[jbaudanza]

Imposing taxes on a legal entity always seemed fishy to me.

Politically, it sounds great to say, "Make the corporations pay their share!", but who exactly are we targeting with these taxes? Is it the rich executives? Why not just raise taxes on the rich directly?

I suspect in most cases the tax burden is just shifted onto the lower-income workers or the customers somehow.

[Mordisquitos]

Yes, I agree. I myself have always wondered about the opposite strategy: literally zero corporation tax, compensated by an overarching income-agnostic personal income tax which would go up to stupidly high percents in the stupidly high income brackets, say for the sake of the argument 80% above 1 million €/$/£, 90% above 10 million, 95% above 100 million etc. I don't necessarily mean these specific values, but you get the idea.

This income tax wouldn't care if the individual's income is salaried, or dividends, or stocks, or real estate, or whathaveyou. Any transfer of wealth from an un-taxed business to a taxable individual would count equally. Of course, the zero corporation tax would be conditional on all of a corporation's profits being distributed to individuals in states subject to the zero-corporate-hardcore-income tax agreement. I'm sure it would be extremely difficult to implement correctly, and to avoid tax avoidance schemes it would also require strong levels of capital controls with non-participant nations.

I may be a bit naïve, but intuitively I feel that erasing corporation tax altogether but highly taxing all individuals' personal profits may encourage innovation and reinvestment, and perhaps even make UBI a feasible option.

[lordnacho]

If we did that, rich people would keep a corp as a piggy bank and only pay taxes on whatever they took out. Most of the money would stay in the corp and be use on various investments.

To a degree this is already what people do (eg contractors), except they have to pay some corp tax each year on what they made.

[magila]

How is that any different from having money invested in stocks/real estate/etc today? Unrealized capital gains aren't taxed regardless of whether the asset is held by a corp or individual. In any case it's when the person realizes the gains that a taxable event is triggered.

[lordnacho]

The difference is it can be a realised gain that you'd then not pay tax on. Eg the Corp makes 100 in profits but at zero it doesn't pay out anything.

For unrealised gains you're right, there's no difference.

[magila]

Ok, but corp owner still can't benefit from the gain without generating a taxable event. Either they pull the money out directly or receive a benefit in kind. In either case it gets taxed as regular income so in that sense the person would actually be in a worse tax situation assuming capital gains is taxed at a reduced rate.

[3pt14159]

Most things that wealthy people want that has to be purchased with after tax dollars, like I don't know a flight to visit a family member, they can pay for just fine out of the pittance they pay themselves in salary.

The real trick they pull is making everything a company. A man building a model rocket at home? That's with after taxed dollars. A man building a rocket to the moon? That's a business. Goes for all sorts of things. At some point you have to say, no, corporations please pay tax as you make it.

[tick_tock_tick]

It's much easier to force a corp to pay dividends or do a share buyback than it is to chase them around the world with some horrible tax policy. A 0% corporate tax with law to prevent excessive hoarding of cash in the corporation is the only sane solution.

[jcrites]

How much cash a corporation holds should be a matter for the corporation's CEO, board, and shareholders to decide.

If the shareholders are comfortable with the company sitting a on large amount of cash as a rainy day fund, or a reserve that can be used for large acquisitions, significant new research efforts (maybe Apple wants to build cars, and self-driving ones) etc., then who's complaining?

With $195 billion in cash reserves, Apple couldn't e.g. buy a semiconductor company like TSMC outright (market cap $623B), but one could imagine that there are plenty of companies that Apple might like to have the ability to buy that are in the several-to-ten billion dollar range.

If a substantial number of shareholders are unhappy with Apple's cash hoard then a large enough coalition could force a vote to distribute a portion of the cash as dividends, or use it for a stock buyback; or pressure management changes at the company, etc.

So far, the fact that Apple investors appear to be comfortable with its cash reserves suggests that Apple investors believe that Apple will either (1) lobby for policy changes that enable it to bring the cash back to the US without paying considerable taxes, at which point it will distribute them as dividends or stock buybacks; or (2) they believe Apple will use that cash for investments/acquisitions that will generate more returns than the investors themselves would generate if the same cash were distributed immediately to shareholders.

