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Thread: Eliminate the Corporate Income Tax

  1. #1

    Default Eliminate the Corporate Income Tax

    I love this debate. It challenges conventional "wisdom".

    Why We Should Eliminate the Corporate Income Tax
    OCT 28 2010, 2:16 PM ET 516
    ...
    "I can practically hear my more leftish readers grinding their teeth as they prepare to unload a wagonful of vitriol, but my objectives here are as much liberal as they are conservative. *The corporate income tax is an extraordinarily clumsy vehicle for the social purposes it is supposed to serve--it doesn't raise that much revenue, and it doesn't necessarily fall most heavily on the rich. *There are better ways to serve its progressive goals, at least as I see them--to reallocate income from capital to labor, and from rich to poor."...

    http://www.theatlantic.com/business/...ome-tax/65351/

    Why I Still Think We Should Eliminate the Corporate Income Tax
    FEB 27 2012, 3:09 PM ET 596
    One of the first blog posts I ever wrote was on why we should eliminate the corporate income tax. *This is not because I just looooooooove corporations, or wish to put more money into the hands of rich people--on the contrary, I want to pair an elimination of the tax with an end to the special low tax rates for dividends and capital gains, and maybe even an increase in rates for higher brackets if that's necessary to keep the thing revenue neutral. *Which would actually be considerably more progressive than the current system."...

    http://www.theatlantic.com/business/...me-tax/253673/

    How to Kill the Corporate-Income Tax
    By the Editors Jun 19, 2012 4:30 PM MT

    "What if we told you there’s a way to make the U.S. tax system fairer, get corporations out of politics, improve our global competitiveness, bring home more than $1 trillion in offshore earnings, increase wages, end the double taxation of company profits and improve returns for many shareholders?
    You’d say we were dreaming. But all this could be achieved if Congress would agree to a simple deal: Lower marginal rates, tax long-term capital gains and dividends at the same rate as regular income, and eliminate the corporate-income tax."...

    http://www.bloomberg.com/news/2012-0...ncome-tax.html
    Last edited by KC; 27-06-2012 at 01:47 AM.

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    Corporations might legally be a "person" but in reality they are made of people, so you can get the exact same effect by taxing only the individual. I feel the same way about sales and income tax. It isn't just the companies lobbying government but also the government picking and choosing contracts to various levels of fairness (this differs by province or state).

    In my idea of a perfect world there would only be two levels of taxation either a sales tax or an income tax and a property tax.

  3. #3

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    I like it and it would eliminate a ton of paperwork on both the corporate (no taxes) and personal level (no dividend income). Would also cut down on quite a few federal and provincial gov't jobs (good for our taxes, bad for the workers of course).

    But, how would they address people setting up corporations to use as tax shelters? With no corporate taxes, there would be a huge benefit to people setting up their own personal corporations and contract a portion of their services out which could be retained in the corporation tax free, acting as a pseudo RRSP (ie. a job pays $100,000, but the employee elects to collect only $50,000 in salary for day to day living and collect $50,000 into his corp for investments). Not that it's a terrible thing for people to be able to invest tax free (that's why they created RRSPs) but this would essentially remove the hard cap on this.

  4. #4

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    ^Legislation could easily fix that. Closing all the BS loopholes as they stand would probably put enough money in the government purse to solve most problems.
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  5. #5

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    Quote Originally Posted by bolo View Post
    I like it and it would eliminate a ton of paperwork on both the corporate (no taxes) and personal level (no dividend income). Would also cut down on quite a few federal and provincial gov't jobs (good for our taxes, bad for the workers of course).

