Plan to Cut Corporate Tax Rate to 15%

[NightFox]

Because it's not the governments role to dictate to private enterprise how it should conduct business and our corporate tax code is an embarrassment of competition destroying carve outs, subsidies and give-aways not to mention the statutory rates are not only not globally competitive but also a completely divorced from what businesses actually pay. IMHO the corporate rates should be ZERO thus eliminating all the lobbying (legalized bribery and extortion), the unnecessary drain of resouces (accountants and lawyers) and providing the maximum incentive for capital investment, not to mention the fact that those taxes are paid by employees (lower wages), consumers (higher prices) and investors (lower returns).

Good thoughts...

But if corporate rates were zero, how would lobbying be eliminated?

What would a corporate tax lobbyist lobby for if the corporate tax rates were zero? I suppose they could lobby for negative rates but that would seem to be a difficult hill to climb even in a scum filled, leech pond like Washington D.C., I suspect the individual lobbyists themselves probably wouldn't vanish from K Street but they'd have to find a new specialization.

And I understand that the current taxes are paid by employees and consumers, but why would a company paying zero taxes suddenly decide to start paying employees more?

Labor market competition and increased productivity, both of which are decreased when you have to send earnings to the public treasury instead of investing in capital.

Generally speaking many (most?) modern corporations place human resources at the top of the list of their most valuable assets and thus acquiring and retaining (good) employees is profitable to both the company and the employees, thus the more financial resources that are available to private enterprise to "go after" employees (demand) the higher the prices those employees will command (assuming labor supply remains relatively constant).

Also you have to take into account that if the corporate rates were zero, you'll have an enormous incentive for foreign companies to plant their flag here in the good ole' USA and thus employ Americans (further increasing labor market competition and providing more domestic capital investment).

 

[Timmy]

Can anyone provide a real life example of a big company actually paying the top biz rate ?

 

[Redfish]

if wages are stagnant, how can the economy grow without having more money thru higher wages, to spend on goods?

in a growing economy wages are never stagnant. People are able to move from minimum wage starter jobs to management jobs. your ignorance never ceases to amaze.

 

[xotoxi]

so your plan is to make income taxes 0 if you make less than 200K? Do you have any calculations to show how the government would stay in business if we did that?

I was wondering the same thing. This is a pretty informative graph. It appears that 42.4% of all income tax is paid by those making less than $200K, so eliminating all tax on that group would not be feasible. Similiarly, less than $100K counts for 20.9%...might work. But eliminating all taxes on those making $50 or less would be only 5.6% of all taxes collected. That would be affordable.

 

[xotoxi]

Can anyone provide a real life example of a big company actually paying the top biz rate ?

Probably the one with the bad accountants.

 

[da Vinci]

If prices don't go down, demand for products will not go up.

If for demand for products does not go up, why would companies increase hiring?

Tax rate is the topic here not supply & demand.
When more people are hired as a result of a lower tax rate more people have disposable income which is spent.

What makes a company hire more employees just because they don't have to spend as much on taxes?

with taxes eliminated companies would be able to expand, growing companies need more employees, its really not complicated.

Why would a company expand if the demand for their products have not increased?

You seem a bit slow.

Tax cuts WILL NOT LEAD TO LOWER PRICES.

They WILL lead to reinvestment

Reality says otherwise. Corporations are currently sitting on nearly $2 trillion in cash. That's $2 trillion in cash just sitting there not being reinvested. This sort of takes the winds out of the sails of the "We need to cut taxes so that corporations have more cash to reinvest" argument, doesn't it?

The bottom line is that corporate profits are breaking records almost every quarter, and the corporate world is hoarding nearly $2 trillion in cash. At the same time we have our national debt to address. Given these facts, the worst possible fiscal policy I can imagine would be a steep corporate tax cut. It isn't needed, and it would only serve to pour fire on other problems that we face.

 

[xotoxi]

Because it's not the governments role to dictate to private enterprise how it should conduct business and our corporate tax code is an embarrassment of competition destroying carve outs, subsidies and give-aways not to mention the statutory rates are not only not globally competitive but also a completely divorced from what businesses actually pay. IMHO the corporate rates should be ZERO thus eliminating all the lobbying (legalized bribery and extortion), the unnecessary drain of resouces (accountants and lawyers) and providing the maximum incentive for capital investment, not to mention the fact that those taxes are paid by employees (lower wages), consumers (higher prices) and investors (lower returns).

Good thoughts...

But if corporate rates were zero, how would lobbying be eliminated?

