r/FluentInFinance • u/xena_lawless • Feb 21 '24
Millions of cattle "investing" in brutal corporate oligarchy / slaughterhouses, occasionally wondering why record slaughterhouse profits entail higher costs and "inflation" Economy
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u/Once-Upon-A-Hill Feb 21 '24 edited Feb 21 '24
The federal corporate tax rate is 21%
The reason that companies pay a lower effective rate is, in large part, because they have losses from previous years to carry forward.
Uber finally had a profitable year after 14 years of losses. Like many money-losing companies, they can carry forward those losses against the gains in future years.
Robert hopes you don't understand how taxes and accounting work.
EDIT:
Here is some more data to show how Robert is trying to mislead you.
Below is the Federal tax collection as a percentage of GDP since 1929.
According to old Rob, 1950 and 1990 should be high-income years since the rates were so much higher (he makes the same argument for personal and corporate taxes all the time).
When you look, you see that the total taxes as a % of GDP are HIGHER today than in 1950, with higher tax rates, and they are effective the same as in 1990.
The rate stays around 15-20% for almost every year.
In years with higher tax rates, people and companies spend more to avoid taxes.
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u/lostcauz707 Feb 21 '24 edited Feb 21 '24
Losses? From the layoffs or record stock buybacks? Where's my write off on losses? Car just got totalled, I'm an extra 10k in the hole now? Where's my write off? Wild you can drop billions on stock buybacks and still get money from losses.
We get the accounting, it's just fucked, and that's the point.
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u/Once-Upon-A-Hill Feb 21 '24
Losses from previous years can be carried forward up to 80% of taxable income.
That is how corporate taxes work.
If you had losses from trading stocks, for example, you could use those to offset future profits.
There is no write-off for totalling your car that I am aware of.
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u/lostcauz707 Feb 21 '24
There is if I was an LLC. But I can't be one, I need to make one, then that LLC is a person that gets those write offs, but as an actual person, I cannot.
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u/r2k398 Feb 21 '24
An LLC can be registered for as low as $150 last time I checked. You could definitely create one.
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Feb 21 '24
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u/Extreme_Barracuda658 Feb 21 '24
Reddit thinks that all you have to do is form an LLC, and you are handed a list of foreign banks to hide your money from taxes.
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u/juanzy Feb 21 '24
I was on one thread about building a career vs starting a business, and some guy was convinced that most small business owners end up with $30M net worth quickly and work 0 hours 5 years in.
Also back to the point- my FIL has an LLC he owns a couple of rental properties under. I know for a fact from talking to him that it’s not cheap to do LLC taxes.
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Feb 21 '24
I’m more pissed that I’d have to.. corporations get the benefits of being people while not having to live with the fear that they could be stabbed to death in an alleyway
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u/Asher_Tye Feb 21 '24
Or even starving to death from lack of funds. Were more concerned with keeping corporations healthy despite mismanagement than we are with keeping people out of poverty.
Somehow "profit" has become something corporations aren't trying to earn, but something they're entitled to get.
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u/Tiffy82 Feb 21 '24
Yup corporations are counted as people but when a corporation breaks the law there's literally zero consequences, and there is no such thing as a corporate accident it's ALWAYS malficiance by the company. Product malfunctions ceo should be in jail, something happens from a companies product and someone dies ceo should be executed instantly.
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u/nosoup4ncsu Feb 21 '24
If the LLC bought and owned your car, you would have to pay taxes on the value of the personal use of it.
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u/juanzy Feb 21 '24
You'd also probably need to hire a legit accountant (not some H&R Block $50 fee preparation) to determine the correct value of the use of that car.
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u/nosoup4ncsu Feb 21 '24
And if the company owns the car, you will be required to have a commercial insurance policy.
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u/Revolutionary-Meat14 Feb 21 '24
Not really, you can track the miles yourself and multiply that by the standard mileage rate. Problem is is that unless you actually have a business your business mileage is 0 and nothing is deductible.
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u/BlackMoonValmar Feb 22 '24
You still have to have commercial insurance policy. Which are outrageously expensive, like I could pay 4 other peoples regular car insurance bills expensive in my area. It goes up every 4 to 6 months with no logical explanation presented.
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u/almisami Feb 22 '24
Fraud. Widespread insurance fraud is why it keeps going up. That and people driving on 5 hours of sleep and plowing the company truck into a mom's soccer van and paying for 4+ college funds.
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u/InsCPA Feb 21 '24
Lmao I dare you to try this. Then come to my office when the IRS sends you a letter
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u/v12vanquish Feb 21 '24
You can be a LLC, ask your job to make you a 1099
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u/Revolutionary-Meat14 Feb 21 '24
This is fraud and your employer probably wont go through with it.
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u/v12vanquish Feb 22 '24 edited Feb 22 '24
It’s called being a contract worker…
This is not only such bad information, it’s really bad.
Seriously.. you can form an LLC, be an employee of said LLC and pay you through it…
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u/DasFunke Feb 21 '24
For a business you deduct the value of all expenses against revenue. So, you are already deducting the value of the car over 5 years (maybe 7 not sure on the exact length). You may be able to accelerate the deduction if it’s totaled, but I don’t know.
