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The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc.

So as a person, any time you can utilize a corporation's resources without drawing income, you are cheating the system. This definitely already happens, but in your case it would go to another level.

>The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc.

This is illegal.

>> The problem would then become people using their corporations to make all of their purchases. Their corporations would own their yachts, their houses, their cars, etc.

> This is illegal.

Citation, please.

It's illegal if it's provably done for personal use. But when you have money, you can create a legitimate company with a legitimate reason to have a yacht. Perhaps the yacht is essential to your meetings with other high net worth individuals, to discuss important business. When your friends all have $10-100M, the lines between business and personal events are constantly blurred.

Take a real life example. Look at Bill Perkins. He live streams poker from his boat. The boat is essential for setting the atmosphere for the live stream. Look at Tai Lopez. He purchases / rents luxury vehicles and residences to portray himself as successful, which is important to his brand. So where do you draw the line?

Why would a person voluntarily forego effort to lower their tax burden? People evade personal taxes all the time.

Lack of resources. If a tax reduction scheme costs 100 million dollars to set up, how many individuals would be able to use it? How many corporations?

Couldn't this then lead to a net income gap around that point? Or people pooling resources to form tax evasion groups?

At the end of the day, it's a form of wealth distribution for the benefit of society (military, police, etc). If you cut corporate taxes, how do you compensate for that amass of wealth? Also remember that currently a company can "own" a bank account that people do tend to tap into for personal gain (although technically against the law). As a moderate, I'd only be open to removing business tax IF businesses are unable to own any profits. This basically just means the business tax gets effectively rolled into a form of personal income tax. I haven't thought about this before, so I'm not sure what the outcome could be.

Alternatively, there's the Henry George system which seems to be getting some interest again. My main issue with this system is that so much "goods" are virtual now being software and information... even virtual land has real value today. I haven't seen a good explanation of how Henry George's system of taxing the 'finite' resources could be adopted to our (still vastly growing) digital age and digital assets.

The problem here is that individuals do not, for the most part, contribute very much in the way of direct tax receipts. The biggest direct tax receipts are from corporations, and for good reason: we decided that capitalism is the best way to organize our economy and private corporations would be the way people band together to engage in economic activity.

Corporations, then, reflect the combined, amplified economic output of private citizens. Which is why they must be taxed; for the same reason you would want to tax individuals.

That is the Why part. But you seem to be saying that because corporations will always find loopholes that we just give up. As long as the Government is nimble enough to discover these loopholes and close them, this becomes an un-economic endeavor. Which is why... Governments are good, and should be made as functional in these things as possible.

I'm fairly sympathetic to abolishing corporate taxes, since corporate taxes are a flat rate on all shareholders, and some of it even falls on workers, however...

Corporate taxes provide an additional incentive to reinvest the profits of your business, rather than just sitting on them.

They also allow national governments to extract tax revenue from foreign shareholders.

And it's that second point that is really the biggest deal, since a unilateral lowering of corporate taxes and replacement with income taxes may increase the tax burden on your citizens.

Ireland likes having a low tax rate because it has a comparatively low tax base and can incentivize these extremely large companies to pay taxes in Ireland, but as you can see, this harms the rest of the EU.

> I'd like to hear counter points to this because normally when I ask my friends the responses I get are more along the lines of "corporations are evil" more than "could it even work economically".

Corporations are not inherently evil, but any sufficiently powerful entity is in a good position to abuse its power (governments included). Would it really be a good idea to skew the system to benefit corporations over individuals even more, with all the rampant power abuse going on already?

Problem with that is people can then make companies and keep all their wealth in there until they need it.

Which might mean nothing gets paid but a minimum.

That's exactly what it means. And if corporations can earn investment / passive income untaxed, then everyone would just keep their portfolios inside a corporation and draw salary for exactly what they need and nothing more.

You can already do this, but it would only result in being taxed twice—first when you earn your wealth as ordinary income or capital gains, then again when you draw the salary or dividends from the company. No such thing as a self-licking ice cream cone (without committing tax fraud).

ETA: Getting your employer to pay your company instead of you would be tax fraud.

> ETA: Getting your employer to pay your company instead of you would be tax fraud.

Isn't that what people do if they are contracting?

Contractors pay income tax.

I think this might be a US specific thing.

Dunno about other countries, but it seems unlikely it'd be different unless their tax authorities were born yesterday. Then again, by US standards most other countries make tax evasion a national sport, so I guess it's conceivable.

So for instance in the UK you can have a company that pays corporation tax at 20%. If you don't pay yourself anything out of it, that's it. Why would you have income tax to pay?

+1 to eliminate corporate taxes entirely. It's incredibly stupid to tax entities that creates jobs, products and services. Taxes only create unnecessary friction and strange side effects.

+1 to only have taxes at the individual level. Also, make tax a quadratic function instead of step function. Step function always leads to stupid / shady behaviors around the step points.

1. People should be motivated to work and rewarded for that. 2. Corporations should be motivated to provide goods and services. 3. Luck should be normalized

Corporations benefit and profit from municipal services, same as people do. Should they be able to use those services for free?

Kansas massively cut their corporate taxes in 2012, with the implicit promise that lowering taxes for "job creators" would pay for itself. The deficit for the state became so massive as their revenue dropped, that the state had to close education and other municipal services. [1] Kansas is now heralded as an example of how 'trickle down' economics of cutting taxes for 'makers' fails. [2]

[1] https://www.forbes.com/sites/beltway/2017/06/07/the-great-ka...

[2] https://www.washingtonpost.com/opinions/trickle-down-economi...