NationStates Jolt Archive

Corporations don't actually pay taxes. That's right. Your government may SAY that they pay some amount in income or other taxes, but they don't. The money is collected from somewhere though, but from whom?

From shareholders. From consumers. From employees.

Perhaps not directly, but they pay the price, literally or figuratively. See, when corporations have to pay taxes, they have to find some way to recoup the losses, and there are many methods in which they could do so- none of which do any good for the people, those who the taxes supposedly benefit.

Of these methods, there are several ways that companies can recoup losses. First off, through shareholders. A company might "nobily" decide to cut into their profits. But what does that mean? It means lowered dividends for those who hold stock in the company. Not all investors are rich people, as some may claim- many are retired people who have invested to provide for their old age and depend on the money they receive from dividends for their livelihood, and the same for other needy folk. If one does not care for the humanitarian reasons, then the practicality is that the reduction of dividends makes investing in a company less enticing, thus causing less investment and economic growth over all, causing damage to the economy. People are hurt.

Secondly, through consumers. It is more likely that a company will choose not to antagonize those who directly control it but rather go for those who are less capable of making the corporation do what they want. Nonetheless, there's the great potential that if a company raises its prices, it can shrink its market share and push itself into even more financial danger, a backlash of consumers "punishing" the company. But no matter what happens with a price increase, irrespective of market shares, the customers still end up paying more for their products than before, thus making their lives harder to live due to rising costs. If companies lower their profits instead of raising prices, it means that corporations will be unable to invest in new technology and capital in the future that would make production cheaper, thus providing lower prices to the consumers. People are hurt.

Third, through employees, present and potential. Companies will be less willing to hire new people if they are more strapped for cash. They'll instead try to find ways to improve productivity, including laying-off less productive workers and increasing the work burden for those who are still employed, both through increasing the workload and also making the employee fear losing their job should they choose not to work harder and longer. Or, the company could maintain the supply line by slashing employee benefits, thus reducing the costs of production, but unfortunately hurting the employees and their families in the process. If they make consumers pay more, the company could lose their market share and plunge the business into financial danger or even ruin, possibly making everyone working at the corporation lose their job. Even if the business cuts into their profits instead of taking out the taxes on the employees, this means less investment for the company, thus slowing its growth and preventing it from creating new jobs. It means that the company grows capital at a lower rate, which directly correlates to productivity, which directly correlates to real wages. People are hurt.

Finally, corporate taxes actually mean less money for the government. It means that money goes into off-shore accounts, Euro-dollars as they are called (regardless of their destination), meaning less money is in the nation, meaning less available to tax, meaning LESS tax income as well as a reduction in investment from interest, causing less economic growth. Economic growth buoys tax revenues, and in the long term makes up for any short term losses. Those services that are promised from "making corporations pay their fair share" never come or are quickly abandoned, even though if those taxes had never been in place those services could have been afforded and provided. People are hurt.

People think that corporate taxes only affect "the corporations", those evil malevolent creatures that lurk under childrens' beds and in their closets. But what so few realize is that corporations don't even actually exist. They are simply fictional legal entities that are designed to maximize efficiency and connect investors, producers and consumers in a streamlined fashion. In other words, they're by, of, and for people. And the people are the ones that really suffer from corporate taxes.

Corporations don't actually pay taxes. That's right. Your government may SAY that they pay some amount in income or other taxes, but they don't. The money is collected from somewhere though, but from whom?

From shareholders. From consumers. From employees.

actually, you got it right in the first line. at least in the u.s., the big corporations literally don't pay much in the way of taxes (http://www.boston.com/business/globe/articles/2004/04/11/most_us_firms_paid_no_income_taxes_in_90s/). and that's before adding in all the subsidies, direct payments, and government created and maintained infrastructure - do that, and they not only don't pay taxes, but they barely do anything other than suck at the government teat (http://www.monbiot.com/archives/2005/12/13/the-corporate-begging-bowl/).

Corporations don't actually pay taxes. That's right. Your government may SAY that they pay some amount in income or other taxes, but they don't. The money is collected from somewhere though, but from whom?

From shareholders. From consumers. From employees.

Perhaps not directly, but they pay the price, literally or figuratively. See, when corporations have to pay taxes, they have to find some way to recoup the losses, and there are many methods in which they could do so- none of which do any good for the people, those who the taxes supposedly benefit.