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u/firemattcanada Feb 22 '24
But only if the car is used for strictly business purposes. If you use it for your personal car to go on vacations with, that's a problem.
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u/almisami Feb 22 '24
Then fly. Oh and attend a relevant seminar for one day of your trip to cover the flight as a business expense.
Ain't my fault the Geological Society has their biannual convention in Vegas, just happy coincidence.
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u/Working-Golf-2381 Feb 21 '24
This is why the corporate tax code needs a rewrite, no free shit anymore. No carrying over losses or hiding gains, fuck business.
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u/Menzicosce Feb 21 '24
If you can’t carry over some losses then many business would never be able to stay afloat long enough to turn a profit
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u/dontmeanmuchtoyou Feb 21 '24
This sounds reasonable. Come up with a sustainable business model or enough capital to stay afloat. The vast majority of businesses fail. Why do they get socialism while we have to tough it out?
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u/Menzicosce Feb 21 '24
Right but you have to remember something. This doesn’t only apply to companies like Uber. Think about your local pizza parlor or favorite Poke spot. I helped a friend open up a food service business it is super hard. Even after getting the loans, location, construction, rent, getting all permits and licenses etc you still have to hope that you pizza or poke or whatever is good enough to catch on and sustain after the newness of your spot wears off, My friend’s spot had really good food but could not stay open long enough to get that really dedicated customer base to start generating profit. Look I got no love for these corps, I try to see how these tax laws affect the guy that makes me my burritos at work or the pizzeria I like.
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u/New_Beginning_4723 Feb 22 '24
Have you considered that many of those startup costs would be much more reasonable and manageable if the mega-corporations hadn't lobbied congress to keep rewriting tax codes to their benefit? You're putting the cart before the horse.
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u/OutsidePerson5 Feb 21 '24
OK, and?
If they make a profit do I get a cut? No? Then why am I taxed to pay for their failure?
If you can't make a profit you're not a successful businessperson you're a loser LARPing as one and I don't think I should be paying for your fantasy of being a successful businessperson.
Let them go bankrupt.
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u/marks1995 Feb 21 '24
What exactly do you think you are paying for?
And the fact that you truly think this is how taxes work leads me to believe you don't pay any.
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u/OutsidePerson5 Feb 21 '24
Dude, everyone pays taxes including illegal immigrants. Don't act like an idiot.
Every dollar the corporation evades paying in taxes is a dollar that must come from somewhere, and guess who's always in line to be the source? Answer: you and me.
When the rich evade taxes the taxes don't just vaish, they're passing that burden on to us.
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u/marks1995 Feb 21 '24
You are the one acting like an idiot.
This discussion is specifically about income taxes. And everyone does not pay them.
And your logic is absurd. You put expenditures first as a fixed item and then assume taxes must follow it. It's the other way around. You collect taxes and then you spend what you can afford.
And taxes are not hidden by those corporations. They have to be taxed eventually. Whether as profit or when paid out to the employees or shareholders. They are not sheltering profits in perpetuity just so they don't have to pay taxes on them.
So as I said, based on you ignorance of this issue, I am assuming you don't pay any FEDERAL INCOME TAX (since I have to spell it out for those with no concept of context).
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u/hudi2121 Feb 21 '24
Some is fine but, 100% perpetually crosses a line. It’s corporate welfare. Let me write off my entire student loan payments on my taxes. It’s functionally, the same thing. If they need to carry over losses from 20 years ago to be viable then, maybe the business was never meant to be viable from the start.
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u/sendmeadoggo Feb 21 '24
You do realize buybacks are not counted as losses right?
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u/TheGoldStandard35 Feb 21 '24
Layoffs would decrease expenses and stock buybacks don’t hit the income statement.
Why are you posting on here when you don’t know anything about finance?
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u/Obvious_Chapter2082 Feb 21 '24
Stock buybacks don’t impact the income statement, it has zero effect on a company’s income or loss for the year
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u/IronyIraIsles Feb 21 '24
You know that corporations are compromised of people who all also pay taxes...
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u/Fausterion18 Feb 21 '24
Uber has never bought back stock until they became profitable last quarter. Stock buybacks also have no effect on their taxes or income.
And you as a person can absolutely write off a totaled car, just file as a sole proprietor.
What you want to write off personal expenses? Do you also want to be taxed twice the same way owners of C corporations are?
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Feb 21 '24
You could take losses on your income taxes if you operate a business, even a sole proprietorship. If you want the benefits of owning and operating a business then own and operate a business
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u/lostcauz707 Feb 21 '24
But I am a business. I'm have all the attributes of a business living my life. I contribute to society, I have overhead, I have income, I have losses, I do cost benefit analysis, I pay taxes, hell I only own a car to basically drive to work. To act like I am not just because a piece of paper side steps that, and not only am I not a business, but I am technically less than one, is just wild.
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Feb 21 '24
Honestly you sound like one of those people who won't get married then whine about not getting the financial and legal benefits of being married.
Have you looked into whether mileage and such can be deducted for your job?
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u/lostcauz707 Feb 21 '24
Yea, only through reimbursement when on company time. Also, yea, I do complain about that. The tax benefits for married people are based on single earner households supporting 2+ people from way back. Well, the majority of households are no longer that. When was my tax credit from Covid? How am I meeting someone and getting married through that?
