Did they get a specific exemption against the public interest that no one else got? Great! Let's talk about that!
Did they deduct 100% of their costs for sham "IP licensing" from a foreign subsidiary? Great! Let's talk about that!
But you need to know the why before you conclude there's something objectionable going on.
Edit: More generally, every headline of this form comes with an implicit statement like "By my model, <company> should be regarded as having a profit of X dollars, but tax law views them as having a taxable profit of Y < X." That necessitates a good explanation of why you think X is the right value.
I find that objectionable.
Profits should follow arbitrary calendar years?
But if:
* their sole proprietorship loses money in one year, it can be carried forward to offset taxes the next year
* they have net losses in investments, those can be carried-over to offset gains in other years
* any LLCs in which they are members have allocated losses, those can be carried-over against profits in later years
These are the ways a private individual engages in economic activity that are analogous to what a C-Corp does, and for these, the standard is essentially the same.
There are a handful of available carryovers and the concept of NOL is very similar to a private citizen as this discussed concern is to a business.
Innovation and front heavy spending is very much improved do to this issue. It is a sound concept.
The average worker isn't allowed to do that even when they lose money in a given year. Why is it so naturally assumed to be acceptable for a business to do it? Maybe the time is to just remove the loopholes in general from both business and personal income taxes.
If you have investments that produce losses one year, you can carry those losses forward to cancel out capital gains in following years and reduce your tax payable.
The differences are significant enough that any sort of parallel like this does not hold a lot of value. Yes, it might make sense to disallow this for corporations, but the justification seems reasonable -- it's not a loophole that allows corporations to take home huge amounts of money without paying taxes, it just allows them to deal with time horizons longer than one year. As it is, a gain in the second half of the first month of the year can be offset by a loss in the first half of the first month of the year, just because of reporting frequency.
Professional expenses are usually deductible, but most of W2 people (including myself) don't have too much to deduct.
Because a business isn't a person. Taxing a business is taking real money away from payrolls, money that would get taxed again anyway once it was paid out.
Corporate income tax only makes sense when you look at it as a barrier to entry for competition in the marketplace. Big companies like Netflix know how to avoid taxes. Small companies don't. Thus corporate income taxes help to protect big companies from disruption by small ones.
The underlying issue seems to be whether it is ethical for a business owner to make money.
Payroll, benefits, offices, etc are easily >50% of revenue in virtually all ventures (including diamond trade and definitely your favourite tech unicorn)
Also implicit in this statement I think, is the assumption that shareholders don't provide as much value to the business, or perhaps the economy writ large. Arguably the investors at least initially play a more crucial role than any employee no mater how back-breaking their work because without starting capital most businesses don't even get started in the first place. But in general all aspects of the business contribute to success, Shareholders, employees, and executive. I don't think moralizing one class over another is useful to this sort of conversation.
Lots of "shareholders" are people's retirement funds, pensions, and the like. When those funds finally pay out, they get taxed as income just like for everybody else.
Saying that Uncle Scrooge and his buddies own all the stocks is not much worse than implying that normal people own a significant share of the market through their retirement accounts.
Each of the 90 people invest $5k and have 1000 stoks.
Each of the 9 people invest $20k and have 4000 stoks.
The millionaire invests $100k and has 20,000 stoks.
The top 10% have 99.96% of the stoks.
It would be weird if the richest people didn't own most of the stocks. It doesn't necessarily mean there's a problem.
Correct me if I'm wrong, but I think payroll expenses are not a part of profit, so no double taxation here.
The point is that any money that exits a corporation gets taxed again somewhere.
So if a company does really well one year and makes a profit, it gets taxed on that profit even if it keeps it in the bank. Then they use that remaining profit to pay payroll next year and then employees or owners get taxed again.
But your point on double-taxation is certainly valid in some contexts.
Franking credits minimise the double taxation issue in these instances.
Double taxation is the concept where a dollar could, in theory, be taxed at over 100% from the aggregation of taxes owed on it. There are to my knowledge only two real examples of double taxation in America. The first happens due to the new cap on SALT deductions. The second is with regards to FICA taxes.
Oversimplified:
Profit = $Revenue - $Expenses
Tax = $profit % $Tax_rate
By that same logic, taxing personal income is akin to taking money away from the goods/services/investments that that person would've spent that foregone income.
There's nothing special about businesses that warrants them special privileges.
Money goes into the business, gets taxed, and then goes to employees and taxed again or to shareholders as profits and taxed again.
Why tax twice?
100k house, 30k in damage, 20k insurance check. You can take 10k in losses.