Of these methods, there are several ways that companies can recoup losses. First off, through shareholders. A company might "nobily" decide to cut into their profits. But what does that mean? It means lowered dividends for those who hold stock in the company. Not all investors are rich people, as some may claim- many are retired people who have invested to provide for their old age and depend on the money they receive from dividends for their livelihood, and the same for other needy folk. If one does not care for the humanitarian reasons, then the practicality is that the reduction of dividends makes investing in a company less enticing, thus causing less investment and economic growth over all, causing damage to the economy. People are hurt.

Secondly, through consumers. It is more likely that a company will choose not to antagonize those who directly control it but rather go for those who are less capable of making the corporation do what they want. Nonetheless, there's the great potential that if a company raises its prices, it can shrink its market share and push itself into even more financial danger, a backlash of consumers "punishing" the company. But no matter what happens with a price increase, irrespective of market shares, the customers still end up paying more for their products than before, thus making their lives harder to live due to rising costs. If companies lower their profits instead of raising prices, it means that corporations will be unable to invest in new technology and capital in the future that would make production cheaper, thus providing lower prices to the consumers. People are hurt.

Third, through employees, present and potential. Companies will be less willing to hire new people if they are more strapped for cash. They'll instead try to find ways to improve productivity, including laying-off less productive workers and increasing the work burden for those who are still employed, both through increasing the workload and also making the employee fear losing their job should they choose not to work harder and longer. Or, the company could maintain the supply line by slashing employee benefits, thus reducing the costs of production, but unfortunately hurting the employees and their families in the process. If they make consumers pay more, the company could lose their market share and plunge the business into financial danger or even ruin, possibly making everyone working at the corporation lose their job. Even if the business cuts into their profits instead of taking out the taxes on the employees, this means less investment for the company, thus slowing its growth and preventing it from creating new jobs. It means that the company grows capital at a lower rate, which directly correlates to productivity, which directly correlates to real wages. People are hurt.

Finally, corporate taxes actually mean less money for the government. It means that money goes into off-shore accounts, Euro-dollars as they are called (regardless of their destination), meaning less money is in the nation, meaning less available to tax, meaning LESS tax income as well as a reduction in investment from interest, causing less economic growth. Economic growth buoys tax revenues, and in the long term makes up for any short term losses. Those services that are promised from "making corporations pay their fair share" never come or are quickly abandoned, even though if those taxes had never been in place those services could have been afforded and provided. People are hurt.

People think that corporate taxes only affect "the corporations", those evil malevolent creatures that lurk under childrens' beds and in their closets. But what so few realize is that corporations don't even actually exist. They are simply fictional legal entities that are designed to maximize efficiency and connect investors, producers and consumers in a streamlined fashion. In other words, they're by, of, and for people. And the people are the ones that really suffer from corporate taxes.

And you can prove this conspiracy theory... how? Now, I do believe corpoorations are a bit unfair, but still, you can't prove this.

actually, you got it right in the first line. at least in the u.s., the big corporations literally don't pay much in the way of taxes (http://www.boston.com/business/globe/articles/2004/04/11/most_us_firms_paid_no_income_taxes_in_90s/).

Does this include S-Corporations too or only C-Corporations? S-Corps by definition pay no taxes, as they pass all the burden to their shareholders.

And you can prove this conspiracy theory... how? Now, I do believe corpoorations are a bit unfair, but still, you can't prove this.

It's hardly conspiracy theory. It's pretty apparent that a corporation would pass on any loss they sustained to their consumers in the form of price increases. It's usually one of the arguments against raising corporate tax rates.

And you can prove this conspiracy theory... how? Now, I do believe corpoorations are a bit unfair, but still, you can't prove this.
Well, Free Soviets linked to an article that shows just how little corporations pay in income taxes when they pay anything at all. As to the second bold point, I think the OP worded it inartfully, but his general premise is accurate in that corporations have legal personhood but no person, so if the corporation breaks the law, there's no one to put in jail. It's even difficult to go after either shareholders or board members or employees of the company because so much of the blame often shifts to the corporate entity--you have to prove illegality on the part of the individual.

If I could institute one single reform in the world of US business, it would be to take away corporate personhood. Corporations are fine as machines to make money and diversify risk, but they are not persons, and should not hold the rights of personhood.

If you expropriate them, you don't have to worry about any of this nonsense.

The OP sure has come to some… interesting conclusions. Here what I assumed was common sense seems to warrant a one page conspiracy theory.

If I could institute one single reform in the world of US business, it would be to take away corporate personhood. Corporations are fine as machines to make money and diversify risk, but they are not persons, and should not hold the rights of personhood.