What would a corporate tax lobbyist lobby for if the corporate tax rates were zero? I suppose they could lobby for negative rates but that would seem to be a difficult hill to climb even in a scum filled, leech pond like Washington D.C., I suspect the individual lobbyists themselves probably wouldn't vanish from K Street but they'd have to find a new specialization.

And I understand that the current taxes are paid by employees and consumers, but why would a company paying zero taxes suddenly decide to start paying employees more?

Labor market competition and increased productivity, both of which are decreased when you have to send earnings to the public treasury instead of investing in capital.

Generally speaking many (most?) modern corporations place human resources at the top of the list of their most valuable assets and thus acquiring and retaining (good) employees is profitable to both the company and the employees, thus the more financial resources that are available to private enterprise to "go after" employees (demand) the higher the prices those employees will command (assuming labor supply remains relatively constant).

Also you have to take into account that if the corporate rates were zero, you'll have an enormous incentive for foreign companies to plant their flag here in the good ole' USA and thus employ Americans (further increasing labor market competition and providing more domestic capital investment).

Thanks for the explanation.

 

[toomuchtime_]

https://www.nytimes.com/2017/04/24/us/politics/trump-corporate-tax-rate-15-percent.html?_r=0

This plan sounds great!

With all the money saved by corporations, think of how many new jobs they will create!!! Plus the price of EVERYTHING will go down!!!

This is a WIN for the AMERICAN PEOPLE!!

Any thoughts?

Corporate tax windfalls are not what drive job creation. Demand is what drives job creation. Cutting the corporate tax rate in an environment where we need to reduce our deficit and address the national debt is about the worst idea imaginable. Corporate profits have consistently hit record highs each quarter for the last five to six years, so it's not as if corporations are in need of tax relief. Also, tax rates are not what drive price. A combination of supply and demand is what drives price. Corporate tax rates are fine where the are. Over 12 million private sector jobs were created during the Obama era under those tax rates.

If you want a tax policy that will stimulate the economy and create more jobs, cut taxes for the bottom personal income brackets and offset that by raising taxes on the higher income brackets. This is a no brainer, though it seems to escape the republican electorate. Tax cuts for the lower income brackets would provide a boost to aggregate demand, which would lead businesses to hire more employees to meet that demand.

What was the demand for small computers before venture capitalists using new money from Reagan's deregulation and tax cuts provided capital for companies like Apple, Microsoft, etc.? There was none, but the "windfall's from Reagan policies allowed investors to take risks on new investments that eventually drove the prosperity of the 1990's. No amount of middle class tax cuts intended to increase demand could have done this.

There was certainly demand for data processing, and more efficient means of consuming, storing, and sharing data back in the 80's. Personal computers were a vehicle to meet that demand. This is true independent of any regressive tax cuts.

Put another way, personal computers - much less regressive tax cuts - didn't invent the demand for data processing any more than the automobile invented the demand for transportation. You're mistaking technological innovation of an already existing, demanded process with the creation of an entirely new, not-previously-demanded process.

If you want to give the Reagan tax cuts credit for something that they actually created, look no further than our national debt. The trend of ballooning deficit spending and national debt begins in the 80s with Reagan's tax cuts. One could also make the argument that those tax cuts play a role in the skewed distribution of wealth and income that has taken hold over the last several decades as well.

There was no demand for personal computers because hardly anyone knew abou them and major companies like IBM and Polaroid who could have produced them didn't because they understood there was no demand for them. Companies like Apple and Microsoft were producing hardware and software for a small market for tech enthusiasts until financing from venture capitalists eager to invest the money they had made from the deregulation of financial institutions and the break up of stagnant corporations allowed these start ups to produce products that finally did gain the notice of both businesses and individuals. Because of this new source of financing these start ups were able to create products that then created their own demand and that is what fueled the economy of the 1990's. Without the bustling economy Reagan created with tax cuts and deregulation, the financing simply wouldn't have been there to launch these new companies.

You have an uncanny ability of missing the point, even though I clearly spelled it out for you. What do personal computers do? They allow us to store, share, process, and consume data. That said, people have been storing, sharing, processing, and consuming data well before the personal computer. And there has always been a demand for more efficient means of storing, sharing, processing, and consuming data. The personal computer met that demand.

Just as there was demand for more efficient means of transportation before the automobile came along, there was also demand for more efficient means of data processing before the PC came along. This is the point, and it is also the fallacy in your line of reasoning.

Whether or not Reagan ever cut taxes is of no consequence to the birth of the personal computer. The personal computer would have came about regardless because it was a tool that met the demand of more efficient means of data processing. One more time: the demand for efficient means of processing predates the birth of the personal computer.