*Also note, I am not a CPA, consult one. This is my current understand trying to deal with a town house I own in NC that was damaged this year.
I suspect that a change to this rule would cost the Exchequer a good £20b a year plus. As a home worker I wouldn't be impressed by that.
Let's say you wanted to give income from labor the same benefits as (negative) income from investments that lost money... How would you do that?
Say I earn a healthy $250K/year at my W-2 job. If I buy a large house with the proceeds from my job, have I incurred a loss? How about if I eat out at an expensive restaurant every night, spending my entire paycheck. Do I get to avoid taxes by keeping my lifestyle expensive?
That being said a corporatiom is not a person, and cannot eat a fancy dinner, so much of their profit can only become reinvested back into paying people who ultimately get taxed for eating fancy dinners.
I am not all that sure about carrying forward investment losses, and as you are aware some expenses are deductible while some are not. While eating a fancy restaurant is strictly optional, spending on medical of educational costs are quite different.
In general I think if someone investigates the edge cases first (eg looking at the second-order effect like carrying deductions on negative income) that's a sign of not wanting to look at the larger picture.
As you indicated above, so much of our personal expenses are "discretionary" in the sense that we could increase or lower them by choice. That's exactly the difference between business investment spending (required to produce the revenue that's taxed) vs. personal income/spending, which is based strongly on preferences. Hard to justify taxing frugal individuals more than lavish spenders just because they save a larger percentage of their income...
It's available through archive.org https://archive.org/stream/galaxymagazine-1954-04/Galaxy_195...
The lenient rates were introduced during high-inflation years. If somebody was pursuing a long-term project spanning over several years (let's say, building a new apartment complex), high punitive tax rates at liquidity time (let's say, 5 years down the road) combined with decreased buying would obliterate any real profitability.
The 12-month cut-off window, though, seems completely arbitrary.
The argument is kinda moot anyways, as capital gains are completely voluntary - one sells when they want to sell. If they don't want to sell, but need liquidity, they can access a bunch of asset-backed loans (HELOCs, PALs, cashout refinance, etc.) Ken Fisher in his book "Debunkery" (and I'm sure the data exists elsewhere) shows how total revenue figures collected by US government do not change over decades, regardless of the actual capital gains rates.
I am not sure what the counter-argument to that is, but one thing I can think of is increased complexity of a tax return for an average joe investor, who bought and sold a few funds in his portfolio. Opponents will also likely point that an official measure - CPI - can be manipulated for political purposes.
Love it when people shoot down proposals I never made
Of course, there's a political component of it too - taxes are always political, and are used to promote or suppress certain actions. I guess the government does want to promote long-term investment and thus defines lower tax rates for this activity.
Also, realize that the government does promote both labor and investments, just through different means. Lowering taxes isn't going to affect how a fully employed individual produces labor; they are trading their time for money. Lowering taxes on investment will promote more investments, since the money for those investments have already been taxed, and since the trade of investments is money-now for money-later, taxes have a much more significant influence over the extent to which someone will invest in a business. Someone fully invested in other things (non-stock commodities, etc) might move some of their investments into businesses instead.
However, once you earned enough money, beyond subsistence level, you have a choice - you can spend it all on consumption, or you can defer some of the consumption, or give up a part of it, as an investment, in hope that this would increase your consumption abilities in the future, or you ability to retire, etc. Modern economy would not work without investment - you need massive upfront spending to lift off something like Netflix of the ground, before it starts being profitable.
This investment is, ultimately, financed by people who chose investment over consumption (might be one very rich person, or tens of thousands of not so rich people giving their money to the bank, which in turn loans it to the entrepreneurs, or likely a mix of both). Ensuring this choice remains a viable and attractive one is something that the government would definitely have an incentive to support.
Moving onto more statistical approach, this one: https://www.fa-mag.com/news/most-millionaires-self-made--stu... says only 8% of millionaires inherited their wealth. For billionaires, according to this: https://www.entrepreneur.com/article/269593 18% got a jump-start (maybe parents were mere millionaires, but the child became a billionaire), and 62% are self-made. So inheritance effects exist, but maybe they are not that huge? At least, clearly, not a majority.
Of course, not everybody starts in the same place. But human behavior and motivations are similar, and thus you can reason about them despite the differences.
Also there is plenty of business income that is not double taxed because it isn't run through a C Corp.
Then in regards to incentives. We already have interest rates to adjust the knobs of investment versus consumption. Capital gains is just a way to make the tax system less progressive.
That is laughably small.
And you can't deduct the losses from your other income while you can as a business.