    But, how would they address people setting up corporations to use as tax shelters? With no corporate taxes, there would be a huge benefit to people setting up their own personal corporations and contract a portion of their services out which could be retained in the corporation tax free, acting as a pseudo RRSP (ie. a job pays $100,000, but the employee elects to collect only $50,000 in salary for day to day living and collect $50,000 into his corp for investments). Not that it's a terrible thing for people to be able to invest tax free (that's why they created RRSPs) but this would essentially remove the hard cap on this.
    Almost every company's ownership eventually can eventually be traced to some individual(s). So require all net income to be paid, even if only notionally, to shareholders. It would be a flow through system. If you own 50% of a company then you get assigned 50% of its 'profits' for the year (royalty trusts, REITs, etc. could serve as a rough model). There would still have to be rules and auditing governing the ability of a company to buy and expense personal use assets.

    Of course, it would also be nice to level the playing field between the self-employed and employees. So, it would also be cool if everyone could operate through a company in order to first deduct costs associated with generating income. ( ie determine what is personal use and what isn't in terms of earning a livng.) Contractors have some fantastic core benefits that regular employees don't have, and employees have UI and other fringe benefits.

    On income and consumption taxes I think a combination of the two are necessary to balance the economy while providing government with a more assured funding stream. However there are other creative alternatives.
    Last edited by KC; 27-06-2012 at 09:27 AM.

  6. #6

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    Quote Originally Posted by KC View Post
    Almost every company's ownership eventually can eventually be traced to some individual(s). So require all net income to be paid, even if only notionally, to shareholders. It would be a flow through system. If you own 50% of a company then you get assigned 50% of its 'profits' for the year (royalty trusts, REITs, etc. could serve as a rough model). There would still have to be rules and auditing governing the ability of a company to buy and expense personal use assets.
    You can't simply pay out all a corporations profits at the end of the year (they could become bankrupt in January), nor could you tax the shareholders for corporate profits (that would be a nightmare to administer, think about how many shareholders there are for public companies). What do you mean by "nominally"?

  7. #7

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    Quote Originally Posted by Chmilz View Post
    ^Legislation could easily fix that. Closing all the BS loopholes as they stand would probably put enough money in the government purse to solve most problems.
    Close the loopholes and they'll threaten to leave!
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    I'm a lefty and I completely agree with this idea. It would increase the problem of personal use of corporate property, so that would be an area of increased interest for auditors.

  9. #9

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    Both the corporate taxes and the individual taxes were highest exactly when the average standard of living was at its height fifty or so years ago.

    The rest is just greed.

  10. #10

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    How do you tax foreign individuals then who own businesses in Canada? Lets say I'm a shareholder in a company in Canada, and I live in Bermuda. I pay no tax then if the corporation is not taxed, but a Canadian who owns the same corporation pays through the roof.

    You would need to jack up non-resident dividend withholding taxes to achieve equity then, but that's contrary to all the tax coneventions Canada is legally obligated to.

    Its an interesting idea, but I'm not sure on the practicalities, especially with respect to developing countries which would have no-one to tax in respect of foreign corporations.

    The other big issue is defferal. Unless there is some way to flow corporate profits out to taxpayers before dividends (in which case you need to caclulate corporate tax anyway, just taxed at a different level), there would be a massive incentive to keep everything at the corporate level and not pay out. Just borrow against for your day to day expenses.

    Another problem is the one that killed income trusts. When TELUS annoucned they were going to examine an income trust, the Federal government had to back down, because a huge % of the tax revenue would be deffered for decades from Canadain tax as people would invest in income trust through tax deffered vehicles (RRSP's).
    Last edited by moahunter; 27-06-2012 at 01:53 PM.

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    CEO or any executives will get huge salary raise and hefty bonus, if there is cuts to corporate tax.
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  12. #12

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    Quote Originally Posted by bolo View Post
    Quote Originally Posted by KC View Post
    Almost every company's ownership eventually can eventually be traced to some individual(s). So require all net income to be paid, even if only notionally, to shareholders. It would be a flow through system. If you own 50% of a company then you get assigned 50% of its 'profits' for the year (royalty trusts, REITs, etc. could serve as a rough model). There would still have to be rules and auditing governing the ability of a company to buy and expense personal use assets.
    You can't simply pay out all a corporations profits at the end of the year (they could become bankrupt in January), nor could you tax the shareholders for corporate profits (that would be a nightmare to administer, think about how many shareholders there are for public companies). What do you mean by "nominally"?
    No. no. no. Payout wouldn't be required. It would be a notional imputed receipt of dividend income. Companies could retain whatever amount they wanted. As for the numbers, yes there'd be some more administration by the degree of additional companies that currently do not pay dividends.
    Last edited by KC; 28-06-2012 at 03:05 PM.