[tick_tock_tick]

> How much cash a corporation holds should be a matter for the corporation's CEO, board, and shareholders to decide.

Or whatever the law says.... I don't particular care that Apples investors have no issues with them building cash reserves.

The TSMC example is actually a very good point that allowing corporations to build huge cash reserves allows incumbents too much power in the market.

[lordnacho]

The law to prevent cash hoarding is just a tax, no?

[chalcolithic]

Don't own, rent everything. How will you handle that?

[handrous]

How's that relevant? I'm not weighing in on the broader wisdom of the parent post, but I don't see how that affects anything.

[chalcolithic]

Isn't that an easy way to evade taxes? The rent will be taxed, but the original money used to buy a house won't be.

[mullingitover]

> Politically, it sounds great to say, "Make the corporations pay their share!", but who exactly are we targeting with these taxes? Is it the rich executives? Why not just raise taxes on the rich directly?

Pretty basic megarich person accounting: You realize zero income, you just hold a lot of valuable assets, and you pay no taxes.

"But surely they must have some income to live on!" you argue.

Nope, you get a $10 million loan backed by your assets. You spend that loan, which is not income, tax free. When the time comes to pay back that loan, obviously the next move is to get a $20 million loan. You can keep rolling these loans tax-free until you die. "Aha, now the estate pays the taxes!" except there are a multitude of other loopholes for evading inheritance taxes.

On paper and at first glance it seems like everything is fair (which is the goal, to seem fair), but only the most incompetent ultra-wealthy person is pulling anything close to their own weight when it comes to taxes.

[dantheman]

Except that doesn't happen?

Bezos paid 973 Million in taxes [1], note that article conflates income and wealth in a truly economic illiterate way.

https://www.seattletimes.com/business/irs-records-show-wealt...

[mullingitover]

Bezos is playing it pretty straight, but then again 973 million is basically pocket change for him, also let's not forget about the year he paid zero taxes and got a refund:

> Bezos filed a tax return in 2011 reporting he lost money because of bad investments, allowing him to claim and receive a $4,000 tax credit for his children, according to ProPublica.

Anway Bezos is far from the only mega-rich person, for example from that article you cite:

> Another wealthy person whose tax data ProPublica obtained was Carl Icahn, the activist investor who built his wealth through corporate takeovers. He paid zero income taxes in 2016 and 2017, partly because he was able to deduct interest expenses on loans from his “adjusted gross income,” ProPublica said.

[dantheman]

When looking at a single year for people who have losses and expenses it can paint quite a misleading picture. Over 10 years how much did they pay, is a much better question.

[mullingitover]

How about not paying taxes 10 out of 15 years[1]?

Honestly I get it, and I can argue both sides of this debate. However, for the regular working person who pays taxes year in and year out to hear that people who live in stratospheric luxury aren't paying taxes: it looks like a duck, walks like a duck, quacks like a duck, and by duck I mean rigged system.

[1] https://www.cnn.com/2020/09/27/politics/trump-income-taxes-n...

[dantheman]

Trump is a notoriously bad business man who loses money. If you're living if savings which is what happens when you lose money, then there is no tax bill. I'm not discounting fraud, but there is active disinformation on this - propublica mixing wealth totals and income tax just one of many intentional misleading arguments.

[bradford]

> it sounds great to say, "Make the corporations pay their share!"

the Global minimum tax rate is only tangentially related to the 'make corporations pay their share' problem. The real problem is a 'race to the bottom' where corporations will shop around and put tax headquarters in the country with the smallest tax rate (i.e., Ireland).

> I suspect in most cases the tax burden is just shifted

The big question for me is: is it really a significant tax burden? or do the companies choose nations with the lowest tax rate because they are seeking a competitive advantage, and thereby inducing all their competitors to make a similiar choice?

the minimum tax rate is trying to level the playing field in this regard.

