Hacker News Reader

Comment by BurningFrog | Hacker News Reader

You can make a good argument* that taxing corporations is weird anyway, since they're abstract legal concepts.

Taxing the income real people get paid from the corporation would be the logical, and much simpler system.

* You can of course also make a decent argument against this :)

Corporations have similar legal rights to corporeal persons. Freedom of speech, access to the legal system, etc. As a result of having similar rights, they should be taxed as corporeal persons. It is not rocket science to conclude that corporations in the U.S. should be taxed at the same effective tax rate as real persons.

Corporations are just bundles of stuff that people own. They have legal personhood as a convenient legal fiction because it would be obnoxious if all of the owners had to get together to sign things, and they have rights because people don't lose any of their individual rights just because they happened to form a corporation together. But at the end of the day, bundles of stuff. Economists seem to be broadly in agreement that tax systems would work better if corporations didn't pay income tax.

What about the inverse. What if individuals didn't pay an income tax but corporations did, kind of as a "user fee" for the privilege of having limited liability.

Mostly because corporations are pretty different from people. They can own each other, buy and sell each other, split in two or be combined, etc. And they they can deduct business expenses in ways that people can’t deduct living expenses, because we rationally recognize that corporations mostly have lower profit margins than the tax bill would be on total revenue (and some always will at any tax level).

Maybe I am wrong on this, but I doubt that you have studied economics or have any idea what economists think.

The people that you are talking about are effectively lobbyists - policy entrepreneurs is the phrase, who appear in the media advocating for policies that benefit their clients.

Feels like an aggressive response to what I said. Feel free to look it up, the statement is noncontroversial. There are regularly conducted surveys of the field that include questions on this topic.

Yeah, this "corporate personhood" issue is so dumb.

All it is is that the legal system decided it would make sense to apply the same laws in some areas to both companies and humans, rather than design completely separate frameworks for each case.

In HN terms: This is code reuse/refactoring.

Corporations just tax their profit. Persons have to tax all their income (with minimal exceptions). How is that fair?

For individual capital income, you are also only taxed on profit (although some presidential candidate are trying to change that with wealth taxes).

Because different industries have wildly different profit margins so if you taxed revenue instead of profit, companies in some industries would be wildly undertaxed while others would instantly go out of business.

Humans, on the other hand, all work mostly the same.

And just like the real person cannot get a write off for things required to live or things that make them more attractive on the market, neither should businesses. If I have to pay taxes on the income I spent to repaint my house, why shouldn't a business have to pay taxes on the revenue they spent to repaint their building?

Because of this: https://news.ycombinator.com/item?id=22370387

Wouldn't the costs be updated to reflect the difference in profit margins. If the tax is 10%, then in cases where the profit margin is razor thin prices would rise by about 10%, but life would otherwise keep on going. If an entire industry would die from such, then doesn't that mean that currently tax payers are subsidizing that industry to keep it alive by having uneven taxes, if the standard of equal taxes is the purposed change?

Are you trying to say that tax payers are subsidizing the entire retail industry? No, that is definitely not the case.

Different amounts of value are added at different stages of the product pipeline. These different amounts of value are reflected in different profit margins. Forcing uniformity here via the tax code would be massively distortionary.

Then you get companies leasing jets, houses, etc for employees uses instead of pay.

And there are already rules which are supposed to cause non-business use of jets, houses, etc to be personal taxable income.

all that is properly considered income for the employee. of course, if the co. fails to report it, then it's a difficult matter to police.

This is already regulated. The current 21% corporate tax rate would be enough to make it very attractive otherwise.

Reply on news.ycombinator.com