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Comment by Afforess | Hacker News Reader

This is unfortunate. Corporate taxation is double taxation in the first place, and silly. Corporate profits are already taxed (in the form of dividends/capital gains to shareholders, and income tax to employees), there is no reason to tax them twice. Further, Corporate taxes make up a pittance of the total revenue by the federal US government. America wastes too much time worrying over the relatively tiny amount of corporate tax dodging when it spends trillions elsewhere.

America would be much better off without corporate taxes.

http://en.wikipedia.org/wiki/Dividend_tax#Arguments_against

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> America would be much better off without corporate taxes.

In 1952, 33% of the federal tax revenue came from corporate taxes.

This figure was down to about 10% in 2013.

So the corporations already have it very good.

Your link is to a page with arguments against the dividend tax, which isn't the same thing. I think this one is more relevant to your comment:

http://www.cato.org/publications/commentary/ending-corporate...

>Corporate profits are already taxed (in the form of dividends/capital gains to shareholders, and income tax to employees)

employees' income - salaries - is expenses and thus excluded from profits, so there is no double taxation here.

Under GAAP (standard accounting practices) any profits become a liability in the form of shareholders' equity. When the shareholders sell, they're taxed on the profits. So it's a reasonable argument that taxing the profits are a form of double taxation.

The argument I'm familiar with for corporate taxation is that it is the cost for limited liability and being its own legal entity.

You can just eliminate the corporate in the middle, and have all the profits, expenses and liabilities directly assigned to share holders. But no one wants the liabilities part. Dropping corporate tax is therefore "something" (limited liability) "for nothing".

the minority of companies is shareholded in EU I think

I believe that's true in the US as well because there are a huge number of sole proprietorships and partnerships. However, the companies with shareholders tend to be much larger companies, so they still make up a very portion of the economy.

The minority is publically listed, for sure, but and ltd or llc I would expect is fairly bog-standard.

Every dollar is effectively taxed an infinite number of times; I don't understand why corporation/shareholder double taxation is a special case.

A 0% corporate income tax rate would just allow unlimited tax deferment.

Piddling?

9% of the 2010 tax revenues is about 1.5% of the 2010 GDP. US capital gains taxes that year were about 0.3% of GDP, with a top tax rate of about 15%[1]. To make up the lost revenue from eliminating corporate taxes, you would need to raise the long term capital gains tax rate six-fold, to 90%.

[1] http://www.forbes.com/sites/realspin/2013/09/09/to-raise-the...

To make up the lost revenue from eliminating corporate taxes, you would need to raise the long term capital gains tax rate six-fold, to 90%.

Or we could just cut spending...

Sorry for the fairly off-topic rant, but this is something I had on my chest for quite a while.

I love how, in the discussions around the NSA, nobody brings up the fact that American tax money are also used to pay for it (not to mention other shady shit going on in the US, like IRS, generalised police corruption, ridiculous military spending, etc). Wake the fuck up, people; you get irate when company X or Y doesn't go over the top to protect their users' privacy against the NSA, but totally disregard the actual problem of mass surveillance (and all the other "anti-terrorism" crap, that's been proven to work by the way). Things don't happen in a vacuum, NSA and PRISM didn't just magically appear, so let's at least start by naming names (I'll start, check out this fucking asshole: http://9to5mac.com/2014/10/13/fbi-apple-google-encryption-in...).

(For an eventual "uh, but what do you do about it, talking is easy, derpa derp", my day job is building (a|yet another) zero knowledge email service.)

Yeap since the US is big on public spending anyway.

It is. Roughly 75% are SS, Medicare, Medicaid and the Army. Its just inefficient.

I believe you are confusing "expensive" and "inefficient". Medicare and Medicaid have the lowest overhead, lowest cost-per-patient, and more-or-less the highest customer satisfaction in the US healthcare system.

They are still hugely inefficient. The US spends more per capita on Medicare/Medicaid than the UK spends on the NHS and only covers a small fraction of the population instead of everyone.

As far as I know, public spending in the US is about 40% of GDP, which is in line with other countries like Canada and Norway, and higher than countries like Japan and Switzerland.

Exclude the military though and it will be a very different story

Reducing the military budget is a valid way to cut spending.

http://gocomics.typepad.com/.a/6a00d8341c5f3053ef017ee581976...

Well, either the corporation is a separate legal person from its shareholders, in which case it should pay its taxes like everyone else, or it's not, in which case things like limited liability and the corporate veil have no foundation. Can't have it both ways. (Or shouldn't, anyway.)

I agree in principal, but unfortunately taxing dividends is a necessity in the defence against tax avoidance. Were the practice to be abolished I could see companies using this as yet another loophole; faciltiating avoidance of both corporate tax (siphoning all of their profits through dividends) and income tax (by making all employees minor shareholders).

Why tax people's labor instead?

Double taxation of corporate taxes exists in the US but it's not the case in every country. For example in Australia you get a personal tax credit for any corporate taxes that you pay.

This is the reason why a lot of people choose an LLC in the US.

S corps don't have double taxation either. Small companies where you would get tax credit shouldn't really pay much in corporate taxes since all the money goes to the owners at end of each year.

I can't understand your position in this day and age, after the 2008 crisis and all the tax breaks that went on.

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