Example, in year 1 you have a $15,000 net capital loss. You write off the maximum $3,000 of this against your other income, carrying over a $12,000 capital loss. In year 2 you have a $10,000 net capital gain, this is offset against your carried over loss leaving $2,000 to write off against your income.
we don't
But it means something different to make a wage and to make a profit. There are definitely loopholes to close in our busted tax system, I agree with that 100%. While we are at it we should eliminate all subsidies for various types of carved out businesses from oil to corn. But Characterizing loss calculations as a loophole I don't think is correct. If I'm not mistaken most corporate tax schemes in the rest of the world use similar concepts, it's a fairly basic accounting concept.
Why? Other than "because our tax law says so"?
Now only farmers and fishermen are allowed to do this, and some retirees who receive a lump sum retirement plan distribution.
We should really tax companies on income to eliminate this unfixable situation. Fiddling with the tax code will not work. Personally, I would like this problem solved by a national land tax and the permanent elimination of the income tax by constitutional amendment. People trading with each other is a win/win situation. We should encourage that, not tax it.
but I agree with your overall statements - the rates and tax system for personal individuals is ridiculous and it gets worse the more income you make. For me personally, I intentionally took a demotion (and pay cut) because it isn't worth the sacrifices you have to do to get the higher salary. More stress, more responsibility, more extra unpaid overtime you have to work, more headaches etc. SIGNIFICANTLY MORE. Then what is the reward for all this extra headaches....you get 50% of the pay raise. So I said forget about it. The extra money isn't worth it if you only keep 50%.
Or TLDR: don't take away rights like this from corporations, give those same rights to individuals.
And even for individuals, losses over that $3k can be carried forward indefinitely to future years.
It's also possible to pay no taxes if you derive all of your income from investments every year as long as you don't exceed the allowed limit since we have a marginal capital gains structure that combos with our marginal income tax structure.
From my observation, most people on the internet doesn't seems to care. There was an argument about Apple paying little tax in US. I said Apple is the largest tax payer in US and paid 20%+, then the topic changed to he is paying ~40%, why is Apple paying 20% only?
There is Apple tax in France, there are even some saying Apple should pay tax in France, then paid Tax in Ireland, and pay Tax in US.
There are some saying how can Apple not paying any VAT in France and UK? ( Have they been watching too much Fox News ? )
I mean seriously, unless your whole life have been working on any non business side of things, if any of the job involves calculating profits and sales would know none of these makes any sense. And yet we are in a world with people demanding company should pay more. Which is fair point, but what they are suggesting is ridiculous.
I know many are concern about the lack of money for government spending, but as a counter point, do they realise how much money and inefficiency government have wasted in their bureaucracy, and their out of touch project which more than often leads to failure with sums that is unrealistic by any standards?
My point is that hard problems rarely have simple solutions, as much as populist politicians might like to pretend otherwise. “Ban lobbyists” is a great soundbite but would introduce all sorts of negative consequences (like driving them underground and introducing more potential for corruption).
Imagine, for example, that all the fast-food workers unionized and wanted to get the minimum wage raised.
How would they do that when most live outside DC and have to work 1-2 shifts per day to keep their jobs?
They hire professionals -- lobbyists.
Unfortunately any unregulated system benefits the powerful, and we have the heavily abused lobbying system of today.
Think about it, it takes at least six months for us to learn our jobs, they have to learn about hundreds of things ongoing in the government before they can make informed decisions. You then even rely more on lobbyists (or "experts") who at least generally know what they are talking about.
Point being, I think this issue is a hell of a lot more complex than it seems.
The expertise they have is in glad-handing, personally enriching themselves, and playing political games. They're certainly not subject matter experts in anything outside that realm. Term limits don't have to mean that we're losing out on this valuable "expertise", it could be something as simple as "retire at 65", you know, like everyone else in every other industry aspires to do.
Except many of them clearly are. Bill Foster worked as a particle physicist at Fermilab for 22 years [1]. Sean Casten started and sold an energy recycling company called Recycled Energy Development [2]. Those are two examples just from suburban Chicago. Try not to let political cynicism cloud reality.
[1] https://en.wikipedia.org/wiki/Bill_Foster_(politician) [2] https://en.wikipedia.org/wiki/Sean_Casten
How many? And I think it's particularly telling that the folks you managed to find are newbies to the political arena and not career politicians, a class of individuals that can only exist thanks to the absence of term limits. Also telling is that in Foster's case, his expertise is completely useless in a political context. Let me know when he gets around to drafting a major particle physics bill.
I think it's time for you to counter by defending your thesis, that lobbyists generally don't have domain expertise, instead of demanding increasingly more evidence.