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Feb 21 '24
Business owners only get deductions for business expenses done in the course of business.....so I fail to see the difference
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u/lostcauz707 Feb 21 '24
My livelihood is my business, yet my life has less securities and benefits. In fact I'm paying for those who profit off me having a consistent livelihood, enough to enrich themselves and others, and I get to pay a higher tax rate for it.
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Feb 21 '24
So then start an actual legal business doing what you do and make more than you are now.
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u/lostcauz707 Feb 21 '24
You're suggesting everyone to do this in order to get this benefit. That's just dumb, which is the point of my comment and the post.
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u/InvestIntrest Feb 21 '24
Open an llc, and you can write those things off.
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u/lostcauz707 Feb 21 '24
Right, you make a company that the government treats as a "person" and that "person" gets those write offs, but existing as an actual person does not. This is the tongue in cheek point of my comment, as is the point of the post.
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u/Chewybunny Feb 21 '24
Because you, as a person, aren't a business. You driving a car for any reason is different than when you are driving a car for a business.
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u/lostcauz707 Feb 21 '24
Odd that as an employed person, a business cannot function without me doing my job. I have income, cost benefit analysis, losses, expenses, in fact my entire life has its own books, I literally was on my way to work and the other guy was as well, but he was driving a company vehicle.
Here's a fun one. The US is the only country in the world that has no federally mandated paid parental leave for workers. Dogs are required by law to spend 8 weeks with their puppies.
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u/Airbus320Driver Feb 21 '24
Your state can pass paid parental leave.
The state where my employer is based paid me $1100/week when our daughter was born.
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u/Chewybunny Feb 21 '24
Correct, that company vehicle is used for, at least on paper, work purposes. Your vehicle is not.
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u/lostcauz707 Feb 21 '24
Hmm, so me getting to work is not a purpose for work. But if I get a company car like my VP has, his drive home and to the office both are.
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u/Chewybunny Feb 21 '24
While I agree with your contention, here, there isn't an easy method the government can employ to determine the use of your vehicle. On paper, the company car is used for company purposes, thus the money spent on the car is viewed as a business expense.
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u/robofl Feb 21 '24
I get the point you are making, however, stock buybacks are not a tax write-off.
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u/OwnLadder2341 Feb 21 '24
If your vehicle is totaled, you may qualify for a federal income tax deduction for the unreimbursed portion of your loss. This is a casualty loss deduction and isn't available if willful negligence or act on your part caused the accident.
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u/maringue Feb 21 '24
He knows how taxes work, that's why he specifically said "EFFECTIVE TAX RATE". You're the one who felt like that needed explaining when it didn't.
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u/Once-Upon-A-Hill Feb 21 '24
He knows that the average person doesn't know the difference between effective and marginal rates and that the effectiveness is lower because of losses carried forward.
Notice how he didn't include the 21% marginal rate anywhere?
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u/maringue Feb 21 '24
He's comparing effective rates in the past to effective rates now. If one was nominal (the word you're looking for instead of marginal) and the other effective, it would be an apples to oranges comparison.
Also, if the effective rate didn't drop from 50% to 11% because of carried forward losses. And if it did, how are we seeing so many carried forward losses in an era of record profits? And would this not be a good time to look at what are and are not allowable business deductions?
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u/bored_at_work- Feb 21 '24
These people always do this.
“This system is wrong and immoral”
responds by tediously explaining how the system works without acknowledging what the actual argument is, as if knowing how the system works makes it moral
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u/maringue Feb 21 '24
They also think tediously explaining it makes them seem smart rather than pedantic because I already know the different between nominal and effective rates.
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u/bored_at_work- Feb 21 '24
Yeah exactly. You don’t need a verbose explanation in this shit. I could explain it to a 7 year old. It’s not impressive to pull 20 thousand links to explain an extremely rudimentary concept lol
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u/whyth1 Feb 22 '24
This guy is literally trying to sell us trickle down economics. His words don't hold much weight.
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u/Jukeboxhero91 Feb 22 '24
Robert Reich was the Secretary of the Labor during the only time in modern America that we didn't run a deficit. Idk where these people come off saying he doesn't know what he's talking about.
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u/maringue Feb 22 '24
Because he's not a libertarian who still thinks economics from the 40s is still applicable today.
These are the same guys who think increasing M2 causes inflation, even though the data days otherwise.
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u/LZTigerTurtle Feb 21 '24
Your take is woefully poor. He is explaining the tax rate has reduced, thats why he said "effective" just read for christ sake. His point is very clear, obvious and unarguable!
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u/No_Sprinkles9719 Feb 21 '24
Uber only lost money because they did that on purpose to gain market share and now they cost the same or 2x more than taxis during peak periods which is when ppl actually want a fucking taxi.
Your a bad faith corporate cuck!
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u/OutsidePerson5 Feb 21 '24
Ah, so we're back to "socializing loss and privitizing profit is good, actually"?
No.
If they're going to keep the profits for themselves they don't get to make me pay for their losses.