You are talking nonsense. If demand for personal computers was as obvious as you claim, why did major corporations that were already producing computers not begin to make personal computers until after these small start ups financed by investors loaded with money from the Reagan tax cuts and deregulation made them popular? According to you, the CEO's of all the major electronics corporations were too stupid to see the demand for personal computers you claim was so obvious.

The Reagan tax cuts did contribute to more debt, but along with his deregulation they also revitalized the American economy after nearly twenty years of stagnation, and they freed up enormous amounts of investment capital that had been locked away in older, inefficient companies and allowed that capital to be invested in innovative ideas like personal computers which the banks and big corporations had no interest in. No amount of middle class tax cuts intended to increase demand can finance innovative ideas that the major corporations and banks had turned away from, only tax cuts that increase the amount of investment capital to the investor class can.

 

[Remodeling Maidiac]

Tax rate is the topic here not supply & demand.
When more people are hired as a result of a lower tax rate more people have disposable income which is spent.

What makes a company hire more employees just because they don't have to spend as much on taxes?

with taxes eliminated companies would be able to expand, growing companies need more employees, its really not complicated.

Why would a company expand if the demand for their products have not increased?

You seem a bit slow.

Tax cuts WILL NOT LEAD TO LOWER PRICES.

They WILL lead to reinvestment

Reality says otherwise. Corporations are currently sitting on nearly $2 trillion in cash. That's $2 trillion in cash just sitting there not being reinvested. This sort of takes the winds out of the sails of the "We need to cut taxes so that corporations have more cash to reinvest" argument, doesn't it?

The bottom line is that corporate profits are breaking records almost every quarter, and the corporate world is hoarding nearly $2 trillion in cash. At the same time we have our national debt to address. Given these facts, the worst possible fiscal policy I can imagine would be a steep corporate tax cut. It isn't needed, and it would only serve to pour fire on other problems that we face.

Anti business regulations say HELLO

 

[mudwhistle]

Because it's not the governments role to dictate to private enterprise how it should conduct business and our corporate tax code is an embarrassment of competition destroying carve outs, subsidies and give-aways not to mention the statutory rates are not only not globally competitive but also a completely divorced from what businesses actually pay. IMHO the corporate rates should be ZERO thus eliminating all the lobbying (legalized bribery and extortion), the unnecessary drain of resouces (accountants and lawyers) and providing the maximum incentive for capital investment, not to mention the fact that those taxes are paid by employees (lower wages), consumers (higher prices) and investors (lower returns).

Good thoughts...

But if corporate rates were zero, how would lobbying be eliminated?

What would a corporate tax lobbyist lobby for if the corporate tax rates were zero? I suppose they could lobby for negative rates but that would seem to be a difficult hill to climb even in a scum filled, leech pond like Washington D.C., I suspect the individual lobbyists themselves probably wouldn't vanish from K Street but they'd have to find a new specialization.

And I understand that the current taxes are paid by employees and consumers, but why would a company paying zero taxes suddenly decide to start paying employees more?

Labor market competition and increased productivity, both of which are decreased when you have to send earnings to the public treasury instead of investing in capital.

Generally speaking many (most?) modern corporations place human resources at the top of the list of their most valuable assets and thus acquiring and retaining (good) employees is profitable to both the company and the employees, thus the more financial resources that are available to private enterprise to "go after" employees (demand) the higher the prices those employees will command (assuming labor supply remains relatively constant).

Also you have to take into account that if the corporate rates were zero, you'll have an enormous incentive for foreign companies to plant their flag here in the good ole' USA and thus employ Americans (further increasing labor market competition and providing more domestic capital investment).

We keep seeing these resident, clandestine, non-governmental officials trying to confuse the issue. We saw it before, during, and after the rollout of Obamacare. Turns out they were just here to discredit USMB members that weren't buying the Obama Administration's BS.

"OH.....YOU DON'T KNOW WHAT AN AVERAGE EFFECTIVE RATE REPRESENTS????"

Yeah....well fuck you.

 

[NightFox]

Can anyone provide a real life example of a big company actually paying the top biz rate ?

Aggregate tax rates? (including local, state, federal and international)

General Electric total corporate tax rate 2015: 79.2%

If you're talking just federal corporate income taxes and nothing else I suspect it would be difficult to find any company paying the statutory maximum.

 

[mudwhistle]

Corporate tax windfalls are not what drive job creation. Demand is what drives job creation. Cutting the corporate tax rate in an environment where we need to reduce our deficit and address the national debt is about the worst idea imaginable. Corporate profits have consistently hit record highs each quarter for the last five to six years, so it's not as if corporations are in need of tax relief. Also, tax rates are not what drive price. A combination of supply and demand is what drives price. Corporate tax rates are fine where the are. Over 12 million private sector jobs were created during the Obama era under those tax rates.

