General Electric pays no U.S. taxes

[Crossroads Inc.]

This is one of the things that makes me in favor of Draconian flat taxes for coporations.

You made 10 billion last year? Ok we'll take 20% of that, no loopholes, no deductions, no credits. 20% of all profits, pay up now bitch.

You're aware that it's easy as hell to artificially reduce profits?

And you're aware that a company that engaged in such a practice would mostly likely see a hit to their stock price?

Now before you say, "But everyone would know they were just doing it to lower their tax burden." How would they be sure? Is the CEO just going to come out and say, "Now, we only did this to screw Uncle Sam." No, because then he's guilty of tax fraud.

See, the problem fixes itself.

I too favor a no-loopholes corporate tax rate, perhaps with a brackets based on size of the company or total revenue.

Taxing raw profits {IMHO} is the way to go. As you say, companies would be really silly to say "we earned no money" as it would make people doubt performance and seriously tank a companies worth.

No the real thing to consider as far as loopholes is how do you stop a company from setting up a shack in Switzerland and saying that they are suddenly a Swiss company to avoid high taxes?
Also..
What is the purpose of brackets again? Why should a company that earned 9.9 billion pay much less then a company that earned 10 billion?

Were a rather "creative" group here... someone surely has thought about this before.

[eion]

What is the purpose of brackets again? Why should a company that earned 9.9 billion pay much less then a company that earned 10 billion?

Flat taxes are notably regressive, and taking 20% of an incorporated small business making only a couple million a year vs. 20% of Exxon-Mobil and their billions a year could prevent a successful small business from becoming an even more successful (and higher tax paying) big business.

[Guardsman Bass]

What is the purpose of brackets again? Why should a company that earned 9.9 billion pay much less then a company that earned 10 billion?

Flat taxes are notably regressive, and taking 20% of an incorporated small business making only a couple million a year vs. 20% of Exxon-Mobil and their billions a year could prevent a successful small business from becoming an even more successful (and higher tax paying) big business.

The only problem with that is that major companies could spin off multiple corporations with smaller on-the-books revenue, even if they're still controlled by the same group of people. Banks would do this all the time with separate investment vehicles, IIRC.

[eion]

What is the purpose of brackets again? Why should a company that earned 9.9 billion pay much less then a company that earned 10 billion?

Flat taxes are notably regressive, and taking 20% of an incorporated small business making only a couple million a year vs. 20% of Exxon-Mobil and their billions a year could prevent a successful small business from becoming an even more successful (and higher tax paying) big business.

The only problem with that is that major companies could spin off multiple corporations with smaller on-the-books revenue, even if they're still controlled by the same group of people. Banks would do this all the time with separate investment vehicles, IIRC.

As a soon-to-be small business owner I'd have to be well established before I decided to incorporate and subject myself to a 20%, no loopholes, no deductions (really, give up my business mileage, my cost of goods deduction, my uniform, payroll, etc.) tax of my corporate income. Some of those deductions actually make a lot of sense, some are horribly abused, but there is a big difference between deduction-hunting and outright tax-avoidance via relocation.

I'm not sure what Crossroads means by "Raw Profit", maybe understanding that definition would help me understand his proposal better.

[Zed]

This is one of the things that makes me in favor of Draconian flat taxes for coporations.

You made 10 billion last year? Ok we'll take 20% of that, no loopholes, no deductions, no credits. 20% of all profits, pay up now bitch.

You're aware that it's easy as hell to artificially reduce profits?

And you're aware that a company that engaged in such a practice would mostly likely see a hit to their stock price?

Now before you say, "But everyone would know they were just doing it to lower their tax burden." How would they be sure? Is the CEO just going to come out and say, "Now, we only did this to screw Uncle Sam." No, because then he's guilty of tax fraud.

See, the problem fixes itself.

Not all corporations are public, though. Your solution works for public corporations, not for private corporations.

[eion]

There isn't a whole lot you can do about private corporations in any arena. They aren't required to publicly disclose revenue, ownership, etc. But for the most part, most corporations dream of an IPO, and if they want to have a good one they'll have to show positive growth in recent years, which they can't do if they've claimed ZERO profit in the last 10 years to avoid paying taxes.

Now, do you have an alternative solution to the United States’ crippled corporate tax system, or do you just enjoy throwing rocks at windows?

[Aldroud]

No the real thing to consider as far as loopholes is how do you stop a company from setting up a shack in Switzerland and saying that they are suddenly a Swiss company to avoid high taxes?
Also..
What is the purpose of brackets again? Why should a company that earned 9.9 billion pay much less then a company that earned 10 billion?

Were a rather "creative" group here... someone surely has thought about this before.

If I may, I've thought about this for a long time. My proposal is to do away with all taxes. No taxes what so ever. No corporate, no individual, no income, and no property taxes.

