[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.