Personally, I'd prefer higher capital gains tax and lower corporate tax. I think it would be more transparent and easier to collect.
The money I spend of my income buying goods from other businesses is "already taxed" and then when those businesses collect it from me its "taxed again".
Mysteriously, the one form of taxation the already wealthy benefit from is very concerned about this happening.
A little bit like a VAT, we don't want to tax, tax and tax some product that has a long and complicated line of distributors, rather, tax the final product, either using VAT rebates etc.. This is more economically beneficial.
With corporate and individual incomes, we think at little bit the same way - i.e. how the taxation will flow through via corp tax, income tax, dividend tax and cap gains.
In Ontario, if you pay small business corp tax and then a dividend, it's pretty much the same as if you were to take a salary and pay income tax. Obviously, this because the million or so small businesses out there would rig their outgoing cash flows one way or the other, depending on tax treatment.
While cap gains is a special situation, it does still form part of those block of taxes that should naturally relate to one another in terms of how net surpluses are taxed.
When you spend your 'already taxed income' on an entirely new product or service, then that's separate economic activity, and so it's taxed without consideration to your 'previously taxed income'.
“In 2018 Google NZ Ltd (an entity of Alphabet group) paid income tax of NZ$398,341 – about 0.055 per cent of the estimated gross ad revenue “extracted” from the New Zealand market.”
Facebook, Apple and Amazon have all been in and out of the news here for their arrangements too.
https://i.stuff.co.nz/business/121505796/google-and-facebook...
“It will hurt Apple and Amazon” is not a problem. “It will hurt most growing businesses”, is.
If people care about this loophole, how about just closing it, rather than taxing everyone else?
A bit of an "angels dancing on a pinhead" question, I'll admit
The proposal would hit every business not just a few tech giants.
Doesn't this apply exclusively to the corporate profits not shielded in a Double Irish (or it's latest incarnation) arrangement [0]?
Same, but it'd mean more tax money for foreign governments, too, since those untaxed profits would be contributing to cap gains tax in another country (in the case of foreign investors) instead of domestic corporate tax.
I've heard time and time again that it's a moral imperative for corporations to reduce their tax burden to zero using every loophole available. Are big corporations actually paying tax?
>55 corporations had zero federal tax liability in 2020, including household names like Nike, FedEx and Dish Network, analysis finds
However, I think it misses that most of the benefit to owners is in the form of unrealized gains, not subject to any of the tax rates that people talk about tweaking.
To the extent that we care about the distribution of net worth, though, unrealized gains are an important part of the story.
[0] https://voxeu.org/article/consumption-and-income-inequality-...
This only costs you the interest of the loan and exposes you to the risk of declining value in the assets securing the loan. Appreciation of the assets or dividends may fully offset the interest or more.
Additionally if you a founder, for example, you retain the influence/control of your company that you derive from the stock ownership, while still be able to enjoy their cash value.
But because most people will never understand this, we can't have a tax code that makes sense. Mass democracy is incompatible with sensible rulemaking in this area.