Taxing corporate top lines instead of bottom lines

[The Rabbi]

Sales tax is paid by the end user.

Wrong. It's often passed on to the end user but the responsibility (and liability) has always stayed with the merchant.

Notwithstanding the State of Massachusett's unconstitutional attempts to get residents to pay a Mass state sales tax on out of state purchases.

Wow. You might be the most clueless individual on this board. And that includes some truly borderline psychotics here.
Have you ever started up a business? Have you ever run a business?

Sales tax is paid by the end user. Corporate taxes are paid by the end user. Every tax is paid by the end user because anyone upstream passes on the cost to the customer.

As pointed out ad nauseam, your absurd proposal would kill any business creation. Businesses have revenue long before they have profit. Run without profit long enough and you're out of business. Tax the revenue and lack of profit happens even faster.
Almost every state I know has a "use" tax to cover purchases made out of state by in state residents. That includes my home state of TN. There is nothing unconstitutional (per the US Constitution anyway) about it.

 

[Ravi]

I doubt any such law exists, but even if it did it would be virtually unenforcable. Whatever you get from the consumer can easily be represented to include both a selling price component and a tax component.

That would be illegal, not to mention a royal pain in the ass.

 

[manifold]

Ribeye,

I respectfully disagree. And I don't think you are clueless about it so much as you are incapable of challenging your pre-existing prejudices.

The argument that this would kill business is completely bogus. Loss producing companies with potential would still get funded. If you doubt that then perhaps I'm wrong and you really are clueless.

 

[manifold]

I doubt any such law exists, but even if it did it would be virtually unenforcable. Whatever you get from the consumer can easily be represented to include both a selling price component and a tax component.

That would be illegal, not to mention a royal pain in the ass.

Illegal? Moot since proving it would be nearly impossible

Pain in the ass? Nope. not even close.

 

[manifold]

What I find most amusing about this discussion so far is that everyone has attempted ONLY to provide reasons why this WOULDN'T work. And they've failed miserably so far. Basically a new twist on the age old falacious argument that personal income taxes cause people to not make money out of spite.

 

[Care4all]

This plan would kill entrepreneurship as we know it.

Most start-ups take several years to actually show a profit. So, you would be demanding young companies pay taxes on money they don't have...which would effectively bankrupt them.

With taxes on raw revenues, say goodbye to innovation and rapid economic growth.

ARE start up companies usually corporations? i don't believe so? his post said corporations...i thought of large corporations not scorps? did mani define corp?

 

[Ravi]

I think you need to give a tax rate to see if this would work. It isn't easy to start up a small company if you cannot write off your expenses, including any interest charged for a loan.

I think this would also encourage companies to sell things off the books or take kickbacks for discounted invoices.

 

[manifold]

Ravi,

Again I can't agree with you. I submit that there exists a fair rate that would make this work but I don't pretend to personally have enough information to reasonably calculate it. And why couldn't it work just like a sales tax? i.e. passed on to the customer? That would completely negate the "unfair to start up companies" argument.

 

[The Rabbi]

What I find most amusing about this discussion so far is that everyone has attempted ONLY to provide reasons why this WOULDN'T work. And they've failed miserably so far. Basically a new twist on the age old falacious argument that personal income taxes cause people to not make money out of spite.

You are truly intent on proving your utter ignorance, aren't you?
People are providing reasons why it wouldn't work for a simple reason: it won't work.
It is not a fallacious argument that people change their behavior based on tax rates. It is a proven argument. Even Hillary Clinton re-arranged her compensation at Rose Law Firm to take advantage of tax considerations.

 

[The Rabbi]

Ribeye,

I respectfully disagree. And I don't think you are clueless about it so much as you are incapable of challenging your pre-existing prejudices.

The argument that this would kill business is completely bogus. Loss producing companies with potential would still get funded. If you doubt that then perhaps I'm wrong and you really are clueless.

Do you honestly think that most start ups get funded by angel investors and the like?
If so, you are even more ignorant than I previously thought.
Have you ever started up a business? Have you ever worked in a start up business?

 

[Care4all]

let's say a company does a million bucks in sales, but makes in profit 100k....10% profit margin which is considered phenomenal, to achieve such.... their taxes due are 35% of the 100k....or $35,000....so their effective tax rate is really only 3.5% of sales...

there are many who pay no corporate tax, and some who pay more...but on average, corporations only have a 10% effective tax rate...



let's tax the poor, who have nothing as is, INSTEAD!

 

[manifold]

What I find most amusing about this discussion so far is that everyone has attempted ONLY to provide reasons why this WOULDN'T work. And they've failed miserably so far. Basically a new twist on the age old falacious argument that personal income taxes cause people to not make money out of spite.