  13. #13

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    The United States has one of the strongest borderline corporate tax percentages around the world. Nonetheless, hardly any corporations pay it, and the nation’s productive tax rate is minor than the rate in various developed countries.

  14. #14

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    Quote Originally Posted by Lewis340 View Post
    The United States has one of the strongest borderline corporate tax percentages around the world. Nonetheless, hardly any corporations pay it, and the nation’s productive tax rate is minor than the rate in various developed countries.
    Yeah, they use transfer pricing and loopholes to bank it off shore!

    A trust model would force real or notional payouts to shareholders who would pay taxes on corporate earnings every year.

    Basically, "companies" don't make money, people make money. Somewhere there's a shareholder with a claim to every dollar of wealth stored in a company's value.

    If you're an investor you can currently shelter savings from taxes by investing in companies that don't pay dividends, it's great. But I don't think it's right, or fair.
    Last edited by KC; 22-09-2012 at 06:33 AM.

  15. #15

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    Like Warren Buffett, I try to read everything Kotlikoff writes because he's often counter intuitive, insightful and never tainted by capitalistic or socialistic dogma.


    Abolish the Corporate Income Tax
    By LAURENCE J. KOTLIKOFF JAN. 5, 2014
    excerpt:

    "In recent decades, American workers have suffered one body blow after another: the decline in manufacturing, foreign competition, outsourcing, the Great Recession and smart machines that replace people everywhere you look. Amazon and Google are in a horse race to see how many humans they can put out of work with self-guided delivery drones and driverless cars. You wonder who will be left with incomes to buy what these robots deliver.

    What can workers do to mitigate their plight? One useful step would be to lobby to eliminate the corporate income tax.

    That might sound like a giveaway to the rich. It’s not. "...

    http://www.nytimes.com/2014/01/06/op...-tax.html?_r=0

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    The concept that the "rising tide lifts all boats" has been disproven over and over again

    Corporations are already heavily subsidized by government, and much of the public assets that we have in place such as our legal systems and physical infrastructure benefit corportations disproortionately to how much they invest in those systems.
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    I didn't see the "rising tide" quote anywhere in his article. He did stae that the American economy could grow doing things other than eliminating the corporate tax.

    It seems that everybody is heavily subsidized by the government when you read these threads and I guess it has to be true or governments wouldn't have deficits.

  18. #18

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    Charts

    http://en.wikipedia.org/wiki/File:US...47-2011_v2.jpg


    http://en.wikipedia.org/wiki/File:Fe..._1950-2010.jpg

    Corporations have been getting a better deal every decade. They have the political leverage that you and I do not have.
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    I would support it as part of a larger package that eliminated tax deductions, lowered the overall income tax rate, and restricted all political donations to citizens who can legally vote.

    "For every complex problem there is an answer that is clear, simple, and wrong"

  20. #20

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    Agreed

    Also closing the tax incentives, corporate welfare and changing the stock market to the original form where it was for investors and managing debts. Get rid of day trading, high frequency trading, derivatives, currency trading etc. and all the gambling that is now the normal day to day scams. When you buy stocks there should be a 30 day minimum holding period before you can sell it. This would take out the wild fluctuations in the market. Now the dollar changes more value in a couple of months than what took years in the past.

    http://commons.wikimedia.org/wiki/Fi...ange_Rates.png
    Last edited by Edmonton PRT; 13-04-2014 at 01:03 PM.
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  21. #21

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    Unfortunately tax legislation has a long history of purposeful loopholes, so no matter how interesting a taxation idea is, corporates and the wealthy who have access to "tax engineering" will be better off than me and you.


