Why can't governments learn that taxing corporations is pointless? The same revenue is can be raised more simply through sales tax and personal income tax on salaries and distributions.
Kind of like the current lobbying going on all over the world?
One of the limiting factor is to avoid giving the said lobbies unlimited funding. That is one of the reason for taxing corporations.
If corporations capture the market/government and become monopolies/oligopolies and you have no choices (i.e. Comcast in some regions), you will have no more recourse.
It's not in this case because the corporation didn't pay any tax.
> The company, Microsoft Round Island One, posted profits last year equal to nearly three-quarters of Ireland’s entire gross domestic product (GDP) – despite having zero employees.
That, to me, sounds like maybe the plan to collect personal income tax on salaries might not be so straight forward.
Individuals shouldn't see tax. That way the voters don't complain when you need to put it up.
Sales tax is similarly a pain - particularly when you have differing rates. At which point we get into the famous is it a cake or a biscuit type cases to decide where the dividing line is.
If taxation is such an inherent good then why does it need to be hidden from people?
If the rate is justifiable the government shouldn't need to hide it. When you consider a democratic society where the government at least indirectly serves the will of the people the idea of the government needing to pull a fast one on the people or obfuscate its actions lest the people tell them to stop becomes even more absurd.
Because the externalities are not always visible, and people do not have enough free bandwidth to spend the time understanding them.
> If you get hand wavy and tell me its too complicated [...]
Unfortunately, it really is too complicated. A doctorate in economics might get you a decent way towards understanding the good that taxation provides, but given that economists still have differences of opinion, maybe not a complete understanding.
[^0]: Well it is, but only a tiny proportion.
Unlikely. Economics doesn't even understand how the monetary system works, let alone taxation.
Taxation works more like memory garbage collection than anything else. It's a cleaning up process.
It isn't an inherent good. It's just required to reduce demand and release people so the public sector can purchase them with its money.
Without it you would have inflation - or none of the public services we voted for.
The reason you pay tax is that your income is higher than it otherwise would have been without the government spending.
What people who don't like tax forget is that should you eliminate it, the increased income will be eliminated too. But not in a smooth way. Jobs will be decimated, and one of those might be yours.
The goal of government shouldn't be to obscure the cost of government services. The cost should be justified.
I don't think that's true. I think what is true, and what we've seen time and time again, is that people don't like the cost of services that others take advantage of that they don't need to.
To invert that, what exactly are you planning on doing with the people currently in the public service, which the people voted for, that is so much more important than providing the services the people voted for?
It is for the private sector to justify its use of resources, not the public sector. The public sector has a democratic mandate.
I recently had to update my W4 form at work for tax withholding, and what a pain in the ass to read and decipher. Add to that, and I had to do the same thing for my state taxes.
I want to point out that Congress has shot down the idea of making it easier to pay your taxes many times. I'm not sure if it is Intuit or some other entity, but paying your taxes should be easy. If you don't like the level of taxation, then work to reduce them, but paying them should be easy.
It boggles my mind that this is the case.
The UK PAYE (Pay as You Earn) system has a 1% tax gap[1] compared to 12.9% on income tax and 7% on corporation tax.
It's extraordinarily more efficient to tax at source.
[1]The percentage tax gap is the tax gap pound value as a proportion of theoretical liability, where theoretical liability is defined as the tax gap plus the amount of tax actually received.
You mean not desirable for society in high tax/high cost countries I presume? What about society in low tax/low cost countries? It seems to be working out pretty well for Ireland[1]. That's why they resist immense pressure form the EU and maintain a low corporate tax rate.
[1] which is a high cost/low corporate tax country
How are you meant to afford a house and stuff with taxes like that?
We need wealth tax - go after the shareholders and landowners, who don't directly create value and dodge a lot of tax.
Mainly land value tax, inheritance tax and property tax would be a good start. And we already have capital gains tax to cover the sale of appreciating assets as you describe (note it is only at sale).
To act like there's no additional benefit on taxing literally billions in revenue is absolutely nonsensical.
$100 -> corp. $90 -> expenses, $10 -> profit -> shareholders dist. $4 -> personal income tax.
In principal it's the same. Path 1 is easier to dodge, because what constitutes "expenses" is hard to define, but distributions are obvious. And the numbers don't have to add to 100. So reality looks more like:
$100 -> corp. $95 -> "expenses", $5 -> "profit". $2 -> corp tax, $8 -> shareholders dist.
vs
$100 -> corp. $95 -> "expenses", $5 -> "profit". $10 shareholders dist. $4 -> personal income tax.