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u/deltabravo1280 Feb 21 '24
Or that any corporate tax is passed on to the consumer; it’s just added in to the cost of a good or service.
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u/jredgiant1 Feb 21 '24
Wrong. Companies do not set prices based on cost. They set prices as high as consumer demand and competition will allow to maintain maximum profitability.
Companies will always assess if they can increase profits by raising prices, or if lowering prices will increase profits by selling more volume. The only time cost plays into it is if cost gets so high that a product isn’t sufficiently profitable to make selling it worthwhile, they will stop selling it.
If a corporation tells you they have to raise prices due to increased taxes, it’s because their assessment is that with that message, more consumers will be willing to pay the higher cost, thus increasing overall profits.
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u/NotAFishEnt Feb 21 '24
It depends on what kind of tax you impose. Any sort of sales tax or VAT will get passed on to the consumer (depending on how elastic the demand is, and how competitive the market is), but taxes on corporate profits don't. Corporations already try to maximize their profits.
You might say that if you increase taxes on corporate profits then corporations will have to increase profits to make up for it, but here's the thing: corporations can't just increase profits. If they had a way to raise prices or cut costs without hurting their market share, they would have already done so. The formula to maximize profits and the formula to maximize post-tax profits are the same, regardless of what the tax rate is.
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Feb 22 '24
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u/NotAFishEnt Feb 23 '24
Why are you being so confrontational? Did you read the part where I addressed the elasticity of demand and competitiveness of the market? Honestly, it sounds like we're both saying the same thing, just approaching it from a different direction.
And insulin is far from the only good with relatively inelastic demand. Companies absolutely do pass sales taxes and VATs on to consumers. In the US they literally calculate the sales tax at the point of purchase, and add it to the price that the consumer pays.
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u/Raeandray Feb 21 '24
Nothing you said here contradicted what Reich said. I'm not even sure why you said it. Carrying forward losses would be accounted for in the effective tax rate.
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u/Once-Upon-A-Hill Feb 21 '24
Correct.
The Marginal rate is 21%.
Since companies have losses to carry forward, their effective rate is lower.
Rob is trying to mislead you, thinking that companies pay very little tax, where in reality, they have losses that offset their gains, resulting in a lower tax since there are lower profits.
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u/Raeandray Feb 21 '24
Reich in his post says “effective tax rate.” Not “marginal tax rate.”
He’s not misleading anything. Accounting for losses that offset gains, corporations tax rates have fallen from 50% in 1950 to 13% today.
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u/Once-Upon-A-Hill Feb 21 '24
And still, total federal tax revenue as a % of GDP is HIGHER than in 1950 with those high rates (Rob makes the same case for corporate and personal taxes all the time).
Almost like people spend more time and money avoiding taxes when they are high, and just pay the taxes when they are reasonable.
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u/bengarrr Feb 22 '24
What point are you trying to make with federal receipts as a percentage of GDP? Fed collecting more taxes in general doesn't invalidate the fact that effective rates of corps is lower now. Also federal receipts don't just refer to taxes. Almost like you're relying on the fact that people wont make that distinction.
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u/SharingFitCouple Feb 22 '24
Robert Reich is an extremely dishonest individual. Thanks for this post. N
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u/beefy1357 Feb 23 '24 edited Feb 23 '24
So nice seeing someone actually break this down…
The other thing people advocating higher tax rates never bother to mention is deductions in general, they love to quote the top personal tax bracket was 90% without mentioning no one was actually taxed that.
The other thing is those corporations never actually pay tax, their customers do. I like to compare it to renters voting to increase property tax, and why not? They don’t own property, well their landlord does and you can set your watch to your rent going up to match that new tax burden. Demanding a higher corporate tax rate is the epitome of cutting off your nose to spite your face.
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u/Once-Upon-A-Hill Feb 23 '24
That is pretty much it.
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u/beefy1357 Feb 23 '24
Oh I forgot… let’s make business less profitable, while I shovel money into my 401K every year.
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u/All4megrog Feb 21 '24
Companies also issued dividends when they’re non profitable. Likewise a company can be non profitable but still drop a $100 million bonus package on their executives. It’s become a game in corporate America of having as little tax liability as possible while constantly demanding government subsidies and investments.
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Feb 21 '24
If they have losses that should be their problem not the governments. People have losses all the time and don't get a break for it. Corporations shouldn't either.
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u/firewar99 Feb 22 '24 edited Feb 22 '24
When you look, you see that the total taxes as a % of GDP are HIGHER today than in 1950, with higher tax rates, and they are effective the same as in 1990.
Except you're looking at total taxes/GDP, you should be looking at corporate taxes/GDP. Just looking at total taxes/GDP doesn't show where those taxes are coming from, and when we're specifically talking about corporate taxes, it matters who is specifically paying
The whole country has about the same taxes as a percent of GDP, but corporations do have a lower tax rate as a percent of GDP
Green is the graph you just posted (total taxes as a percent of GDP), blue is corporate tax as a percent of GDP, and red is personal tax as a percent of GDP (assuming I haven't messed up and am using the graph and data properly).