I'm not sure, I provided two examples to prove your assertion wrong. Surely, you can find more if you look.
== And I think it's particularly telling that the folks you managed to find are newbies to the political arena and not career politicians==
Can you name a career field where experience is considered a bad thing? Does your career have term limits, would people be more effective at it if they did? The free market seems to pay specialists more than generalists, due to higher perceived value.
Politics is the only place I have ever heard this argument. Foster was first elected in 2008, so he's hardly a "newbie".
==Also telling is that in Foster's case, his expertise is completely useless in a political context. Let me know when he gets around to drafting a major particle physics bill.==
Huh? The House holds the purse strings and decides funding on things like the Energy Department, which funds Fermilab, or NASA. I think he might have something to add in that arena.
If you want to outlaw lobbying by for-profit corporations, then they'll just create subsidiary lobbying organizations. The NRA is a 501(c)(4), which is also a tax exempt non-profit designation, and realistically it serves primarily as a lobbying group for gun manufacturers.
Lobbyists often are, and, whether or not they themselves are, are almost invariably supported by, domain experts.
> They are salesmen
Yeah, but they are salesmen who do the public policy equivalent of technical sales, and it's a field where selectivity is high because you are selling to a very small number of very high value customers.
"We know you don't have time to dig deep. Here is a summary of the research, and our recommendations based on it."
Edit: I also once had a fairly cynical view of lobbyists. But then some people I know went to work for lobby groups after they graduated. When I looked into the types of lobby groups they went to, they were fairly impressive. Things like advocating for homeless, advocating for people without health care, etc.
For example, H.R. 5323, Derivatives Fairness Act drafted on behalf of CitiGroup.
Career bureaucrats are the ones who run many of hundred things that run the government. Politicians need to provide direction and reflect the will of the people. Hardly need to career politicians for that. Younger representation is critical to make sure the voice of youth is being heard.
Do you think any politician understands the needs of the millennial generation ? Any long term policy like say education enacted now is going to impact the future generations more than anyone else.
In both houses, committees now screen out fewer bills assigned to them and are more likely to see their work rewritten at later stages. The practice of“hijacking” Assembly bills—gutting their contents and amending them thoroughly in the Senate—has increased sharply. As a body, the Legislature is less likely to alter theGovernor’s Budget, and its own budget process neither encourages fiscal discipline nor links legislators’ requests to overall spending goals. In addition, legislative oversight of the executive branch has declined significantly.
...legislators are learning more quickly than their precursors, but that frequent changes in the membership and leadership of legislative committees, especially in the Assembly, diminish their expertise in many important policy areas. Many committees lack the experience to weed out bad bills and to ensure that agencies are acting efficiently and in accordance with legislative intent.
That said, overall the summary finds that the effects of term limits were neither as good as proponents hoped or as bad as detractors feared.
1: "How Have Term Limits Affected the California Legislature?" https://www.ppic.org/content/pubs/rb/RB_1104BCRB.pdf
And lobbyists aren't experts either, they're simply paid to bribe people to get a result.
This implies that the EFF does not have expertise in privacy and free speech. Would you agree with that?
EFF is probably the antithesis of most lobbyists, certainly the ones being discussed here.
Moreover, it works the other way round as well. If, say, a teacher returns back to school after a term in state senate, the school will get access to invaluable wealth of knowledge of government internals.
Do you have a citation for this? Because term limits would mean that elected officials need to plan for what to do after they hit their limit. That could make them even more beholden to corporate lobbyists, who have the resources to offer termed-out lawmakers jobs or other benefits after they leave office.
One unintended consequence in my district is that we have two guys who trade seats back and forth between state senate and state house. They're totally interchangeable and neither one ever talks to their constituents (well, the ones who don't write big checks anyhow)
Yeah except they all say they can't be bought and paid for. And they probably believe it for a while. Decades in an environment where graft runs rampant will change a person though.
Don't see how idealism and fantasies of heroes is going to make our government better. How about we stop expecting mythical people to exist and come save us from the bad guys.
I think there are good people that want to serve, but they have to play the money game to survive (costs millions/billions to get elected?? What?!). Which eventually corrupts them ...
Term limits might be nice too.
The power of large lobbies is more closely related to the fact that they represent a large number of constituents who donate and vote (approximately) as a block.
With your example, Hillary Clinton would be a billionaire for doing that inane dance on Ellen.
[0] https://www.washingtonpost.com/politics/mike-pence-used-camp...
When you think there are simple answers to big problems it's generally because you don't actually understand the problem.