And this is why you want to tax at the distribution level.
It is certainly plausible that a tax will provide no additional benefit. Microsoft is one of the great value creators of the late 20th/early 21st century. it is not immediately obvious why redirecting money away from the company is a good idea.
Were you deliberately or accidentally confusing the two?
It certainly isn't obvious that raising taxes is a net win. Experience to date is that a 100% tax rate is very bad, so logically there is a fair limit somewhere between 0% and 100% - ie, a specific fair rate that is not the word "more".
Certainly Ireland would like a slice of those billions of dollars - but if they try to take a big slice, Microsoft won't route the billions through Ireland. So it is a somewhat moot point in that specific case.
This confuses the issue - corporation tax has the opposite effect to this, because it only applies to profits. When profits are heavily taxed, there's a strong incentive to invest more money in R&D and longer-term internal investment (thereby avoiding corporation tax on that spending entirely) rather than reporting it as profit that's immediately distributed it to shareholders today.
There's interesting arguments about how this affects shareholders and whether it discourages external investment, but it's certainly not a drain on R&D.
the argument for taxing profits:
- incentivise investments
- companies are less likely to hide expenses like salaries
- It's more fair for high cost business (car company vs google)
Personally, I'd tax all corporation 3% of their revenue. You could lover it by to 2% by what is your operating profit ratio to revenue. You can lower it to 1% by a list of 20-30 deductibles e.g. you install solar panels. BUT the minimum you have to pay is 1%.
If your company cannot pay 1% of the revenue you don't have a viable business. Average corporation spends more on accounting and consulting.
e.g.
Revenue 0-20mln EUR, you keep the existing tax scheme
Revenue 20-100mln - you can choose the tax scheme
Revenue 100mln+ - you have to tax revenue
Thresholds are up for debate.
Also, companies already pay around 0-5% of their revenue in income tax. Gigantic companies pay close to 0.
You can try to work against it by arbitrary progressive taxation thresholds, but this doesn't change the underlying mathematics.
Also, there's a reason why progressive taxation isn't widely implemented for corporations, because it's very easy to circumvent by splitting up and increasing the number of legal entities. A sensible way around that is taxing the _ultimate beneficiary_ rather than the company itself (i.e. the owners as natural persons), which is what GP suggests with "sales tax and personal income tax on salaries and distributions".
You can make the same argument about VAT. There is a cost on every transaction (split payment, money is frozen until you get a return). The incentive would be negligible comparing to other incentives for vertically integrated companies.
> progressive taxation isn't widely implemented for corporations, because it's very easy to circumvent by splitting up and increasing the number of legal entities
It's getting more popular and it's easy to draft a law that splitting companies, does not reduce the taxes (see GDPR) https://taxsummaries.pwc.com/poland/corporate/taxes-on-corpo...
> sensible way around that is taxing the _ultimate beneficiary_ rather than the company itself (i.e. the owners as natural persons), which is what GP suggests with "sales tax and personal income tax on salaries and distributions".
It doesn't work in practice, because of tax heavens. Also, I can have a travel blog and a youtube channel when I review cars and clothes. Would I pay close to 0 in taxes.
---- All taxes are bad, but given current global world, revenue tax seems to be better, hence the digital tax in EU.
So banks and oil companies, which are naturally lots of revenue with a tiny amount of profit, would disappear, or become very small?
Accounting costs banks and oil companies around 0.8%, so the will be fine.
I don't remember the exact number.
Oil companies have huge capital costs to find and extract resources, if you look at what their profits are compared to their costs of doing business, then obviously taxing revenue isn't going to work.
Restructuring taxes will take a lot more work, and then end up with hundreds, if not thousands of extra taxes, each of which will be "avoidable" if you have enough lawyers, simply because the system won't be able to keep up.
Pure ideological point of view with no grounding in reality. It's totally possible to tax corporations. In fact, some state like Japan and South Korean get more money from enterprises than individuals, the reverse of Europe and US (until recently consumption tax was 5% in Japan, now is 8%, still far less than EU's typical 20%).
The solution you propose doesn't even work well, since it's one more incentive for (mega-)corps to not raise salaries, as keeping salary low means also low taxes.