If you want a tax policy that will stimulate the economy and create more jobs, cut taxes for the bottom personal income brackets and offset that by raising taxes on the higher income brackets. This is a no brainer, though it seems to escape the republican electorate. Tax cuts for the lower income brackets would provide a boost to aggregate demand, which would lead businesses to hire more employees to meet that demand.

What was the demand for small computers before venture capitalists using new money from Reagan's deregulation and tax cuts provided capital for companies like Apple, Microsoft, etc.? There was none, but the "windfall's from Reagan policies allowed investors to take risks on new investments that eventually drove the prosperity of the 1990's. No amount of middle class tax cuts intended to increase demand could have done this.

There was certainly demand for data processing, and more efficient means of consuming, storing, and sharing data back in the 80's. Personal computers were a vehicle to meet that demand. This is true independent of any regressive tax cuts.

Put another way, personal computers - much less regressive tax cuts - didn't invent the demand for data processing any more than the automobile invented the demand for transportation. You're mistaking technological innovation of an already existing, demanded process with the creation of an entirely new, not-previously-demanded process.

If you want to give the Reagan tax cuts credit for something that they actually created, look no further than our national debt. The trend of ballooning deficit spending and national debt begins in the 80s with Reagan's tax cuts. One could also make the argument that those tax cuts play a role in the skewed distribution of wealth and income that has taken hold over the last several decades as well.

There was no demand for personal computers because hardly anyone knew abou them and major companies like IBM and Polaroid who could have produced them didn't because they understood there was no demand for them. Companies like Apple and Microsoft were producing hardware and software for a small market for tech enthusiasts until financing from venture capitalists eager to invest the money they had made from the deregulation of financial institutions and the break up of stagnant corporations allowed these start ups to produce products that finally did gain the notice of both businesses and individuals. Because of this new source of financing these start ups were able to create products that then created their own demand and that is what fueled the economy of the 1990's. Without the bustling economy Reagan created with tax cuts and deregulation, the financing simply wouldn't have been there to launch these new companies.

You have an uncanny ability of missing the point, even though I clearly spelled it out for you. What do personal computers do? They allow us to store, share, process, and consume data. That said, people have been storing, sharing, processing, and consuming data well before the personal computer. And there has always been a demand for more efficient means of storing, sharing, processing, and consuming data. The personal computer met that demand.

Just as there was demand for more efficient means of transportation before the automobile came along, there was also demand for more efficient means of data processing before the PC came along. This is the point, and it is also the fallacy in your line of reasoning.

Whether or not Reagan ever cut taxes is of no consequence to the birth of the personal computer. The personal computer would have came about regardless because it was a tool that met the demand of more efficient means of data processing. One more time: the demand for efficient means of processing predates the birth of the personal computer.

You are talking nonsense. If demand for personal computers was as obvious as you claim, why did major corporations that were already producing computers not begin to make personal computers until after these small start ups financed by investors loaded with money from the Reagan tax cuts and deregulation made them popular? According to you, the CEO's of all the major electronics corporations were too stupid to see the demand for personal computers you claim was so obvious.

The Reagan tax cuts did contribute to more debt, but along with his deregulation they also revitalized the American economy after nearly twenty years of stagnation, and they freed up enormous amounts of investment capital that had been locked away in older, inefficient companies and allowed that capital to be invested in innovative ideas like personal computers which the banks and big corporations had no interest in. No amount of middle class tax cuts intended to increase demand can finance innovative ideas that the major corporations and banks had turned away from, only tax cuts that increase the amount of investment capital to the investor class can.

And don't forget growth.

After 4 years of Carter....any growth was a blessing.


Now after 8 years of Obama's stagnant wages and almost zero growth....economists figure 2% or more isn't good enough for a Trump economy. Anything less that 3.5% is the worst economy since the Great Depression.

 

[mudwhistle]

Can anyone provide a real life example of a big company actually paying the top biz rate ?

Aggregate tax rates? (including local, state, federal and international)

General Electric total corporate tax rate 2015: 79.2%

If you're talking just federal corporate income taxes and nothing else I suspect it would be difficult to find any company paying the statutory maximum.

General Electric paid zero for years as long as their CEO was working for Obama.

 

[mudwhistle]

Budget Basics: How Much Do Americans Pay in Federal Taxes?