How would you outlaw lobbyists? Setting aside the fact that it would be unconstitutional, do you think it should be illegal for you to air your grievances to elected officials? That seems to fly directly in the face of democracy. Or should it only be that businesses aren't allowed to lobby? What about a small business that is being unfairly impacted by regulations, or being run out of business by a large company abusing a loophole in the law? Seems like them not having a voice in government would be a path to oligopoly or monopoly. If that's ok, where's the line in which business is allowed to lobby, and how do you keep a large business from simply hiring a small business to lobby on their behalf?
Yes, actually showing that political favors were exchanged for money is tricky, but still, it's better than nothing and it changes the whole discussion from "it's the system" to "who's doing something bad and hiding it?".
?
This is already illegal. It's generally termed "corruption".
You shouldn't be allowed to finance people whose decision you stand to profit from.
I guess the only "simple" way to solve this is to outlaw the private financing of politicians and their campaign. It should all be public money. Not that easy to operationalize (almost nothing of interest is), but feasible, desirable and fair I reckon.
Doing it for money - yes, that should be illegal.
God forbid we think outside the realm of what the Founding Fathers wrote down.
> fly directly in the face of democracy
Except the U.S. has long been classified as a flawed democracy.
The problems you list can "simply" be solved with a comission akin to the FTC. A small business can complain to said comission which would solve the matter.
It was a system designed to consolidate power among white landowners and to be extremely difficult to change. It's not a surprise it's got issues.
It was designed to be difficult to change because democracies always fail when the majority decides the rule of law is no longer important.
This is basic civics. It's taught, or I hope it's still taught, in grade school. It's not controversial, it's not surprising, it's fact.
0. Lobbying is a right, but one that can only be exercised by individual citizens, not corporations.
1. Anyone who wishes to "lobby" congressional candidates or congresspersons must register their financial interests
2. Make it illegal to directly accept money for lobbying services (akin to prostitution)
Sure, it wouldn't make lobbying impossible - but it would make it much harder.
So charities and environmental groups can't lobby? Lobbying for them means designating a representative. How is that any different from what corporations are doing? They just happen to have deeper pockets.
Furthermore, the fact that they have deep pockets is actually important. It means they reflect an important aspect of the economy, so ignoring their interests could also have detrimental economic effects.
It's not nearly as simple as you're portraying.
This embeds the idea that someone making more money has a right to a larger voice than someone that doesn't. - In my "if the world were simple" dreams I'd say something like "every voter can spend $200 - any lobbying group or corp can spend that $200 IN THEIR NAME, but then no one else, including that voter, can. Corps/groups can still raise money and represent their members (who don't have to each spend that money) but it doesn't make a small group of wealthy voters look like a big group of voters. The groups/corps would have to make sure they represented the views of their members, or those members would start revoking their permissions."
Of course, the world isn't that simple, but that sums up my views on money in politics.
No, it's a signal that you might be proposing an economically destructive policy. You're not required to listen to lobbyists or take their suggestions.
I don't see how. I just said their opinion shouldn't be ignored, which is what the OP was suggesting by banning corporations which represent large groups of shareholders and employees.
They could create form letters for their members to email their representatives.
Some charities I belong to operate this way.
Obviously Comcast could do this too but I don't think they'd be successful getting real people to lobby on their behalf.
>Furthermore, the fact that they have deep pockets is actually important. It means they reflect an important aspect of the economy, so ignoring their interests could also have detrimental economic effects.
The fact that they have deep pockets means that they can broadcast their message more easily so they have an inbuilt advantage. There's no reason not to compensate for that.
You might be surprised; see https://en.wikipedia.org/wiki/Astroturfing for the way it's usually done.
Incase you didn’t know, all tax-exempt charitable organisations are already severely limited in how they’re allowed to engage in politics. They’re never allowed to endorse candidates, or directly or indirectly campaign for them.
A "corporation" isn't a thing that exists in the world. They don't have mouths, and can't speak, so it makes no sense to outlaw their ability to use the mouth that they don't have.
There are people in the world. As well as groups of people.
A corporation is merely the pural of person. Each person in that corporation, whether employee, or owner, should have the same speech rights as any other individual.
What is facile is to argue that a law which simply bans corporations from hiring people describing themselves as lobbyists or government relations professionals will have any real world effect, or to pretend that there are no possible downsides from legislation which might prevent organisations like the EFF from existing or ensure that healthcare professionals are unable to make representations about healthcare to politicians.
Unlike with our our elected representatives. (https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...)
