[projektfu]

I don't disagree, but S-corporation profits are only taxed once, regardless of distribution, and C-corporation profits are taxed on the corporate tax bill even if distributed in a dividend to shareholders. It's a little peculiar.

[wolverine876]

It's the concept of a corporation as a fictional person that is source of the peculiarity. If it's a fictional person, with its own assets, income, and expenses, then it pays taxes. It serves real humans by providing a place they can safely pool their investment.

S corps are more extensions of a real human than separate fictional entities.

[varispeed]

Still. The corporate tax rate is way lower than personal tax. In my country some workers pay over 50% tax on their income, while corporation they work for pay 10% or less if they have good accountants.

[orangepurple]

Every US person pays for taxes on capital gains and income tax at some point and those taxes ain't zero for executives of large corporations. Not even close. This extreme focus on taxation of corporations is bizarre. Eventually corporate profits need to be used by people. Companies cannot buy houses and living properties for executives either unless there is a legitimate business purpose rolled in somehow. You can try to bullshit the IRS but they will come down on you like a bag of bricks if you feed them a load of crap.

[wolverine876]

> Every US person pays for taxes on capital gains

Much of America never pays such taxes and has no such investments. About 40% (? IIRC) don't have $600 saved.

> taxes ain't zero for executives of large corporations

Taxes on wealthy are relatively low, in part because capital gains, the source of revenue for the wealthy, are taxed at a lower rate than income, the source of revenue for working class Americans.

> This extreme focus on taxation of corporations is bizarre.

I don't see the argument. Corporations pay relatively low taxes, and it has a large effect on other Americans who lack government services and have to pay more themselves to cover the corporations' share.

> You can try to bullshit the IRS but they will come down on you like a bag of bricks if you feed them a load of crap.

The GOP cut IRS enforcement to the bone, and it was restored only ~1 year ago.

[orangepurple]

Long term capital gains tax on the wealthy is 20%.

About the other point: IRS will come after you even after many years have passed so its a dangerous game of chicken to even attempt.

[nullc]

In the US we've historically arranged thing so that the corporate tax rate + long term cap gains rate is approximately equal to the income tax rate.

If the combined rates were much greater it would create an incentive against creating c-corps.

[varispeed]

> If the combined rates were much greater it would create an incentive against creating c-corps.

This argument isn't sound. If high tax doesn't create an incentive for creating corporations, then it also doesn't create an incentive for people to work and be productive. Now the taxes are pushed on the workers that have to pick up the corporations tab. It may have worked in the past where corporations had high head count and were not outsourcing, but now governments rather than working to correct that imbalance, they increase workers' taxes. We can see this system is slowly collapsing as your can tax the workers only so much before they feel like slaves and stop working.

[nullc]

I am not following your reply. Consider that you face two options for organizing your business activity-- you can operate it as a pass through entity of some kind (s-corp, sole proprietorship, etc) or you can operate it as a c-corp. The c-corp path will result in double taxation, corp tax and LTCG. But the combination of the two is a similar rate to the tax on income (e.g. 21+20% vs 37% top marginal).

Cranking the CG or corp tax rate even higher will result in more businesses with less diverse ownership, even if only on the margin, which would result in increased wealth consolidation.

[wolverine876]

> If the combined rates were much greater it would create an incentive against creating c-corps.

Are you implying that sole proprieterships would be alternatives to C corps? Facebook would be a personal asset of Zuckerberg?