I actually don't get why corporation should pay taxes.
When the profit of the company is distributed, or paying the employees, the employees/shareholders will be taxed on that money.
A government should be able to achieve control through Pigovian taxation, regulations and fines. I'm not convinced that a blanket corporate tax (which does indeed facilitate targeted tax breaks) is necessary beyond the other tools that already exist.
Money is fungible. From an accounting perspective $1 given via tax credits is identical to $1 check given by the government. That said, your point is still valid because the former is much more politically palatable than the latter.
Your idea would make that money free to keep out of the economy and out of employee's hands.
The current offshore “hoarding” is actually due to the current tax code.
If companies knew they were going to pay the tax one way or the other, there would be no point in hoarding overseas.
We should penalize companies for the behavior until it makes more sense for them to repatriate it immediately.
The whole point is for stakeholders to eventually get paid in a taxable event; either shareholders through a capital gains taxable event or employees through an income taxable event.
Some tech companies are hoarding cash but I don't believe this is due to incentives created by taxation, although I could be mistaken.
Greed, son, greed. That is why 5 people in the US have more money than the bottom 100 million. They didn't work hard to become that rich, they stole it by not paying wages, health care, benefits, or sharing the wealth. Because they do not have to, nothing prevents them from keeping it and paying low wages in an economy where the ONLY jobs are working for them. (Look at the most recent jobs reports, delivery and couriers grew by double digits, most everything else fell: what do you do when there literally are no other jobs except delivering goods to people and peeing in bottles because you don't get a break?)
Apple has paid hundreds of billions of dividends to shareholders the last few years. It's borrowed money to do it because it would be taxed if it repatriated funds to pay dividends with.
If the corporate tax rate was reduced to zero it would have zero reason to keep foreign profits offshore, it would just repatriate them and pay dividends directly.
Right. That's great: the richest employees of apple get richer, and the people doing the worst labor live in dorms and work 18 hour days.
> If the corporate tax rate was reduced to zero it would have zero reason to keep foreign profits offshore,
Again, you seem to be ignoring the abundant evidence. Trickle down has never worked. Corporate tax rates are the lowest they've EVER been (down from >80% in the early 80's) and money still flows out of the US.
Please, study history and try again.
The "worst labor" are jobs that are so much better than typically brutal Chinese rural labor jobs that thousands of applicants stand in line for hours to get them. And Apple audits its labor practices, unlike solely owned Chinese companies.
And the corporate tax rate has never been 80% in the U.S. it was 40-46% in the 1980s and highest ever was 53% in late 1960s. And corporate tax rates were lower than todays rates for the first 163 years of U.S. history, they were first raised above 20% in 1940 to help fund the war.
And even though the current corporate tax rate is historically low, it's still an impediment to returning foreign profits. Repatriating foreign profits costs a minimum of 21%, more with state taxes. For companies it's still cheaper (and legal) to keep the profits in their foreign subsidiaries and wait for a repatriation window, or borrow against some of the deposits to pay dividends.
You should try studying history as well.
Trickle down doesn't work because republicans love pumping the supply side of the economy even when it is fully saturated. The days of a weak US economy are long gone. The real problem is that savings exceed investments. You either let the government create viable investments for the private market, or you just let the government invest directly.
Arthur Laffer tried to argue that tax cuts would lead to an increase in growth enough to produce the same or more tax revenues, which clearly didn't happen. But tax cuts did clearly lead to an increase in growth.
Right now, even under the lower Trump corporate rates, if you want to invest in a U.S. Business you will lose 33-50% of your profits to Federal and State taxes. Thats a tax on investment, reinvestment and savings. If you want to convert savings to investment, just cut those taxes.
Yeah, the reason why this strategy works is because Apple can pay dividends today and just wait for the inevitable tax holiday that comes when a republican president enters the white house. Similar schemes work with cryptocurrency in Germany. Holding onto Bitcoin for one year grants you tax exemption from capital gains. So you just borrow against your Bitcoin for one year.
Corporate taxes have been gamed so much they are purely cosmetic at this point, with some harm done to smaller companies. A better tax code is needed.
1) Increase the incentives to save and invest in the U.S/
2) Restore progressivity to the tax code by taxing profits when paid to investors on a progressive rate based on their tax brackets.
3) Repurpose hundreds of thousands of accountants into doing actual business finance and development of wasting their efforts reconciling the differences between GAAP & a super convoluted Tax code accounting (and searching for loopholes)
4) Simplify business decisions and reward honest management based solely on GAAP accounting with no more "angles" to take advantage of tax code loopholes.
If I'm a greedy shareholder, then I want dividends and cap gains, which are both taxable outside of company tax.
How does hoarding cash inside a company, which is out of my personal reach, help me to satisfy my greed? I can't buy a yacht with it until I get the money out.
Why do companies do dividends or stock buybacks? Because they think investors can do better investments elsewhere with the money.
The shareholder still has to receive a dividend or sell that higher priced stock, which are both taxable events.
So I still don't get it.
Second, the main reason U.S. companies keep foreign profits offshore is they would be taxed if brought back to the U.S.
Your understanding of the problem is exactly backwards.
The government needs to collect money to pay for current and futures investments that created that environment... no? What's the most effective way?
Startup A wants to get into a market and it buys Zoom licenses, GSuite, AWS servers, etc and pays a hefty tax bill.
Microsoft wants to get into that market? They don't have to buy any of that stuff, they already own everything. No tax dollars, lower cost to the incumbent.
Microsoft and other do own their infrastructure but if they're not renting it to clients it wastes money as it has ongoing costs so not, them using their own infra is anything but free.
Meanwhile with land value taxes, you either own the land and you pay, or you don't own the land and you don't pay. The only way you can dodge this is by not owning assets in the US and by not living in the US. Landlords pass the land value taxes onto renters (individuals and companies) who then end up paying their fair share of the US taxes.