You are truly intent on proving your utter ignorance, aren't you?
People are providing reasons why it wouldn't work for a simple reason: it won't work.
It is not a fallacious argument that people change their behavior based on tax rates. It is a proven argument. Even Hillary Clinton re-arranged her compensation at Rose Law Firm to take advantage of tax considerations.

I didn't say it doesn't influence behavior. Especially when that behavior is exploiting loopholes. Seems to me closing the loopholes would be a good thing.

 

[The Rabbi]

And the best way to close those loopholes is to make a flat tax, a fair tax, or anything else that will simplify the whole business.
Your proposal would do none of those things.

 

[manifold]

Ribeye,

I respectfully disagree. And I don't think you are clueless about it so much as you are incapable of challenging your pre-existing prejudices.

The argument that this would kill business is completely bogus. Loss producing companies with potential would still get funded. If you doubt that then perhaps I'm wrong and you really are clueless.

Do you honestly think that most start ups get funded by angel investors and the like?
If so, you are even more ignorant than I previously thought.
Have you ever started up a business? Have you ever worked in a start up business?

I've raised over a billion dollars in Angel, Venture and Institutional funding for start up and early stage companies. I do actually know a little bit about the process.

 

[manifold]

And the best way to close those loopholes is to make a flat tax, a fair tax, or anything else that will simplify the whole business.
Your proposal would do none of those things.

My proposal does EXACTLY those things.

Clearly you don't understand it... or worse.

 

[The Rabbi]

Ribeye,

I respectfully disagree. And I don't think you are clueless about it so much as you are incapable of challenging your pre-existing prejudices.

The argument that this would kill business is completely bogus. Loss producing companies with potential would still get funded. If you doubt that then perhaps I'm wrong and you really are clueless.

Do you honestly think that most start ups get funded by angel investors and the like?
If so, you are even more ignorant than I previously thought.
Have you ever started up a business? Have you ever worked in a start up business?

I've raised over a billion dollars in Angel, Venture and Institutional funding for start up and early stage companies. I do actually know a little bit about the process.

So the answers to my questions are:
Yes, no, and no.

OK. Let me set you straight. Most businesses are started up by the entrepreneurs themselves. They use capital from their 401ks, from their home equity, or from loans from relatives.
They have limited cash. Their business plans call for a certain period of "cash burn" before sales reach the break-even point and the business becomes self-sustaining. The next step beyond self sustaining is profit. But it is a time issue. If you impose a tax on revenue, before the company becomes profitable, you increase the time it will take for the business to break even, much less become profitable. That time is critical to success. If you increase it you increase the failure rate of businesses that might have made it otherwise.
All of this you are willing to do for the sake of "simplicity." Never mind that companies have an equal number of ways to hide, defer or otherwise monkey with revenue numbers. So simplicity is an illusion here.
I see tons of downside and very very little upside here.

 

[The Rabbi]

And the best way to close those loopholes is to make a flat tax, a fair tax, or anything else that will simplify the whole business.
Your proposal would do none of those things.

My proposal does EXACTLY those things.

Clearly you don't understand it... or worse.

It does none of those things. If you can't understand that, I can't help you.

 

[Ravi]

Ravi,

Again I can't agree with you. I submit that there exists a fair rate that would make this work but I don't pretend to personally have enough information to reasonably calculate it. And why couldn't it work just like a sales tax? i.e. passed on to the customer? That would completely negate the "unfair to start up companies" argument.

That's a different thing...now you are talking about a national sales tax instead of a tax on sales. Subtle, but there is a difference.

That might actually work but I've not put much thought into it. I'm pretty sure most retailers would be against it.

 

[manifold]

Ravi,

Again I can't agree with you. I submit that there exists a fair rate that would make this work but I don't pretend to personally have enough information to reasonably calculate it. And why couldn't it work just like a sales tax? i.e. passed on to the customer? That would completely negate the "unfair to start up companies" argument.

That's a different thing...now you are talking about a national sales tax instead of a tax on sales. Subtle, but there is a difference.

That might actually work but I've not put much thought into it. I'm pretty sure most retailers would be against it.

I don't think it's as different as you do. Regardless of how it's structured or what it's called, it would end up being passed on to the customer. All costs, not just taxes, always are. I'm just saying that this structure would be a lot simpler to police because it would be a lot harder to circumvent. But you're right about one thing, most would be against it. But only because those that currently benefit hugely from the current structure would wage a propaganda war against it and kill it before it would ever be honestly considered.

 

[Ravi]

That, too...but retailers won't like it because if people have to pay more for their products than they already do it will hurt their sales.