Under the terms of the Lobbying Disclosure Act of 1995, anyone who spends 20% or more of their work time lobbying the Federal government already has to register themselves, and disclose both the clients they lobby on behalf of and any expenses they incur as part of their lobbying activities. (See https://en.wikipedia.org/wiki/Lobbying_Disclosure_Act_of_199... for more information.)
Many states also have similar laws in place regarding lobbying of state officials, though obviously the details will vary depending on what state you're in.
Funny. Most complex problems have simple solutions. It takes lot more effort to do it, but the simple solutions tend to stick around the longest. This is based on 10 years of work exp in top tech companies :-)
The only place when simple solutions don't work is when people have other vested interests.
This trope is both untrue and tired, as most cookie-cutter generalities are.
It is the very problem of representative democracy: elected officials need to form an elite of superior intelligence and ability to comprehend the world, yet at the same time be firmly grounded in the reality of everyday people to understand their problems and represent them...
This is much less of a problem if you can hold down scope-creep on the role and responsibilities of government.
What even is lobbying? A broad definition would include most any communication with a policymaker, a narrow one would exclude lots of activity that is obviously meant to influence policy.
If you want to reduce the influence that moneyed interests have over politics there's only one answer: take their money away.
So, no one is allowed to write their senators anymore? People can't request to meet with their elected representatives? Subject matter experts aren't allowed to express their opinions within earshot of a member of congress?
Lobbying is just people with a shared interest expressing their views to elected representatives.
Now, the concept has gotten a bit overly... complex, but outlawing lobbying all together would be a huge infringement on freedom of speech.
Doubtful. Then they are incentivized to secure a lucrative position after their term. Guess who can provide lucrative jobs for some consideration?
So rather than outlaw lobbyists, one alternative would be to balance this out by hiring public lobbyists. They would craft the legislation on behalf of the state.
The analogy I'm thinking of is that this would work in much the same way that we hire public prosecutors to represent the public interests in the courts by prosecuting criminal cases on behalf of the state. Otherwise the only criminal cases would be if someone hired a private prosecutor, as it was until the 18th century.
Currently the bill-writing is the responsibility of legislators and parties. This would make it a non-political, non-partisan role in the bureaucracy.
Vote.
All sorts of interests lobby, all the time. These include consumer-focused interest groups, as well as corporations. But, at the end of the day, politicians gain (and keep) office based on the votes of their constituents. These politicians are (generally) not going to vote on bills that they think might get them kicked out of office.
Voting isn't a real solution to unchecked corporate lobbying.
One of the lessons I've taken from this case and others related to gerrymandering and voter suppression, for instance, is how deeply the integrity our democracy depends on tactical execution of the broader ideals at stake. It's our ability to handle issues at the margin that will determine whether the whole thing works or falls apart.
It's equivalent (this isn't an analogy, it's literally equivalent) to allowing a person to spend money to buy a megaphone to make their speech literally louder than everyone else's. Not everyone can afford a megaphone.
It is also possible that the majority doesn't feel (read: vote) the same way about these issues as you. Would that mean that the system is flawed?
The level of cognitive dissonance the public has about politics is the most disheartening part of the whole burning shit show. Remember America; It's your own fault if he beats you, you made him do it.
It seems to me that democracy has been hijacked in the U.S. From my perspective, regardless of reason or solution it remains that corporations are not paying enough for the maintenance of society. Given that we have had free elections for some time it appears that the answer is more complex than just saying in theory we can vote out the scoundrels. In actuality this hasn't occurred and this suggests that something is wrong with the system.
You can find examples in almost any election of a heavily-funded initiative being defeated at the polls. Here in California, a recent example I can think of off the top of my head is the continual defeat of policies and politicians backed by charter school advocates, including in the Nov. 2018 election.
> It seems to me that democracy has been hijacked in the U.S.
Elected officials in the U.S. are in their positions because voters put them there. Unless you're claiming that substantial election fraud took place, you can't claim that democracy isn't working just because it didn't produce the result that you agree with.
In circumstances of elections is best to talk about probabilities and concentrate on what is normative.
...you can't claim that democracy isn't working just because it didn't produce the result that you agree with.
I claim that American democracy is broken because it consistently produces results that are not in the the long term interests of the nation and are not done in the interest of the people. There are lots of reasons to support my belief but none of them have anything to do with me personally not liking the results it produces. Indeed, I'm quite satisfied with the results of the last Presidential election cycle. My candidate won.
I might be wrong in my belief that American democracy is broken.
Lessig has a good video that breaks a lot of this process down. https://m.youtube.com/watch?v=PJy8vTu66tE
This isn't some conspiracy of giant corporations and lobbyists beating down the will of the people. This IS the will of the people. In many regions it's the overwhelming majority of the people.