But how do we fund the government? you ask. Easy enough, and more in line with the tariffs and duties clause from the Constitution. ANY entity that services clients in the United State, be it a corporation, a business, or hedge fund management company (gosh I just hate the sound of those) is, by definition, an American company (i.e., you can't get a business license without agreeing to that term). Said company must consign X-% of corporate stock (nonvoting) to the US government.

The government gets its operating capital from the stock dividends. When the economy is good, the government makes more money. When the economy is bad, the government has greater incentive to fix it. When companies 'do bad things', like dumping toxic waste into rivers, wereas before they would pay a 'fine' (read operating cost) and go about dumping now they see their non-voting stock convert to voting. Gov't starts voting out the board of the company until new board gets with the program.

Instead of corporations owning the government, flip it over and let government own the corporations. But do so in a business friendly environment that sees profit motive for everyone.

[Guardsman Bass]

If I may, I've thought about this for a long time. My proposal is to do away with all taxes. No taxes what so ever. No corporate, no individual, no income, and no property taxes.

You're destroying one of the main ways that the US government can be held accountable by its citizens. Look at states that don't rely on taxation for revenue, drawing it from an outside source (usually resource royalties). Most of them are corrupt dictatorships, precisely because the government can buy off/ignore most of the population and pay for its own security with the revenue.

But how do we fund the government? you ask. Easy enough, and more in line with the tariffs and duties clause from the Constitution. ANY entity that services clients in the United State, be it a corporation, a business, or hedge fund management company (gosh I just hate the sound of those) is, by definition, an American company (i.e., you can't get a business license without agreeing to that term). Said company must consign X-% of corporate stock (nonvoting) to the US government.

Quite a few companies (an increasingly large amount in the US) are private and do not issue stock. An even larger number of them are proprietorships or individual businesses that don't issue stock either.

The government gets its operating capital from the stock dividends. When the economy is good, the government makes more money. When the economy is bad, the government has greater incentive to fix it. When companies 'do bad things', like dumping toxic waste into rivers, wereas before they would pay a 'fine' (read operating cost) and go about dumping now they see their non-voting stock convert to voting. Gov't starts voting out the board of the company until new board gets with the program.

What makes you think that the government won't be "captured" by the interests of the companies whose stock they're holding, and look the other way at abuses that might affect its revenue? Regulatory Capture is a bad enough problem as it is - your system would make it far more possible and dangerous.

[PeZook]

It's not "quite a few" companies that are private: it's nearly all of them. Most employers throughout the world are the small enterprises employing only a few people.

The government won't draw revenue from them without taxes ; And of course since all its profits would depend on stock value of the big public firms, it will have the incentive to just keep them on the market: voting the board out could drop the stock price, after all.

Bad idea. The main problem with giant corps not paying taxes lies in creative accounting. You need a way to extract revenue from the money flowing out of the country to a corporate entity in the Sescheles.

[J]

But how do we fund the government? you ask. Easy enough, and more in line with the tariffs and duties clause from the Constitution. ANY entity that services clients in the United State, be it a corporation, a business, or hedge fund management company (gosh I just hate the sound of those) is, by definition, an American company (i.e., you can't get a business license without agreeing to that term). Said company must consign X-% of corporate stock (nonvoting) to the US government.

The government gets its operating capital from the stock dividends.

"J&J&J Enterprises decrees that from this day forward, dividends on non-voting shares shall be zero."
Whoops! So much for that funding model...

[Winston Blake]

The government gets its operating capital from the stock dividends.

"J&J&J Enterprises decrees that from this day forward, dividends on non-voting shares shall be zero."
Whoops! So much for that funding model...

Fundamentally, this proposal degenerates into something very like the current tax system. After what J said happens, the govmt then institutes a legal minimum for public-owned shares. Now instead of taking their cut via setting the tax rates, they take their cut via setting the 'public dividend rates'. And then after that, they offer deductions, breaks, incentive schemes, bracketing, etc on this rate.

Although I am not sure exactly how, I feel that the exact same effect could be produced by modifying the current tax system.

[Note: economics/business ingenue here].

[Rogue 9]

Relevant.

[Teebs]

A nitpick, but private companies do issue stock it's just not publically traded. I think that what is being thought of is partnerships and/or sole traders which aren't technically companies.

[Traveller]

This is hardly news, american corporations have been dodging taxes for decades. GE is hardly alone or even somehow exceptional. Its very very nice to be a large corporate entity in the United States. Subsides everywhere, little or no regulation when it comes to labor or enviromental abuse. A compliant fawning mass-media, complete capture of most if not all government and regulatory bodies and a cowed and ill-informed population(they make the best consumers after all). Corporations havent spent all that effort and time to mold the US to its likeing just to start paying its fair share. As for the notion that corps flee the US because of its excessive tax rates, thats a good one, how can you compete with an effective tax rate of zero or less? Europe is hardly a tax-haven for all those battered US corporations fleeing the tax man either. If americans think heading to Switzerland is a good idea, its probably got to do more with the fact that Switzerland is a civilzed nation, that happens to have very lax banking laws. Unlike the united states, which can only claim lax banking laws.