    Quote Originally Posted by KC View Post
    Like Warren Buffett, I try to read ...
    Don't read/listen to what they say, do as they do. Indeed Buffet is a very fitting example here. He earns a flat 100k from his CEO position, so as he famously said his effective tax rate is lower than his secretary. So he is all for higher taxes, right?

    Just see how he managed to save himself and his company, an estimated $675 million in taxes in his recent deal transaction on Graham holdings:

    How Warren Buffett and Don Graham are saving $675 million in taxes (Washington Post, 11 April 2014)
    http://www.washingtonpost.com/busine...bc3_story.html

    Buffett Cuts Tax Bill, Tells Others Not to Complain (Bloomberg, 19 March 2014)
    http://www.bloomberg.com/news/2014-0...-tax-take.html

  22. #22

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    ^ You're talking about Buffett in his role as CEO and I'd say that's his fiduciary responsibility to shareholders. I don't see anything wrong with a person operating within the current set of tax rules and the law while criticizing the fact that the current rules give him and all others in his situation an unfair advantage and lobbying for change and more fairness. Most people benefitting from biased rules just praise and defend those rules. If you were a financial planner and disagreed with the size, degree, design or ethics behind a tax benefit available to your clients, would you then not avail your clients of the knowledge and opportunity for them to reduce their taxes owing, but instead stay quiet so that they would pay more tax than need be? I think you would advise them of the opportunity while maybe lobbying to improve the fairness of the tax code.

    Personally Buffett had $600 million in cash and short term instruments a few years ago. I don't see a lot of fancy tax maneuvering potential there.

    Moreover the idea that Berkshire Hathaway is the only company with tax accounting prowess is ludicrous. As Buffett says:
    "“American business is complaining enormously about the level of the corporate income tax,” Buffett said at Berkshire’s annual meeting in Omaha last year. “I would have you take that with a grain of salt.”

  23. #23

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    Quote Originally Posted by KC View Post
    No. no. no. Payout wouldn't be required. It would be a notional imputed receipt of dividend income. Companies could retain whatever amount they wanted. As for the numbers, yes there'd be some more administration by the degree of additional companies that currently do not pay dividends.
    This is similar to how LLCs are taxed in the us or partnerships. It's no simpler than the current system though because there is still the need to calculate the income that gets attributed to those individuals, whether it be foreign sourced or domestic. And, companies will still be obliged to minimize that taxability to the extent it isn't distributed to enhance the return to shareholders (most of whom are typically middle class Canadians through pension funds), which in turn results in the need for a sophisticated corporate tax system.
    Last edited by moahunter; 13-04-2014 at 04:25 PM.

  24. #24

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    It's not really about simplicity beyond levelling out the corporate world but rather ensuring owners are taxes equitably and fairly according to their stakes in companies while freeing companies from the need to perform financial gymnastics to reduce their tax bill. In the case of publicly traded corporations, such companies generally want to report higher earnings not lower even if it would benefit some shareholders. Non-taxable entities like pensions could actually receive higher returns since taxes would be eliminated from their returns. Raising expenses or lowering income to reduce net income deemed to be distributable/assignable to its shareholders might shelter some of the company's true earnings but at some point that hidden wealth would be reflected by higher share valuations and I don't think this is antpy different than what goes on today. It's just that there is likely little consistency across the corporate world at present. And there too, you could tax(credit) MTM annual gains(losses) after inflation.

  25. #25

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    ^^^ no! you didn't get my point. I am referring to how the wealthy and corporations have access to "tax engineering". And Buffett example was given to show how people on the left or tight of political spectrum take advantage of that. Another example, this time from the republican side is Mitt Romney's tax debate during the presidential election.