[novok]

It's a collusion agreement amongst the government industry to not compete with each other on this one aspect.

[UnpossibleJim]

One of the even bigger issues with this bill is the lack of accountability in government spending. This does nothing to tackle military spending or riders tacked on to bills that have nothing to do with the proposed spending bill.

If politicians really wanted to make people happy and get things under control, it would be transparency in spending and no riders on spending bills. This is just another way to wring more money out of a populace with a better sales pitch by saying, "Make the corporations pay their share!", knowing full well that people don't consider the down stream effects on middle and lower class economic systems.

[walshemj]

Well that's a very US specific thing with its current rather 18th century set up. I agree from a parliamentary perspective its horrific.

Its a bit similar to the way the tiny NI parties hold UK governments feet to the fire in return for support they get nice bungs or optouts on human rights laws.

[UnpossibleJim]

That's completely fair, as I really can't speak to the government expenditures in other countries, nor how they pass their budgets.

[PoignardAzur]

I mean, I don't disagree that governments can spend their money in undesirable ways, but in general increasing government revenue is a good thing.

Maybe this bill doesn't stop oversized military spending, but it at least puts a damper on the race to the bottom of countries offering low taxes to gigantic corporations.

[robertlagrant]

Preventing that race to the bottom is not a goal in and of itself.

[throwaway34241]

It's basically the shareholders that pay this tax - the corporate tax being described here only on applies to the profits, so salaries for example would be counted as an expense and not included in that.

There's also not a lot of reason for this to be passed on to the consumer - if raising prices would let the company make more profit, it would make sense for them to do that anyway regardless of the specific tax rate they pay on those profits.

As for taxing the shareholders directly, they of course do do that in addition to the corporate tax. One way the corporate tax is a little bit different is that it's paid before income is distributed to the shareholders, so if a company accumulates a huge cash balance but doesn't do any share buybacks / dividends, it will still pay the corporate tax even though the shareholders won't pay any tax (unless the company starts distributing the profits).

[djrogers]

Shareholders tend not to wind up holding the bag - higher corporate taxes result in higher prices at the consumer level.

[svachalek]

No one ever wants to argue the opposite -- "but if you tax consumers, they won't spend as much, and corporations won't make as much money!" Although personally if I had to bet on one way or the other, I would say this reversal is easier to prove.

[handrous]

> Politically, it sounds great to say, "Make the corporations pay their share!", but who exactly are we targeting with these taxes?

I just think of it as forced public ownership of a fraction of the shares of companies chartered & granted special privileges by the public's government, but with extra steps.

[dougmwne]

What stops a person from creating a legal entity to funnel your activities through to personally avoid taxes? If the corporate tax rate is 0% and the individual tax rate tops out at 40%, the incentives to practice this kind of avoidance are strong.

[magila]

Existing tax law already covers this. If you use a corp to fund personal activities that is a benefit-in-kind and subject to income tax same as if you received the money directly.

[eunos]

> who exactly are we targeting with these taxes? Is it the rich executives?

Lot of times the money were not handed to the employee, executives included. They just stay at the company or paid to the financial company that owned the companies.

[harikb]

At least from my eyes, recent trends are exact opposite. Stock buyback returns the money to investors (by raising stock price). Huge bonuses to executives. The company itself is managed on a very thin buffer so that

a) When things go south, they can always ask the government for bail-out. Too big to fail & all that.

b) Anything affecting the company, in terms of regulations, can be shown to directly affect the employees and their job.

This may be a cynical take, but this is what I see.

[ClumsyPilot]

But investors keep their money in honding companies and trusts, sometimes registered in panama. The billions never actually have a physical person as their official owner

[runarberg]

I think you’ll find hints of the answer in the fact that most countries are pretty bad at collecting taxes from the rich already. It is fairly easy if you are rich to hide your wealth and evade taxes. I suspect it might be a little more difficult for a publicly traded company to hide its wealth the same way.

[8note]

Apple would be an example.

Rather than pay taxes, they get a tax free date to onshore their money every so often