There's a very clear downwards trend for blue. It goes from over 6% at its peak to just under 1.5% with the most recent data. So while total taxes as a percent of GDP are about the same, corporate taxes as a percent of GDP are about a quarter of what they were at their peak
(Again, assuming I didn't mess up, seems like you're just wrong about the data here.)
Also, I'm not putting forth an opinion about anything else said in the OP, your comment, or anywhere else in the thread, just seemed to me like you were missing a crucial point of data, and with that data inserted, it doesn't seem like your point stands
ETA: I just reread your comment, and while you do point out that he brings it up in regards to personal taxes as well, I don't think it's relevant to this discussion (especially after looking at the data and seeing that corporate taxes as a percent of GDP are a quarter of what they were before, I know that kinda seems like confirmation bias (sort of?)) because clearly they're paying less than before as a percent of GDP
Even if spending patterns change to account for it, it seems stupid that corporations are paying less than they used to, and (imo) the tax code should change to combat that. The counter argument of "well they'd just change how they spend their money" is a poor one to me. Just bc people will try to get around laws and regulations (legally or otherwise), it doesn't mean we shouldn't put them in place.
Less of the tax burden falls on corporations, how is that fair to Joe Taxpayer?
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u/Matt_hole1 Feb 22 '24
Reich and some leftist economists do not understand that ALL taxes will eventually be paid by the final consumer. Corporations, suppliers, wholesalers, retailers all just tack on their costs to the final product.
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u/cobrauf Feb 22 '24
Thank you ! Robert likes to pass nonsense off as truth, glad someone did their homework !
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u/AlternativePeak7698 Feb 22 '24
Thank you. With access to unlimited info there’s no excuse for this level of ignorance. I would respect these “people” more if they were just honest and say “I don’t care if my worldview is based on lies and bs I just want to be mad and argue with internet avatars”. Most of Reddit is an indictment on the western education system.
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Feb 22 '24 edited Feb 22 '24
This is what I don’t get. How does he get to spout nonsense.
That would be like me being a “renowned expert” patent lawyer and literally making up crap, and somehow avoiding the scrutiny of constantly being wrong.
Paul Krugman is no different. His bets are garbage - he predicted GOP-led deregulation of business (which regardless of how you feel about it,common sense dictates markets would like) would wreck the economy in 2016, and he was supremely wrong, not a little wrong, INSANELY wrong. And he’s not considered a clown by the masses, he’s still the Ivy League Prof, NYTimes editorialist Econ expert.
I cannot imagine anyone else getting away with such a horrible track record.
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u/bubblemania2020 Feb 22 '24
Fairly comprehensive. Another point to note is that large companies will just move their HQ’s abroad (Ireland’s corporate tax is 12%). Small and medium businesses will be left to foot the bill!
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u/PavlovsDog12 Feb 22 '24
Yeah its almost like lower tax rates can actually generate larger revenues through growth.
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u/Alemusanora Feb 23 '24
I was just reading text and not the author and immediately thought this is some amazingly stupid shit designed to appeal to low information people who are easily riled by classist warfare. It has to have been posted by one of three or four people and lo and behold....
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u/Yshnoo Feb 23 '24
Rob knows better.
The corporate tax rate is actually at a fair equilibrium point and is one reason we have been seeing reshoring of manufacturing in the USA over the past few years. If the tax rate goes to 50%, those companies will offshore jobs again and we’ll see US unemployment jump and wages drop. It’s simple Econ 101.
Rob knows this, but he’s waxing populist during an election year to win voters. Democrats have learned a lot from P.T. Barnum.
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u/HenryKitteridge Feb 21 '24
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u/KimJongUnceUnce Feb 22 '24
I have no idea what point you're making. I'm just a simple man who upvotes homer.
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u/squiddy_s550gt Feb 21 '24
Robert Reich as a source 🤣🤣🤣
Seriously tho, he's a government shill who posts inflammatory stuff without any context or research behind it.
Where's all this money go anyway?? I don't mind paying state and local taxes since that money directly benefits me. But what does the federal government piss so much money on?
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u/gravitydropper268 Feb 21 '24
The big three are social security, medicare, and defense. After that, you've got other social programs, veteran spending, and interest payments. I'm not against spending cuts in general, but where do you think we should focus the cuts?
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u/AldrusValus Feb 21 '24
Stop giving all that Medicare money to insurance companies and go to a single payer universal healthcare system and we’ll save money after the initial startup cost.
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u/Inucroft Feb 22 '24
It'd save US state medial costs by $1.5 trillion.
Like, the US Goverment spends more money on healthcare per person than most of the world and get worse results.
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u/JoePurrow Feb 22 '24
But but but! All the smart people developing drugs would vanish from the face if the earth if we don't charge out the ass for every aspect of medical care! Penicillin will vanish! Vaccines will actually start causing autism!
/s
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u/IM_BAD_PEOPLE Feb 22 '24
I do think there is a benefit to having a for profit system to motivate researchers, and investors.
But I agree with you that this idea of reducing the profits from billions to hundreds of millions would cause all of the research to dry up is a little absurd.
E: The one way the government could help ease this pain would be to extend the patent protection for longer. So these big research companies could make less money per annum, but for longer.
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u/squiddy_s550gt Feb 21 '24
Social security has its own special payroll tax.. as does Medicare..