    Let's extrapolate the charts on post#18 to its logical conclusion. The middle class (mainly people on payroll who won't even see a pay check in their account before being taxed) are being milked to the bone, to fund federal, provincial and municipal governments. Then to grow the economy they are also encouraged to consume, and when unable, they are offered cheap credit towards a debt fuelled consumption. Given the wealthy and corporates evade paying taxes, in the name of what law allows, at some point, if not already, the system becomes a centrifuge, delivering cream a la cream, the 1%, and the rest, the 99%.

  26. #26

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    That's the thing. Taxing corporations greatly expands the tax engineering opportunities for the wealthy. Those among the truly influential that take a stand and try to level the paying field, like Buffett on payroll taxes, are held up as hypocrites. The wealthy will always have access to tax avoidance strategies but over the past century there have been occasions where they have paid significantly more tax. High MTRs post depression and in the late 70s are examples. Such measures have raised tax receipts but have done little to improve the efficiency of the economy or improve the assignment of taxes among the populous.

    Some additional biased articles:

    6 Reasons To Get Rid Of The Corporate Income Tax - Business Insider
    http://www.businessinsider.com/6-rea...me-tax-2013-11

    Excerpt:
    "3. One of the best reasons for doing this is that the corporate tax is not necessarily progressive. Research is mixed on who actually pays the corporate income tax - shareholders or employees. After all, the tax ultimately comes from someone's wallet. Most economists agree that at least some of it is passed on to workers. Some believe that workers actually pay the majority of it. If we replaced the corporate tax with taxes targeted at the wealthiest individuals, we could actually make the tax system more progressive."


    A Populist Argument For Eliminating The Corporate Tax - Forbes
    http://www.forbes.com/sites/realspin...corporate-tax/
    Excerpt:
    "Most people believe that corporations pay taxes. They are wrong. Every economist will tell you that corporations are not people and that the people who own corporate equities ...

    A much better approach would be to eliminate the corporate tax and the corporate tax code entirely, remove the corporate veil and integrate the corporate and individual tax systems. All corporations would pay zero, but owners of capitol would not. A simple way to accomplish this would be to tax dividends and realized capital gains at the shareholder level and at the shareholder normal rate. In fact, a number of businesses already function this way, where all corporate profits are passed through directly to the owners. All corporations should operate under these same rules."

    Why I Still Think We Should Eliminate the Corporate Income Tax - Megan McArdle - The Atlantic
    http://www.theatlantic.com/business/...me-tax/253673/

    Want a 12 percent raise? Eliminate the Corporate Income Tax | e21 - Economic Policies for the 21st Century
    http://www.economics21.org/commentar...ate-income-tax
    Excerpt:
    "Kotlikoff’s case for abolishing the corporate income tax is so strong that the editors at the New York Times published an op-ed on his findings. Such simple reform would go so far in advancing the lives of Americans young and old, unskilled and skilled. Abolishing the outdated corporate income tax now would jumpstart the economy, spurring investment and growth in the labor force that is necessary for true recovery."

    Apple Shows It's Time to Abolish Corporate Taxes - Bloomberg View
    http://www.bloombergview.com/article...orporate-taxes
    Last edited by KC; 13-04-2014 at 09:49 PM.

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    Quote Originally Posted by Edmonton PRT View Post
    Get rid of day trading, high frequency trading, derivatives, currency trading etc. and all the gambling that is now the normal day to day scams. When you buy stocks there should be a 30 day minimum holding period before you can sell it. This would take out the wild fluctuations in the market. Now the dollar changes more value in a couple of months than what took years in the past.
    There's probably some argument for restricting/reducing high frequency trading. But having a 30 day minimum holding period for equities is insanity. Massively reducing the efficiency of markets would lead to vastly MORE volatility in the markets, not less. That's basic finance 101.

  28. #28

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    KC, please think through what Buffett did. He exactly avoided the capital gain tax (and there was no dividend payed either) that the zero-corporate-tax model suggest should be the source of tax revenue, via an increased personal tax for owners of capital. Tax engineering in action!

  29. #29
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    Eliminating corporate income taxes is an terrible flawed idea.