A major problem is that there's so much money in campaigns that in order to get enough money to compete, a politician must make deals with donors. Often these donors are small groups of high wealth individuals or industries.
Now the politician is effectively in the pocket of the monied interests, or else they are out of government cone next election cycle.
Until campaigns are equally financed by "the people", the results will not have a chance of being representative of what the people want.
But ironically, to make that change would require the current government to take action that most of the big industries do not want. Thus, it will not happen.
I know for folks like Sanders, it might have switched early on, but he's getting more and more curmudgeonly about corporate thievery, eco-destruction, and worker rights.
There is also the plain political game. You can't make a political career alone, you need allies, people that trust you and support you within the party, above and under. Over the years, you get stuck in a network of dependencies that ties your hands.
And there is the sad reality that no single decision is going to improve anything. You need continuous and consistent effort in one direction for years. So even if you are aware of all that I listed above, the truth is that you can't go fully lose cannon and actually achieve anything lasting.
This is true. But politicians are playing the exact same game. Back when I was a tax lawyer, I asked my boss why the R&D credit was temporary but always renewed. Why not just make it permanent? He said it was because then the companies had to keep donating to the politicians in order to maintain the status quo. If they'd made it permanent, there would be very little chance of repeal, and therefore much less need to stay cozy with the politicians. It's a 2-sided game.
The whole reason we have a corporate tax is because we feel rich people need to be taxed more, but the association between corporation and rich person is fuzzy at best. More nefariously, you are taxing pools of organizational and financial capital as opposed to individuals...which means that their ability to fight the tax code is amplified with pooled resources. It's regulatory capture waiting to happen.
The better option would be to dump the corporate tax entirely, and have all capital gains and dividends taxed as income. I know it can't be that simple because they're not the same as income, but working out those details would be a hell of a lot easier than trying to figure out how to get corporations to repatriate income after their international tax arbitrage schemes.
Your better option doesn't actually work, though, because the really rich can dodge it by borrowing money against their wealth as collateral, and because once stock (and other capital) is inherited, the new owner doesn't pay taxes on its appreciation before acquiring it - so most of it is essentially untaxed entirely.
No, it's because without either having it or treating all corps as pass-through entities (which becomes problematic when you've got layers of ownership before tracing back to individual taxpayers) corporations become abusable as tax shelters.
>I believe one way is to actually be involved in politics and get into the seats that govern and make the laws.
The only real issue I have is the difference between capital gains taxes and income taxes.
I don't want to shoulder the burden alone for their roads and traffic and pollution and power-grid-improvement requirements et cetera.
Maybe the system could be different where companies directly pay for the road upgrades they need and the power infrastructure upgrades they need, etc, but that's not the system we have where I live.
This is the solution most economists would suggest.
All of the tax avoidance would be reduced by the company that had the lowest corporate income tax.
And I mean beyond just a decrease in tax rate which businesses would be expected to lobby for.
Then the question is, does it really influence laws? Well I think if it didn't, they wouldn't spend so much money.
It's also notable that you couldn't point to a specific tax law, like OP asked for. Lower taxes in general--nobody needs to lobby for that, there is a large contingent of people who favor that just on principle.
We have the same thing for judges. The conservatives have the Federalist Society. The liberals have the ACS. But for whatever reason, the Federalists have better branding, and are a perennial bogeyman. But all either organization does is keep track of judges that fit their policy goals. What's wrong with that?
It's also a matter of perception. Keeping the lobbying sums low(ish) also helps keep a lower profile. You don't want to draw too much attention to the fact that you're paying to get something done your way.
Plus, how much can you reasonably spend? In the end you're still trying to influence the same (relatively few) people, spending a considerable percentage of that "$19 trillion economy" is hard to make look legitimate.
I think this is really the crux of the issue.
If a CEO met with a politician and said "I've talked to all my CEO buddies and if you do XYZ we're all going to make substantial contributions to your campaign and PACs" that's clear-cut bribery and honest services fraud.
But if the same CEO hires a lobbyist to say the exact same thing to a politician suddenly it's "free speech" and we're expected to believe the government can't do anything to reign it in.
This is not what happens during lobbying. If you have any concrete evidence of this sort of exchange happening, please report it, since it's a blatant violation of federal law.
