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Comment by Layke1123 | Hacker News Reader

Without even reading, I'm going to assume it had to do with capitalists dodging taxes. Let's find out how surprised I'm going to be. /s

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To be fair, you have to wonder what the point of corporations even paying taxes is. I always thought that they should wait until the shareholders or employees actually received money/goods/services from the Borg. In a highly simplified world, 100% of profits are passed through, but then you currently get the issue of dividends being non-deductible (that's true, isn't it?). Odd.

On the other hand, with the Senator from Mastercard running matters, I don't expect to see any consequential changes.

The key issue with that is that in this case the shareholders can defer the distribution (and thus the taxation) for multiple decades and potentially forever. If you need to get some spending money/goods/services from the Borg, you can instead sell a small share of the Borg; if you'd want to invest the profits somewhere else, you instead have the Borg invest it there (because that's untaxed in that case), if you'd want to buy a fancy villa you can have the Borg buy it and rent it to you - even at a fair price, the key thing is that you're only taxed on the amount you'd need to extract for rent, but the purchase is with pre-tax money.

If we would wait until the shareholders actually receive the money, it means they have the ability to arbitrarily decide when the revenue will be taxed, so they'll ensure that it definitely isn't taxed now. So the result would be that profits are never passed through until/unless absolutely necessary - or perhaps they can wait out a couple governments until some decades later the rules change.

It seems to me that that argument could be made for any appreciating asset class.

Real estate (especially in Prop 13 California) would go up in value and could be borrowed against. Same with collectibles. I hear what you are saying in that the gaming on a simplification begins on Day 2.

With tax law, I'd say that the West is covering new ground in the last 100 years. Multiple mitts in the pie of legislation who all want something different (money, partial control of the taxee, veering of social goals) resulting in increasingly arcane rule sets, edge conditions resulting in tax court decisions with yet more fuzziness on the outlines.

The death of self employment and economy of scale of the modern corporation leads you to some weird places.

No, the argument is about revenue generating asset class, and the thing is is that such a deferred taxation enables, and motivates (perhaps even forces) one to effectively convert any revenue generating asset class to an appreciating asset through a corporate wrapper. And the deferral of taxes breaks the process of governance, as there's no income now to pay for the common expenses now.

Real estate is a good example - assume non-appreciating real estate, which is the historically main example of a revenue generating asset (i.e. the rentier landlord class historically). If you defer taxation of profits until they're removed from the company, then any rent-earning landlord can instead of earning rent, getting taxed, and investing that after-tax money in more real estate would establish a corp for that, and use the rental profits (untaxed) to buy more real estate within that corporation. It gives a tax advantage (ability to arbitrarily defer) to everyone who can put their earnings under a corporation, and punishes those who can't.

The key problem with such taxation is essentially the same as moving to a consumption-only tax - it means that you disproportionally tax the people who (have to) spend all their income to buying things for consumption (i.e. the poor), and don't tax the people who use their income to buy revenue-generating assets and control (i.e. capitalists); it's a rich-get-richer, poor-get-poorer form of taxation.

"rich-get-richer, poor-get-poorer form of taxation."

Is poor-get-richer, rich-get-poorer the purpose of taxation? Why?

Corporate income tax is double taxation--in theory.

On the other hand, as others note, there are so many ways for individuals to defer taxation, for example in the case of 401 (k)s, or even eliminate it in the form of large charitable contributions or other mechanisms. So I'm not entirely opposed to some level of corporate income tax.

Well, there's also the bit about not having to deal with a long list of fees and onerous requirements like many states have, when all you're trying to do is start a business, build a product and hopefully find some paying customers.

This is exactly how people reinforce their existing bias.

This is exactly how people treat someone being honest. You don't know what is his opinion after reading the article, so you can't say he reinforced anything.

Wait until you find out how much in taxes the elites pay in communist countries.

Whataboutism? Are you saying if they do it, it makes it ok for us to do it? What's the difference then?

No the point is that PEOPLE will try to take advantage of tax codes regardless of the ideology presumably followed by the country. It has nothing to do with capitalism. You could undoubtedly find examples of elites avoiding taxes under feudalism, or in the theocracies of the world, in Communist nations, and capitalist ones.

The thing you ascribe to capitalism is a failure not of some ideology but a problem with human nature. If you blame capitalism and throw up your hands the problem can't be addressed.

Tax avoidance, and inequality generally, is not a distinguishing feature of US-style capitalism.

It appears to be baked into the cake of humanity.

The high GINI scores in the USSR always cracked me up.

The tendency for money and resources (and pretty women I suppose) to pool has never been well dealt with. All large-scale systems for business and government seem to devolve into dogfights over scarcity.

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