    The consequence would be - for reasons of tax avoidance - a massive wealth transfer from the accounts of individuals and families to those of corporations.

    There have been huge reductions in federal (from 28% to 15%) and Alberta corporate income tax rates (from 15.5% to 10%) in the past decade or so. The Canadian economy is already experiencing a problem with corporations sitting on a growing cash pile, rather than investing this cash to improve productivity.

    Imagine if incorporating meant income could be earned and kept inside a corporate entity without paying any tax. This would be hugely beneficial to existing owners of capital who would have a strong incentive to shelter more of their wealth inside a corporate entity rather than pay it out as personal income. There would also be a rash of incorporations from individuals wanting to shelter income who have little incentive to do so under the existing tax rules.

    The tax distorting impacts of eliminating corporate income tax (especially if accompanied by corresponding increases in personal income taxes to maintain revenue neutrality) are mind boggling.

    The optimum income tax system is one where the effective tax rates of the individual and corporate sectors are roughly the same.
    Last edited by East McCauley; 14-04-2014 at 04:07 PM.

  30. #30

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    ^ Royalty trusts had to pay out most of their cash flows.

    Here's a current article...

    Andrew Coyne: If we really want to soak the rich, we should abolish the corporate income tax | National Post

    Excerpt:

    "But in fact the evidence suggests that shareholders do not bear the bulk of the tax. ...

    Who does that leave? Workers. As much as three-quarters of the tax, according to recent research, gets ..."

    http://fullcomment.nationalpost.com/...?__federated=1



    .
    Last edited by KC; 07-07-2014 at 09:33 PM.

  31. #31

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    Quote Originally Posted by FamilyMan View Post
    KC, please think through what Buffett did. He exactly avoided the capital gain tax (and there was no dividend payed either) that the zero-corporate-tax model suggest should be the source of tax revenue, via an increased personal tax for owners of capital. Tax engineering in action!
    Yes I know and that's because he can retain earnings.

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    Quote Originally Posted by East McCauley View Post
    Eliminating corporate income taxes is an terrible flawed idea.

    The consequence would be - for reasons of tax avoidance - a massive wealth transfer from the accounts of individuals and families to those of corporations.

    There have been huge reductions in federal (from 28% to 15%) and Alberta corporate income tax rates (from 15.5% to 10%) in the past decade or so. The Canadian economy is already experiencing a problem with corporations sitting on a growing cash pile, rather than investing this cash to improve productivity.

    Imagine if incorporating meant income could be earned and kept inside a corporate entity without paying any tax. This would be hugely beneficial to existing owners of capital who would have a strong incentive to shelter more of their wealth inside a corporate entity rather than pay it out as personal income. There would also be a rash of incorporations from individuals wanting to shelter income who have little incentive to do so under the existing tax rules.

    The tax distorting impacts of eliminating corporate income tax (especially if accompanied by corresponding increases in personal income taxes to maintain revenue neutrality) are mind boggling.

    The optimum income tax system is one where the effective tax rates of the individual and corporate sectors are roughly the same.
    it should be very simple for the corporation to allocate all profits to its shareholders who would then be responsible for paying tax based on their circumstances (ie higher income earners would pay a higher rate - something that doesn't happen now). mutual funds and pension plans and insurance companies all manage to report and allocate income on that basis - there is no reason to think that "companies" could not do the same thus eliminating that ability to shelter income and avoid taxes that probably takes place already to a larger degree than it would otherwjse.
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  33. #33

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    Quote Originally Posted by kcantor View Post
    it should be very simple for the corporation to allocate all profits to its shareholders who would then be responsible for paying tax based on their circumstances (ie higher income earners would pay a higher rate - something that doesn't happen now).
    Basically what you are saying here, is treat all companies as partnerships. It isn't a simple matter to allocate income from partnerships as you still need to calculate the taxable income. As to the deferal at the moment, I don't think its that significant, especially when you consider many of the owners of shares are actually tax deffered entities like pension plans, or personal RRSP's. This was why the government was so opposed when companies like TELUS proposed to become an income trust - all of its profits would mostly be sitting in tax deffered investments, meaning it would have been decades before the government got the tax revenue.