100 senators 435 representatives 1 President 1 Vice President
~7 million dollars per person per year
:)
During the bush tax cuts, there was also a tax holiday that allowed money to be brought back into the US at a very low tax rate. Can't imagine that 0 corporate lobbyists were involved in the process of creating these laws.
from wikipedia: "In 2004, the United States Congress enacted such a tax holiday for U.S. multinational companies in the American Jobs Creation Act of 2004 (AJCA)) section 965, allowing them to repatriate foreign profits to the United States at a 5.25% tax rate, rather than the existing 35% corporate tax rate."
Here is a HN discussion on it though: https://news.ycombinator.com/item?id=16841449
https://www.propublica.org/article/filing-taxes-could-be-fre...
This thread is about reducing tax payable. The intuit story is about making it harder for citizens to file taxes.
Edit: From this[1] Bloomberg article:
> Under pressure from industry lobbyists and exploiting a split among White House advisers, the Republican Congress in December failed to fulfill Trump’s promise to end the tax windfall enjoyed by money managers. And lawmakers seemed to stumble in trying to narrow their tax advantage, writing the new carried-interest rule in a way that provided firms an easy escape.
Closing the loophole actually has bi-partisan support... except among those who spend a lot of time with industry lobbyists.
[1] https://www.bloomberg.com/news/articles/2018-02-14/mnuchin-s...
I don't know the answer so this is just speculation and five seconds of Googling (but I am writing this regardless because I hope someone knowledgeable will see this and correct me so I actually learn something)
My first stop was https://www.investopedia.com/terms/c/corporatetax.asp
> Corporations are permitted to reduce taxable income by certain necessary and ordinary business expenditures. All current expenses required for the operation of the business are fully tax deductible. Investments and real estate purchased for the intent of generating income for the business are also deductible. A corporation can deduct employee salaries, health benefits, tuition reimbursement and bonuses. In addition, a corporation can reduce its taxable income by insurance premiums, travel expenses, bad debts, interest payments, sales taxes, fuel taxes and excise taxes. Tax preparation fees, legal services, bookkeeping and advertising costs are also used to reduce business income.
So here is my interpretation: Let us say for ease of math, I am Pupflix and I have 100 customers who pay $10 per month. I have an annual income of $100 * 10 * 12 = $12,000. Let us say I pay salary of $20 a month, so $12 * 20 = $240. I can deduct that. So my income is now $1200 - $240 = $960. Lets say my operating expenses are $10 a month. I can deduct that as well, so deduct $120 from $960, which leaves me with $840.
Now all this is relatively straight forward. From what I've learned from previous conversations, corporation tax is on profits, and not in revenue. Apparently, this is essential because some businesses are very low margin. Apparently, when all is said and done, a retail grocery store typically has under 5% profit (before any shenanigans).
However, what happens when our Pupflix pays Disney Corporation $1000 in licensing fees for the right to stream Disney content for the next ten years? Does our Pupflix deduct $1000 this year? That would be very wasteful because our income at this point is only $840.
I believe this is where Loss Carryforward comes in. https://www.investopedia.com/terms/l/losscarryforward.asp
> For example, if a company experiences negative net operating income (NOI) in year one, but positive NOI in subsequent years, it can reduce the amount of future profits it reports using a loss carryforward to report some or all of the loss from the first year in the subsequent years. This results in lower taxable income in positive NOI years, and reduces the amount the company owes the government in taxes. Imagine a company lost $5 million one year and earned $6 million the next. The loss from the first year can be carried forward and included in the current balance sheet for the second year, lowering the profits, and therefore the taxable income, for that year to $1 million.
I am not an accountant. My guess is that the accounting people will somehow run multiple possible execution paths and choose the "best" one. I think the tax field is very nuanced and just being able to classify an expense as either operating vs capital can make a difference in the amount of taxes a corporation has to pay:
https://www.investopedia.com/ask/answers/042415/what-differe...
For example, when I was a contractor my boss told me that I am a "cap ex" which is OK but for some reason he couldn't bring me on as full time because reasons. Not that this would change my work at all. I was working with the team just like any full-time employee would. I just wasn't their employee. How this makes sense, I have no idea. I doubt he lied to me. There are probably hundreds of things like this where you could argue an expense is one way or another depending on what suits a company the best at that time.
I welcome all corrections and additions to eliminate omissions and especially concrete examples that refurb asked for
My last job had a number of people in a similar situation. The reason was fairly straight forward: Higher-ups in the parent company decided how many full-time developers we would need over the next 5-10 years, and anything we needed on top of that had to be contractors because we were only filling short-term needs.
Nobody in the chain between us and them actually understood the rationale, because it was a totally arbitrary number for a plan made under assumptions that were no longer the case. Unfortunately, noone could convince them that it wasn't the case either, so we all just carried on.