Agreed. Corporations are not individuals and do not deserve indivdual rights. That whole thing with Nike claiming to free speech a few years back highlighted that for me. http://news.bbc.co.uk/2/hi/americas/3023950.stm

Agreed. Corporations are not individuals and do not deserve indivdual rights. That whole thing with Nike claiming to free speech a few years back highlighted that for me.
True, but don’t forget that the individuals within Nike still deserve free speech, even if a non-entity doesn’t.

True, but don’t forget that the individuals within Nike still deserve free speech, even if a non-entity doesn’t.

But of course. But they are speaking for themselves, not the corporation. Corporate speech should fall under regulated comerical speech/advertising.

Does this include S-Corporations too or only C-Corporations? S-Corps by definition pay no taxes, as they pass all the burden to their shareholders.

i suspect that the gao dealt with all the necessary complexities in their report (http://www.gao.gov/new.items/d04358.pdf)

But of course. But they are speaking for themselves, not the corporation. Corporate speech should fall under regulated comerical speech/advertising.
“Corporate speech” shouldn’t even be a term.

“Corporate speech” shouldn’t even be a term.
I agree. Corporate speech allows the CEO or some other spokesperson to hide behind the corporate person and avoid responsibility for what is said. If, for example, Nike makes a statement, Phil Knight ought to have to stand behind that statement, and take the responsibility for it.

I agree. Corporate speech allows the CEO or some other spokesperson to hide behind the corporate person and avoid responsibility for what is said. If, for example, Nike makes a statement, Phil Knight ought to have to stand behind that statement, and take the responsibility for it.
Well, Phil Nike and the people responsible for the statement (maybe a marketing team?).

Well, Phil Nike and the people responsible for the statement (maybe a marketing team?).
Nah, I think the CEO ought to stand behind whatever statement the company makes. He's the one making the big bucks, and he's the one who's supposed to sign off on the big decisions. None of this waffling--you either run the joint or you don't, like the captain of a ship. They'd be a hell of a lot more careful about the statements they made if they were going to be held accountable for them, that's for damn sure.

Nah, I think the CEO ought to stand behind whatever statement the company makes. He's the one making the big bucks, and he's the one who's supposed to sign off on the big decisions. None of this waffling--you either run the joint or you don't, like the captain of a ship. They'd be a hell of a lot more careful about the statements they made if they were going to be held accountable for them, that's for damn sure.
If the CEO approves a message or action than it is his responsibility, of course, but there are instances, especially in large corporations, where incompetents may make some very bad choices. I suppose, if those choices involve a substantial loss of money for pensioners or some instance of fraud, the CEO should face the consequences of allowing it to happen (probably should lose his job, no severance depending on the severity), but certainly no legal trouble if its proven he had nothing to do with it.

If the CEO approves a message or action than it is his responsibility, of course, but there are instances, especially in large corporations, where incompetents may make some very bad choices. I suppose, if those choices involve a substantial loss of money for pensioners or some instance of fraud, the CEO should face the consequences of allowing it to happen (probably should lose his job, no severance depending on the severity), but certainly no legal trouble if its proven he had nothing to do with it.
That's the Ken Lay excuse, and part of the reason that the Sarbanes-Oxley act requires CEOs to sign off on financial statements now--an excellent reform, in my opinion.

I have the feeling that a lot of you don't understand/didn't read what I wrote.

It's not a conspiracy theory. I'm not talking about corporations using chemtrails and waves from black helicopters to beam into people's heads and saying that people should wear a tinfoil hat. I'm talking about the practicality that corporate taxes make no sense financially, as the costs are taken out on other people, like shareholders, consumers, and employees, and that it hurts people in the future by damaging economic growth and investment. Had some of you read past the first sentence, you would have understood that instead of jumping to these ridiculous conclusions. Anyone saying that what I listed is a conspiracy theory would be like saying that, because I lose my job and don't have the money to buy the new car I've been saving for, that my cost-cutting is clear evidence I'm in league with the Illuminati. It's nonsensical.

People think that corporate taxes only affect "the corporations", those evil malevolent creatures that lurk under childrens' beds and in their closets. But what so few realize is that corporations don't even actually exist. They are simply fictional legal entities that are designed to maximize efficiency and connect investors, producers and consumers in a streamlined fashion. In other words, they're by, of, and for people. And the people are the ones that really suffer from corporate taxes.

Well obviously :rolleyes:

The people associated with each corporation suffer, then the society as a whole benefits. It it's the way the system works. Everyone gets a slice of the success that the company is getting.

