Nike's New Tax Deal With Oregon If you don't think corporate taxes are important, then please, keep reading... http://www.cnbc.com/id/100315374
A Stealth Tax Subsidy for Business Faces New Scrutiny "Companies are borrowing money using tax-exempt bonds, a valuable perk that is costing taxpayers hundreds of millions of dollars, the New York Times reports." http://www.cnbc.com/id/100522105
Corporations should not only have to pay their taxes they should have to be law abiding citizens like most of us. The simple idea that a business can dump waste into rivers that will kill children downstream is all I have to know about a culture to know that it's SICK!
based on examples provided by Nitro it's look like neo corporatism http://en.wikipedia.org/wiki/Corporatism
First you have to back up and understand that all taxes are paid by people. Corporations are owned by people and corporate tax is paid out by owners, shareholder's, it is an expense against the owner/shareholder's interest. So, when you look at a corporation you should look at the shareholders and consider the tax paid by the shareholder. U.S. Public Corporations ('C' Corps) are taxed twice. Corporate income is taxed annually and distributions of remaining profits or retained profits are taxed again when they are paid to shareholder/owner's as dividends. The U.S. has the highest tax rates for Public Corporations in the World; 35% tax on income and 24% tax on distribution of profit as dividends. That is a 59% tax rate. Of course the rate is not the whole story; you have to consider the actual tax paid, the effective tax. That varies by industry as differnent industries have carved out different crony subterfuge and subsidy out of our prostituted and currupt political system dependinig on thier lobbying rent seeking whorish competencies. The most general and main way that C Corps pay less than the tax rate is by the use of financial leverage. The tax code allows corporations to deduct the cost of borrowed cash flow (debt) while they have to pay tax on cash flow from operating profits (earnings). This perversion, encourages coporations to float debt in public markets and leverage their balance sheets so that much of thier operating earnings is not taxed by is expensed as the cost of debt service. They can use the cash flow from the debt as revenue and use thier real profits to pay the cost of the debt and deduct that cost from taxable earnings. There may ways to avoid the full tax rate but the use of leverage and the subsidy of debt against the penalty against earnings is the big basic issue. People generally take this as the normal order of things without considering the incentives created or who benefits from the arrangement the most. Think about who is in the business of selling debt. Oviously, they are benefited if the cost of debt is subsidized by its deductibility. Conside also that the incentive to leverage Public enterprise creates more risk in the event that future earnings decline unexpectedly. Think about who pays the cost of the incrased risk. It may seem radical, but it would appear sensible that earnings should be taxed less and debt should not be subsidized. What do you think would happen to effective C Corp tax rates if the cost of debt was not expensible, not deductible against income, in exchange for the tax rate on income being reduced dramatically? Better yet, what do you think corporate balance sheets would begin to look like if corporate tax was reduced to Zero, obviating the value of debt cost deductibility...and all other discretionary expenses? Consider then how a C Corp tax rate of Zero might impact Dividend policies. Consider how shareholders might begin to look at the importance of dividends differently. Remember that there is a little used provision in the Corporate tax code that concerns excess retained profits; there is an excess retained profit tax that will levy a tax where corporations retain profits without a qualified purpose rather than paying out the retained profits as dividends when they have no business purpose to retain the profits. If C Corporation tax was zero and the tax against excess reatained profits was enforced the amount of dividend payments would likely increase. How do you think this would impact the amount of revenues now paid by shareholders as dividends rather than at the corporate level? If you understand that Corporations have owners and that owners pay taxes you can begin to see that it would be better lower the corporate level tax to Zero and raise the Dividend tax paid directly by owners up to the level of regular income tax rates and enforce the excess ratained profits penalty to ensure that dividends get paid. This would raise more revenue than the current tax structure while making corporate balance sheets less risky and corporate boards more active in pursuit of dividends as an important corporate objective. Of course this would not be good for the banking sector. There is another issue that this thread ignores. Corporate tax is not the way that most U.S. business is taxed. For the double taxation structural reason disclosed above, new business formations over the past 30 years have favored the "S" form of corporate organization. 80% of U.S. manufacturing jobs are in S corporations. More than 50% of business revenue and business jobs are in S type Corps now and the trend continues to grow in favor of S corps and other 'passthrough' corporate forms. Such firms do not pay tax at the Corporate earning level but instead pay tax at the shareholder level, the owner level, where the Corporate income is paid on the individual tax return. The advantage is that these typically closely held corporations avoid double taxation but pay tax only once at the idividual rate. The problem with this form of Corporation is that the shareholder/owners have to pay tax on the Corporate earnings, whether those earnings are distributed or not...so they often have to pay tax on undistributed profits out of the lower amount of profit that is actually distributed. As these S corps do not have the same access to debt financing they tend to be less leveraged and rely more on retained earnings for growth, so they are most disadvantaged by the C Corp driven subsidy of leverage through debt deductibiliyt and taxation of retained earnings. In practice profitable mid sized and growing S Corporations that are more than 5 years old are the real job engines of the economy and ironically they pay the highest effective business taxes. Right now they pay at the new highest marginal rate of 39.5% and they pay that on all earnings distributed or not...so an owner who retains 30% of profit to fund growth pays 39.5% tax out of the 70% of profit that they actually recieve...raising the owners effective tax rate to 63%. So, when you talk about Corprate tax rates don't forget to consider that more than half of 'corporate' tax revenue is embedded in the individual tax data base where it is taxed at much higher effective tax rates than is the case with reported C Corp tax data. Bottom line is that the most effective corporate rate sturcture that would increase the revenue from business taxes and improve the risk profile and balance sheet of corporations while improving corporate governance, is to make the Corporate rate Zero and raise the Dividend rate to the marginal income tax rate and make Corps pay dividends unless they have a business purpose not to. This also obviates the need to make 'C' or 'S' Corp distinctions. This change alone would cause a flood of capital to flow into the U.S.
double taxation is nothing to the quadruple taxation regular people get. regular people get taxed 4 times in a row.
Want to Avoid Federal Taxes? Call Yourself a REIT? Restyled as Real Estate Trusts, Varied Businesses Avoid Taxes http://www.cnbc.com/id/100660846