Hacker News Reader

Comment by mjthompson | Hacker News Reader

Corporations enjoy signficant benefits of being in the state, including, for example, a police force that protects them from attack, and a legal system that will resolve disputes they have both internally and with others.

They should pay reasonable (not low) taxes in any event, not subject to the caveat you identify.

View on HN

Everyone they employ already pays tax.

Everyone that gets a dividend pays tax.

Everyone that enjoys capital growth pays tax.

Just looking at the direct corporate tax rate is grossly myopic.

You’re right, capital gains should be taxed at the normal tax rate too.

> Everyone they employ already pays tax.

But this is their tax they pay on the money _they_ earned. Not sure why this is okay for corporations to appropriate this tax as theirs.

> Everyone that gets a dividend pays tax.

In my country dividend tax has a lower rate. You have this insanity where a person making money out of their hard work pays more tax than a person living off dividends and doing nothing.

The money used to purchase shares has already been taxed as income. A person receiving dividends is enjoying the benefit of their own hard work in the past.

But does your tax system allow for company tax payments to be offset against the tax liabilities of those receiving dividends? Here in Australia/NZ companies can provide shareholders with franking/imputation credits.

No, here dividends cannot be offset, but there used to be tax credits to improve the effective double taxation. However, I don't think this is a problem as the right way of getting money out of company should be a salary, not dividend.

In a corporation who is this "they", employees? (paying taxes), c-suite? (paying taxes), stockholders (paying taxes)

The problem, there is no "they".

That's the whole problem, the finger pointing ends in everyone pointing at eachother equally. It's why corporations can do atrocious deeds to human life or the environment and people end up with bonuses instead of handcuffs.

But imagine you are some unethical person looking to ensure as little of of your hard earned cash goes to things like a subsidized meal to a hungry person as possible. Your company is raking in millions and you want that money, but you know Uncle Sam is going to take his cut. Maybe you set your personal salary at minimum wage, and have the corporation own your nice house and nice car instead, and use the corporate card for your airfare and dining. IIRC, setting up a corporate trust similar to this was how Jeffrey Epstein was able to get Les Wexner's multimillion dollar Manhattan townhouse for nothing at all on paper. The Trump foundation also got into similar trouble for misuse of funds a few years ago. No doubt a lot of people in this world are abusing the tax advantages offered for corporations towards personal gain, and no doubt they lobby lawmakers to keep things this way.

> You have this insanity where a person making money out of their hard work pays more tax than a person living off dividends and doing nothing.

It's not insanity. They worked and paid taxes on the money they used to buy those dividend bearing stocks, why punish them?

>In my country dividend tax has a lower rate. You have this insanity where a person making money out of their hard work pays more tax than a person living off dividends and doing nothing.

You have to put this into perspective, there are ways to obtain profits from capital gains without doing any work whatsoever, without employing employees at all. Dividends are quite harmless, because those people living off of dividends give people jobs who are then doing productive work. Compare that to getting rich off a stock market bubble, where literally nothing productive was done and no jobs were created.

Isn't that a consequence of "buying" liability protection by becoming a C-Corp? There are other forms of incorporation that allow for pass-through taxation. There is a reason those are only used in specific situations.

If we are going to treat corporations as a fictional person, we should only be looking at the direct corporate tax rate.

Reply on news.ycombinator.com