And you can prove this conspiracy theory... how? Now, I do believe corpoorations are a bit unfair, but still, you can't prove this.
Actually, he's perfectly correct, corporations are nothing but legal fiction. As for what they do, it's common fucking sense. Let's say I'm the sole owner of a company that makes widgets. There are no taxes currently involved on the company whatsoever. Money essentially goes to 4 areas. Those areas are maintenance & materials, my employees, me, and the slush fund. The slush fund is there for advertising, R&D, and expansion. Now say the government comes in and wants to take 50% of my percieved earnings, which is likely if it's a small company, more if it's an LLC. How do I pay it? Well, the simplest thing is to double my end prices, but then it becomes much less likely that people will buy my product unless it isn't a competitive field. Of the 4 areas, the area that gets the most money is probably the slush fund. But then there is less room to make my business grow. So maybe I can perform less maintenance. Of course, then there's the added risk of things breaking down, which may come back to bite me in the ass in the long run, but thems the breaks. Then there's the money I make, but at what point does the money I make become too little for the effort of running the company by myself? And finally there's the money my employees make. At what point am I no longer paying them a competitive wage? In the end, I will be doing a little bit of each. What that means in the long run is that research and expansion is stifled, everyone earns less money, the equiptment is down more often, and less money is in circulation.

Well obviously :rolleyes:

The people associated with each corporation suffer, then the society as a whole benefits. It it's the way the system works. Everyone gets a slice of the success that the company is getting.

You're actually right, though not in the way you think.

"The people associated with each corporation" includes the consumers, since they're doing business with the company. It includes the average worker at the company, who's just trying to make a living and pay the mortgage. It includes the retired people who invested in the company to pay for their old age. It includes the people who sell equipment to the company, the retailers who stock their products, the shippers who bring them... pretty much everyone, in other words, the society that you believe that corporate taxes supposedly "benefit".

So yes, they do get a slice of success, success that has been greatly reduced by moronic, nonsensical taxes. But they were already getting a slice of the success from getting good wages, new jobs, better dividends, better and cheaper products. The taxes only help to prevent what they were supposeldy made for- benefit to society.

absolutely...

the "i hate corporations" group might think they want companies to struggle, but really...

the harder we are on companies, the shittier our economy will be (jobs, products/services, investment offerings would all suffer).

So while they should pay taxes, let's not go overboard and redefine corporations rashly... many monied people decide to take on the risk and start companies because of some of the liability protection offered by incorporating. IF they didn't, there go all the jobs/investment ops/products that their venture would offer.

The article is all very interesting, but considering the U.S. is up to it's neck in trillions of dollars in debt, you might want to lay off the tax cuts just a bit. If you wanted to get rid of capital gains tax while getting rid of Bush's tax cuts for the wealthy and or keeping the estate tax, that's fine with me. But no more cuts in total revenue until the U.S. has a surplus, thanks.

yes, let's hit the people hardest who drive the economy the most

let's keep personal taxes where they are (richest still taxed the most, by %) and maybe do things to get companies to pay more of what they should be paying.

The article is all very interesting, but considering the U.S. is up to it's neck in trillions of dollars in debt, you might want to lay off the tax cuts just a bit. If you wanted to get rid of capital gains tax while getting rid of Bush's tax cuts for the wealthy and or keeping the estate tax, that's fine with me. But no more cuts in total revenue until the U.S. has a surplus, thanks.

Well, I agree with you.

I think it would be better to encourage capital accumulation and investment, as opposed to the out-of-control dissaving and consumption of the US, and the best way to do that would be to get rid of the clusterf*ck that is the tax system. A personal consumption tax, with a rebate provided to all families to neutralize taxation on essential items (the poverty line), that is taxed on the final purchase of all goods and services equally (thus no lobbying and no accumulating expenses from taxing every step of the production and supply chain), that would be high enough to be revenue neutral while eliminating and banning any payroll and income taxes would be the best course of action. If business purchases and investment etc. were left alone, and if people's whole paycheck was available to them with no restrictions to save, it would allow for better productivity and economic growth, which would buoy economic growth and raise tax revenues.

I'm not for tax cuts, because that would assume I think that the current tax system is worth any more effort to reform. I'm for getting rid of the idiocy that permeates tax policy, and, in turn, that tax policy itself.

The article is all very interesting, but considering the U.S. is up to it's neck in trillions of dollars in debt, you might want to lay off the tax cuts just a bit. If you wanted to get rid of capital gains tax while getting rid of Bush's tax cuts for the wealthy and or keeping the estate tax, that's fine with me. But no more cuts in total revenue until the U.S. has a surplus, thanks.
What part of increase in revenue don't you get? A higher level of taxation does not mean an increase in revenue. You and yours seem to think it does.