 

[mudwhistle]

By DAVID KOCIENIEWSKI
March 24, 2011

General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

G.E.’s Strategies Let It Avoid Taxes Altogether

 

[jc456]

https://www.nytimes.com/2017/04/24/us/politics/trump-corporate-tax-rate-15-percent.html?_r=0

This plan sounds great!

With all the money saved by corporations, think of how many new jobs they will create!!! Plus the price of EVERYTHING will go down!!!

This is a WIN for the AMERICAN PEOPLE!!

Any thoughts?

If you live in a white trash country, which voted overwhelmingly for Trump and you find your life better because the rich are getting richer and Trump's promises are connecting to you, than yes, its a win. But you know and I know, talk is not only cheap, it doesn't pay bills or put food on the table....but as long as red necks are happy, hey, more power!!!

In a few more months, reality will sink in and idiots will wake up.....no infastructure bill is coming, no mega jobs from China, no wage increases, Trump is gonna make you idiots life a living hell in a few more months, you'll see

Trickle down has never ever ever ever ever ever worked.

son, son, son, the rich got sooooo much richer under obummer. learn something for a fking change.

 

[xotoxi]

Taxes.

 

[Vandalshandle]

Well, with corporate tax rates going down, they will have less incentive to invest in tax deductible R&D and expansion, so it will make sense if business expansion and job growth slows.

Umm.. decisions regarding investment are based on risk/reward not solely whether or not it's deductible, a lower effective rate generally speaking means higher returns (reward) and thus (in many cases) makes investment more likely.

In other words... if I invest X amount today for Y amount of returns tomorrow, with lower effective rates Y has a lower tax exposure and thus a higher reward over the lifetime of the investment.

If I only get to deduct X once (or depreciate it over a schedule) but have to pay a higher effective rate on Y over the lifetime of the investment then the reward (possibly) isn't going to be as attractive versus the risk.

It really depends on the details of the nature of the investment and the current financial position of the company in question but IMHO more than likely it would stimulate CapEx in the aggregate.

Several decades ago, when I was in a 35% tax bracket, I found myself facing a humongous income tax bill. That motivated me to spend $15,000 on a solar system for my house, because I got a huge tax credit from both the feds and the state of Colorado. That is what businesses do as well. The higher the tax liability, the higher the motivation to spend on deductible expenses. Lower their tax, and they have more incentive to just pay the tax, and not invest in expansion. That means more R&D, more employees, more expansion, etc. Corporations run their shops with tax strategies in mind.

 

[GaryDog]

The idea is to make it financially attractive to build and expand in the USA. When corporations build and expand their operations in this country, jobs are created in this country. Good paying, blue and white collar jobs. Many of them union jobs.

When corporations do well, everyone does well, and yes, some people get rich. So fricking what? Those rich people pay most of the income taxes collected by the government. Take away the rich and you have no government funding for welfare, food stamps, unemployment, or any other government service.

Take away expendable income for the middle class, and you have no demand, and no revenue in a service or manufacturing economy.

 

[GaryDog]

https://www.nytimes.com/2017/04/24/us/politics/trump-corporate-tax-rate-15-percent.html?_r=0

This plan sounds great!

With all the money saved by corporations, think of how many new jobs they will create!!! Plus the price of EVERYTHING will go down!!!

This is a WIN for the AMERICAN PEOPLE!!

Any thoughts?

IMHO Depends on what those corporations spend the extra money on and what sectors we're talking about.

Just some random observations based on this 15% outline of a plan to create a plan...

Average effective tax rate for large corporations right now is around 19% so we're looking at a roughly 4% boost to the bottom line, many of our largest corporations are already sitting on mountains of cash which means that it's not likely they're going to go on an expansion spending spree with a 4% bump, what's more likely to happen with those corporations is an increased pace of stock buybacks and higher dividends, which is good for investors but isn't likely to translate into a massive labor market expansion.

For foreign companies it does provide an attractive incentive to locate within the U.S. which is a good potential job creator as well as pulling in new investment to the U.S..

For SMB's it'll be a mixed bag depending on where they are now with taxes, it'll be great for the retail sector since it gets hit hardest by income taxes so I'd imagine we'd see some positive job creation there but less so for sectors with a lighter income tax burden.

All in all (if this ever becomes law, which is a BIG if) I'd expect this will be a positive for job creation and have a significant upside for investors as well as allowing certain sectors some cushion in terms of pricing, however IMHO it still doesn't go far enough (Corporate rates should be ZERO in my estimation).

How deceptive of you.

The top rate is over 38%

LOL, Do You need help with understanding the word EFFECTIVE or sumptin' ?

What will be the effective tax rate when the legal rate is lowered to 15%?

It's 19% now, with the marginal rate being 35%. So, virtually zero.