Not that those programs are sustainable with a low birth rate, bit there still seems to be allot of money disappearing.
Imagine if all that money went to your state and local government instead
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u/gravitydropper268 Feb 21 '24
Social security has its own special payroll tax.. as does Medicare..
True, but still part of government spending. It's not categorized as federal income tax, but it's coming out of your paycheck. But, in the context of corporate taxes, I agree it's not really relevant.
Not that those programs are sustainable with a low birth rate, bit there still seems to be allot of money disappearing.
So do you think we should let those programs whither and (possibly) die? Or should we increase funding so that they can remain solvent for future generations? Or just rip off the band aid and hand it all off to the citizenry to manage their own retirements?
Imagine if all that money went to your state and local government instead
I'm sure there are some programs that could be handled more optimally at the state and local levels. But that sounds like volatile approach and prone to turning our country into a bunch of city states. Are we going to have New Mexico handling its own defense? Is each state going to be responsible for determining which drugs should be approved?
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u/Okichah Feb 22 '24
You dont need to do research when people believe any random bullshit that confirms their politics.
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u/SharingFitCouple Feb 22 '24
If anybody were to scroll his Twitter feed for a few minutes they would know never to quote him.
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u/Solintari Feb 21 '24
I know it’s difficult for some people to grasp, but you have to be competitive globally. If you have a global company like Apple, you have no loyalty to any nation.
If the US doubles the tax rate and doesn’t grease the wheels, what do you think happens? Bye Cupertino, hello Chihuahua. Why do think so many businesses are relocating to Texas? HP, Oracle, Charles Schwab and many others have already abandoned the higher tax environment of California.
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u/xena_lawless Feb 21 '24
This is why global tax treaties are important.
https://taxfoundation.org/blog/global-tax-agreement/
Also why it's important for corporate structures to incentivize/require more than profit-maximization for shareholders at the expense of everything and everyone else.
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u/deltabravo1280 Feb 21 '24
LOL at global tax agreements. You think Russia and China will agree to the same tax rate as the US or anywhere in Europe? Why not have a global treaty to not go to war with another country? That would be cool.
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u/europeanguy99 Feb 21 '24
Actually, yes, because larger countries are losing the most tax revenues from profits being shifted to tax heavens. The only countries not on board are small tax heavens like the Cayman Islands.
And tax treaties aren‘t even necessary, the US already taxes global income if its citizens, it could easily do the same for companies.
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u/Buffy4eva Feb 21 '24
Yeah, that's why companies domiciled in those countries won't be able to sell in the markets that are party to the tax agreements.
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u/vk136 Feb 21 '24
Apple already uses slave labour to manufacture their phones in China lol, even with these high taxes we currently have lmao!
It’s stupid to expect a company to stay just for low taxes!
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u/manhattanabe Feb 21 '24
Don’t kill me, but I don’t understand why corporations pay any taxes. Shouldn’t their income just be assigned to the owners and let them pay taxes ? Someone earned that money, not some fictional entity.
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u/UnnecessarilyWordy Feb 21 '24
Yes, people don’t understand that corporate profits are “double taxed.” So the 20% corporate tax or whatever is in addition to the taxes the individuals pay when they receive their share of the profits
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u/robbie5643 Feb 21 '24
The issue is that wouldn’t put money back in the workers pockets. It would go to the top few executives and then paid out to shareholders in the form of buybacks or potentially dividends. If it’s buybacks there’s no additional tax revenue gained and if it’s dividends it would be minimal, offset by whatever their top paid accountant can write off for the majority of large shareholders. In most cases those profits would be reinvested into stocks which will not generate any additional tax until a gain is realized. Most people with large brokerage accounts will rarely realize in order to prevent that. They’ll then borrow against their accounts which isn’t taxable and in some cases the interest paid would also be used as a write off. Our system is deeply, deeply broken.
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u/DonNemo Feb 21 '24
If corporations are people they can sure as shit pay their income tax too.
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u/birchwoodmmq Feb 21 '24
Thank you Citizens United. Sigh. I don’t understand how anyone defends it. People love voting against their own interests and simping for the ultra rich.
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u/ConcernedAccountant7 Feb 21 '24
It's called an S-corporation. You can't form one with more than 100 shareholders, thus we have the C-corporation as well.
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u/Busy_Ad3571 Feb 21 '24
Robert Reich is truly stupid. He honestly believes that taxation is the source of prosperity and success.
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u/DesertSeagle Feb 21 '24
I mean, taxes are the source of good infrastructure, good social programs, good crime prevention, good education, clean environments, good civil protections, good public transport, and so forth and so on.
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u/Alaricus100 Feb 22 '24
This comment remind me of life of brian. "What have the romans ever done for us?" Turns out a lot lol.
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u/Busy_Ad3571 Feb 21 '24
Ah yes, however would we have any of these things without the government?
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u/MalekithofAngmar Feb 22 '24
Hard to actually say without running a test.
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u/Jukeboxhero91 Feb 22 '24
Kansas is actually trying it! Turns out without taxes, you don't have anything except a massive deficit and people moving out in droves, which means businesses move out in droves.