    Also, what do you do then with non-resident invetors? How are you going to tax them? As a general rule, flow through entities create more complexity, not less, when tax planning. There is a reason why virtually every country on earth has corporate tax - its relativley simpler to tax and collect from one person (the company) rather than thousands (various shareholders).
    Last edited by moahunter; 08-07-2014 at 11:50 AM.

  34. #34

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by kcantor View Post
    it should be very simple for the corporation to allocate all profits to its shareholders who would then be responsible for paying tax based on their circumstances (ie higher income earners would pay a higher rate - something that doesn't happen now).
    Basically what you are saying here, is treat all companies as partnerships. It isn't a simple matter to allocate income from partnerships as you still need to calculate the taxable income. As to the deferal at the moment, I don't think its that significant, especially when you consider many of the owners of shares are actually tax deffered entities like pension plans, or personal RRSP's. This was why the government was so opposed when companies like TELUS proposed to become an income trust - all of its profits would mostly be sitting in tax deffered investments, meaning it would have been decades before the government got the tax revenue.

    Also, what do you do then with non-resident invetors? How are you going to tax them? As a general rule, flow through entities create more complexity, not less, when tax planning. There is a reason why virtually every country on earth has corporate tax - its relativley simpler to tax and collect from one person (the company) rather than thousands (various shareholders).
    Good points.

    Pension funds, RRSPs, etc.: tax them as shareholders but at reduced rates on par with what the average corp would have paid. Non-resident shareholders: Hit them with withholding taxes.

    Essentially, hit pensions, non-residents, etc. with a withholding tax to make up for whatever aggregate amount the government currently receives in corporate taxes before these entities receive their dividend payments. Non-resident investors could get hit with a rate equal to the highest MTR being charged on domestic dividend receipts. (Note how we have no qualms about taxing domestic holdings companies at high MTR rates.)


    INVESTMENT HOLDING COMPANIES
    Excerpt:
    "The above discussion can be summarized as follows:
    1) An investment holding company can no longer be used as a tax deferral vehicle. Earning and retaining interest, rent, royalties, foreign income, taxable capital gains or Canadian dividend income in an investment holding company will result in a greater tax liability than if such income was earned personally."
    https://dir.rbcinvestments.com/getim...ntent_id=20991
    Last edited by KC; 10-07-2014 at 09:58 PM.

  35. #35

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    Quote Originally Posted by KC View Post
    Essentially, hit pensions, non-residents, etc. with a withholding tax to make up for whatever aggregate amount the government currently receives in corporate taxes before these entities receive their dividend payments.
    You would need to renegotiate tax treaties with every country Canada has them with which would take decades, because currently withholding taxes are limited by these treaties (in return, Canadian companies can invest offshore with little withholding tax, which is important so that they can compete internationally and bring money back to Canada). Keep in mind as well, that Canada desperatley needs equity investment from foreign companies to enable it to undertake the various LNG and Oilsands projects (let alone building another refinery or similar, which some people want), there isn't sufficient capital in Canada to do this. Its just opening a can of worms for minimal benefit, the current Canadian corporate tax system works very well.

    http://www.fin.gc.ca/treaties-conven...force--eng.asp
    Last edited by moahunter; 11-07-2014 at 09:28 AM.

  36. #36

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    Another approach.. In the US... (A hot topic over the past couple months)

    Harvard's Mankiw: 'Repeal Corporate Income Tax Entirely, Scale Back the Personal Income Tax'
    http://www.newsmax.com/Finance/Manki.../25/id/590697/

    One Way to Fix the Corporate Tax: Repeal It - NYTimes.com
    http://www.nytimes.com/2014/08/24/up...002&abg=1&_r=1


    How To Abolish The Federal Corporate Income Tax Without Increasing The Deficit
    http://www.forbes.com/sites/stancoll...g-the-deficit/


    And one basically just proposing higher income taxes for the rich...

