyone knows what it is, and has known for a long time. It goes to show that the loophole is not an accident but rather an intentional result of our political process. Unfortunately.

[jariel]

True - but of the business activity is in EU, then really it's Ireland's issue to sort out with the EU, it's a separate issue from the 'other side' of the taxation in the US. What they should do is sort it out.

[anonAndOn]

> capital gains tax + corporate profit tax roughly equals normal income tax

Doesn't this apply exclusively to the corporate profits not shielded in a Double Irish (or it's latest incarnation) arrangement [0]?

[0]https://en.wikipedia.org/wiki/Double_Irish_arrangement

[trhway]

That doesn't make sense. Those are taxes with different bases. It would make sense to talk that way about corporate profit tax and corporate dividend tax for example.

[fighterpilot]

> Personally, I'd prefer higher capital gains tax and lower corporate tax.

Same, but it'd mean more tax money for foreign governments, too, since those untaxed profits would be contributing to cap gains tax in another country (in the case of foreign investors) instead of domestic corporate tax.

[klyrs]

> The argument I have heard is corporate profits are already taxed

I've heard time and time again that it's a moral imperative for corporations to reduce their tax burden to zero using every loophole available. Are big corporations actually paying tax?

[bolasanibk]

https://www.washingtonpost.com/business/2021/04/05/corporati...

>55 corporations had zero federal tax liability in 2020, including household names like Nike, FedEx and Dish Network, analysis finds

[akvadrako]

That's not relevant. If you pay out dividends, you cant evade those taxes. Capitol gains is supposed to be based on expected future dividends.

[walshemj]

shifting even more the tax burden to the citizen why?

[jcampbell1]

The concept of “tax burden” or more precisely “tax incidence” is a rather complex topic. For instance, no consumer pays gas taxes since the gas station pays them all, but most people are smart enough to realize the consumer bears a lot of the burden of fuel taxes even though none pays it directly. There is the question of who faces the burden of corporate taxes? Executives? Stock holders? Employees? Consumers? This question has been studied extensively, and with so many multinational companies, in the long term employees are the most burdened by the tax because corporations make investments in lower tax areas. The cost of an investment in a location are wages+taxes. If taxes are high, then wages must be lower for the investment to make sense. This only becomes true in the long term, but it is a good argument for lower corporate taxes and higher capital gains taxes.

[closeparen]

The argument is that dragging on corporations hurts customers and staff as well as owners. It's better to precisely target the owners.

However, I think it misses that most of the benefit to owners is in the form of unrealized gains, not subject to any of the tax rates that people talk about tweaking.

[walshemj]

Pension funds you mean ?

[throwaway8581]

It's not a gain if you don't realize it.

[closeparen]

That's certainly a perspective you can take. Then you'd really want to look at consumption inequality instead of wealth inequality. Consumption inequality is both much lower at an absolute level than either wealth or income inequality, and pretty much flat over time [0].

To the extent that we care about the distribution of net worth, though, unrealized gains are an important part of the story.

[0] https://voxeu.org/article/consumption-and-income-inequality-...

[akvadrako]

You can still borrow against it.

[throwaway8581]

You need to realize it to pay back the loan. No free lunch.

[greenburger]

Under current US tax law the original value of an asset is rebased upon death. Thus, you can borrow against an asset, such as stocks, and then your heirs can repay the loan immediately after your death and pay zero capital gains.

This only costs you the interest of the loan and exposes you to the risk of declining value in the assets securing the loan. Appreciation of the assets or dividends may fully offset the interest or more.

Additionally if you a founder, for example, you retain the influence/control of your company that you derive from the stock ownership, while still be able to enjoy their cash value.

[throwaway8581]

No, corporate tax is of corporate profits, which is just capital gains that haven't been dispersed and may be dispersed in the future (or may be reinvested). Salaries and wages are not profits, so they are not subject to the corporate tax. In theory, the sum of the capital gains rate + corporate tax rate is supposed to approximate the individual income tax rate.

But because most people will never understand this, we can't have a tax code that makes sense. Mass democracy is incompatible with sensible rulemaking in this area.

[lwansbrough]

To improve society.