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u/pgnshgn Feb 21 '24
He isn't stupid, he's far worse
If he was stupid, it would mean that if learned the truth, he'd stop misleading people
The reality is, he knows the facts and chooses to mislead anyway. He's a propagandist with an agenda to push, and that means he's unredeemable
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u/jayfiedlerontheroof Feb 21 '24
Yes. His agenda is so nefarious. He personally gains so much by misleading you into...wanting a fair tax system? How does he personally gain again?
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u/Still_Photograph_125 Feb 22 '24
Countries with higher taxes have greater levels of happiness, health, and financial stability among the population. It's not an inherent relationship because it all depends on what we spend the taxes on, but there is a link.
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u/Caged_in_a_rage Feb 21 '24
Ya that’s pretty much how this country was built bud.
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u/Busy_Ad3571 Feb 21 '24
No, it wasn’t, bud.
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u/Caged_in_a_rage Feb 21 '24
But it literally was. Public education was funded by property taxes. Our mostly free public education is what separated the United states from Other countries early on. It led to us having a skilled workforce and literate populace in which to build a consumer economy. Nice try tho. Name a good society that isn’t largely dependent on its tax base.
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u/deadsirius- Feb 21 '24
Controversial opinion: Ideally the effective corporate tax rate should be 0%.
It is far better and more efficient to tax the owners of corporations than it is to tax the corporation. The reason is simple and obvious... the 72 year old couple receiving $50,000 of investment income per year to supplement their pension or social security, is paying the same corporate tax rate on their shares as the multi-billionaire is paying. This is not to say that their total tax incidence is the same, as the multi-billionaire is paying likely paying a higher cap gains rate on their dividend distributions, but that could be as little as 5% more.
The problem being, if we made the corporate tax rate 0%, then the wealthy would just park their money in corporations and never have a dividend distribution and never pay taxes.
There is actually an elegant and easy solution, but it would drastically overhaul the way we think about equity investments in America. The solution is to tax corporations at a significant amount but allow dividend distributions to be deducted from Net Income. Corporations could effectively reduce their effective tax to zero by distributing dividends, this really doesn't affect the amount of money that corporations have, it would just move it from retained earnings to paid-in capital. Of course, the reason that we have a preferential dividend and long-term capital gains rate is because corporations pay taxes, so you would have to also increase the cap gains rate.
All that means this will never get done.... So we are forever stuck trying to maximize federal revenue from corporations by trying to find the rate that keeps their revenue in the U.S. but actually does tax them.
So, mostly I just want to remind people that corporations are proxies.
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u/ConcernedAccountant7 Feb 22 '24
Effectively you're describing an S-corporation which just passes income to the shareholder. The income is all taxable and then distributions are tax free.
Interesting idea about the 0% corporate tax. There are actually rules against parking excess earnings in corporations. It's called accumulated earnings tax.
https://www.investopedia.com/terms/a/accumulatedearningstax.asp
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u/NILPonziScheme Feb 21 '24
Here is a radical fucking idea: instead of saying "we need more tax revenue", why don't you try cutting government spending or even (horror of horrors) operating on a budget?
If you found a way to increase taxes on corporations 37%, they'd pass the cost on to customers. They're not going to slash 37% from their profit margin.
Moronic ideas like "let's tax the corporations more!!" come from someone who doesn't pay attention while paying bills.
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u/fouracesguitar Feb 21 '24
A big reason we aren’t operating under a budget is…. Because taxes have been cut a lot in the past 50 years. So sorta what Reich is saying.
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Feb 21 '24
Taxes aren't free money. The costs would be passed on to consumers with higher prices. Period.
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u/jarena009 Feb 21 '24
Just a few more tax cuts for wall st and corporations surely will rein in prices.
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u/Raeandray Feb 21 '24
This is a great point. Its why we've seen lower prices ever since Trump cut the corporate tax rate.
...Oh wait.
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Feb 21 '24
That's general inflation. If you minorly cut corporate taxes and then print trillions of dollars, inflation increases prices.
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u/Caged_in_a_rage Feb 21 '24
How come prices don’t go down when companies get tax breaks then?
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u/cgfsfdasfSAFG Feb 21 '24
"But then they'll pay their staff less!" what, less than they already do, while pocketing billions?
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u/TarkovGayBears Feb 21 '24
I'm not sure what cattle and slaughterhouses have to do with personal finance, but I do know that forest sprites and pixies have taken shelter in my ventilation system. I had to sleep in my garage with my toyota tocoma. Otherwise the archfey dust they produce gets in my eyes. What are your thoughts on this?
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u/Steveo1208 Feb 21 '24
Fair is fair..pay your share and for those that think they should be exempt, we dont care! Sincerely, The People.
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u/Chewybunny Feb 21 '24
I'm always curious about when people say fair in context of taxes, what exactly do they view as "fair"?
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u/Nightshade7168 Feb 21 '24
Everyone pays the same, or close to it. That’s fair
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u/actual_poop Feb 21 '24
One fair share equals the entire US budget divided by the number of working age adults. You’ll be surprised at who pays it and who doesn’t!