    We Don't Need a Corporate Income Tax - Bloomberg View
    http://www.bloombergview.com/article...ate-income-tax
    Last edited by KC; 27-08-2014 at 09:44 PM.

  37. #37

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    I bet the thought of eliminating corporate taxes send shudders of fear through the bean counting community - consummate private sector bureaucrats making incredible livings off corporate taxation.

    Even Trudeau has talked about cutting corporate taxes:

    Why it’s time to abolish the small-business tax rate - The Globe and Mail
    http://www.theglobeandmail.com/repor...ticle26358808/

    The Case for Not Eliminating the Corporate Income Tax
    Share Tweet LinkedIn
    June 21, 2016
    By Scott Greenberg

    http://taxfoundation.org/blog/case-n...ate-income-tax

    https://www.taxpolicycenter.org/site...ate-income.pdf



    http://www.forbes.com/sites/bernieke.../#1117040b8c85
    Last edited by KC; 15-11-2016 at 01:11 PM.

  38. #38

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    Quote Originally Posted by KC View Post
    I bet the thought of eliminating corporate taxes send shudders of fear through the bean counting community - consummate private sector bureaucrats making incredible livings off corporate taxation.
    http://www.forbes.com/sites/bernieke.../#1117040b8c85
    No, because of the reasons listed in the Forbes article: it's very politically unpalatable for the 99%.
    I feel in no way entitled to your opinion...

  39. #39

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    The Grumpy Economist: Corporate Tax
    Thursday, January 26, 2017
    Corporate Tax

    Excerpt:
    My view: the corporate tax should be zero. Not just a zero rate, but the tax should be abolished. Lowering a rate is just an invitation to renegotiation, and a quick raise when the next party takes over. Lowering a rate keeps all the lobbyists around to keep all the exemptions going. To reduce a tax, you must follow the advice of a zombie movie -- kill it, and drive a stake through its heart. Burn the code, delete it from the hard drive.

    http://johnhcochrane.blogspot.ca/201...e-tax.html?m=1



    GOP senator floats eliminating the corporate income tax | TheHill

    Excerpt:
    Sen. Mike Lee (R-Utah) on Monday suggested that Congress eliminate the corporate income tax while increasing taxes on capital gains and dividends.

    This tax reform framework would help to put "America First," Lee said in an op-ed in The Federalist.

    "More than that, it would put the forces of globalization, even global elites themselves, to work for American workers, instead of the other way around," he said.


    https://www.google.ca/amp/thehill.co...?client=safari
    Last edited by KC; 29-01-2017 at 10:15 PM.

  40. #40

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    This is the Republican plot to kill the US corporate income tax as we know it — Quartz


    https://qz.com/888091/this-is-the-re...as-we-know-it/

  41. #41

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    Corporations have a lawful duty to act in the interest of the shareholder. Any cash that's freed up doesn't trickle down, it just pads profits. Sure, low taxes may kickstart investment, but nobody's looking to hire people, they're looking for the cheapest place to build automated factories. If, and this is a massive if, any big overseas manufacturers do decide to invest in the US, it'll take time to set up (logistics supply chains don't happen overnight), they'll either go highly automated or only operate in places with pitiful wages (which is why the abolishment of minimum wages are high on republican agendas), and lax to no environmental regulations (again, this is why the republicans want to strip EPA of all power).

    So there'll be investment, but they won't bring good jobs, they won't pay taxes, and they'll pillage the environment, all so that some shareholders can get even richer. The people that looked to Trump for jobs got bamboozled. They wanted a "businessman" to run the country. Well, they got one. And business owners are in the business of trying to find ways to replace expensive people with anything else, and to cut all corners to increase profits.
    "Men never do evil so completely and cheerfully as when they do it from religious conviction" - Blaise Pascal

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