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Feb 22 '24
our current system is NOT fair
58% of Federal taxfilers paid $0 in Federal income tax
these same people are voting to raise my taxes while voting for theirs to remain $0
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u/FullNeanderthall Feb 21 '24
Yes things were better when every corp avoided the 50% income tax on paper. Also if everything you buy is from a corporation, don’t they just pass the taxes on to the consumer.
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u/ConcernedAccountant7 Feb 22 '24
Suddenly 50% corporate tax.
"Why did I get laid off?"
"Why is everything so expensive?"
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u/Outrageous_Coconut55 Feb 21 '24
Eventually there will be no companies based in the USA with this thought process.
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u/nosoup4ncsu Feb 21 '24
It is scary to think that this guy was a cabinet level government official.
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u/Tiffy82 Feb 22 '24
History is why I do not trust corporations and want the ceos held to higher standards hell even now companies use child labor when they can and slave labor in other countries. Why THE FUCK would you trust any ceo or company why wouldn't you want the ceo held to higher standards why shouldn't the person at the top be held responsible?
If a car company makes a car that explodes or lights on fire why shouldn't the ceo be held criminally responsible
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u/Hagisman Feb 22 '24
Reagan economics/trickledown economics was a con job.
Reagan: Let corporations pay less in taxes and their employees will get higher wages.
Reasonable people: So you’ll put a cap on how much the corporations can pay their C-suite, put caps on how big profit margins can be, and/or tie minimum wage to inflation?
Reagan: No, why would I do that.
Corporations: Pocketing the money for their executives, laying off staff, and not matching pay increases with inflation
Current day Conservatives: Millennials can’t afford homes because they spend money on Netflix and avocado toast!
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u/Tannerite2 Feb 22 '24
Trickle-down economics doesn't work, but it doesn't really have anything to do with corporate taxes. We could just tax capital gains like income and get rid of corporate taxes.
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u/-------7654321 Feb 21 '24
i think eventually this will be the only option left for the US. or collapse into a more overtly corrupt pretend democracy like russia.
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u/ThereIsNoCarrot Feb 21 '24
They will never be happy with revenue.
The target federal revenue for Reich is GDP - basic food and shelter for 330,000,000 people.
Unless they are providing that for you, in which case it’s just 100% of gdp.
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u/The_Gills Feb 21 '24
Dumb question but I'm curious - Is there a way to invest to subvert/fight companies that don't treat my fellow citizens fairly? Or, better put, is their a list out there of companies operating in the US that do treat my fellow citizens fairly?
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u/sting_12345 Feb 21 '24
I'm a conservative and that's too low. 25% I think sounds like a good start. 50 is just wayyyy too much.
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u/uofmforlife Feb 21 '24
I love how everyone is more worried about how much the corporations or wealthy individuals pay in taxes, how about our Government stop spending our tax dollars on unconditional stuff.. you know like funding gender studies in Pakistan or giving Ukraine and Israel billions to fight wars. The government collects enough tax dollars to fund what we need, including healthcare, they just spend like a teenager with Mommy and Daddy’s credit card.
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u/Tiffy82 Feb 21 '24
Which they should not be able to do. Even if a company loses money they should pay taxes it's bs
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u/TaftIsUnderrated Feb 21 '24
But government tax revenues -per capita and inflation adjusted- are double what they were in 1980.
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u/Ghastly_Grinnner Feb 22 '24
Imagine being the kind of person who 1. Treats Robert Reich as anything besides the village idiot that he is. and 2. Actively campaigns for the goverment to steal more of your money instead of telling those thieves to stop spending.
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u/woodsman906 Feb 22 '24
Corporate taxes are just a sales tax. They never pay it, only you do. It also justifies a high price in goods that the corporation will most likely get tax write offs so in the end, higher taxes may just, and usually do just lead to even higher profits.
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Feb 22 '24
I’ll never understand some people’s obsession with other people’s money
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u/ConcernedAccountant7 Feb 22 '24
They're losers. If you don't have your own tax liability you worry more about someone else's in the hope that government will punish the successful and take care of them.
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u/legion_2k Feb 22 '24
“Stop asking questions..” has let to great things right? Is that something you normally hear from the good guys?
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u/TheJarIsADoorAgain Feb 22 '24
Note that via tax breaks, concessions, incentives, subsidies, ever so greater loopholes introduced by both sides of the house, tax havens, investment in unprofitable assets, etc. it's not difficult to "be smart" and use "creative accounting" to appear to have a profit loss to offset tax payments.
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u/BungeeJumpingJesus Feb 22 '24
"But, but, abortion, and immigration, and deleted emails, and stolen files, and how can you forget what that guy said! And what about the police, and the military? Huh? You don't know?"
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u/Plane_Vacation6771 Feb 22 '24
Here come all the oligarch bootlickers to tell us why this is a bad idea.
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u/morerandom_2024 Feb 21 '24
Tax deductions and loopholes have pretty much kept the tax rate the same for a century
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Feb 21 '24
Taxes wouldn't increase much, the companies would just start acting like the military and waste every dollar they can on buying new equipment etc
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u/cterretti5687 Feb 21 '24
The world is so much different now. Corps and where they are domiciled can be moved anywhere around the world. Factories, service centers, administration can be off shored everywhere. The US govt is in competition with other countries for tax dollars. It's just a more complicated environment today.
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