# Tax Rates for the Superwealthy **URL:** \ **Category:** Great Debates\ **Created:** [January 20, 2012, 9:37pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172 "2012-01-20T21:37:07Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [January 23, 2012, 6:56pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/61 "2012-01-23T18:56:50Z")
> [@Martin\_Hyde](#): > > What I find funny is people like **erislover** , who are so quick to denounce the way corporations are taxed versus individuals, who show they actually don’t know how corporations or individuals are taxed at all. I think you should assume at least minimal levels of competency and try to see what they COULD be trying to say rather than looking for the most nonsensical way of readin someone’s post. He wasn’t complaining about corporations being taxed on net income, he was complaining on people (allegedly) being taxed on gross income. I understand the distinction that we have made between personal consumption and business expense but we do allow businesses more deductions to businesses than we allow wage-earners. > [@Chessic\_Sense](#): > > I find it so difficult to follow the liberal narrative these days. Perhaps you shouldn’t use Fox as a filter for the liberal point of view. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [January 23, 2012, 7:21pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/62 "2012-01-23T19:21:21Z")
For the record, my _actual_ position on taxation goes something like this: there is no corporate tax, and all individuals are taxed the same way, under a progressively-structured negative income tax scheme (“income” is not just cash, any compensation is income). Value-added taxes are not out of the question but sales tax needs to go, too. (Sorry states!) My reasons are relatively simple 1. Taxing savings encourages spending. If your savings are going to be taxed away anyway, might as well get something for it and spend instead of save. That is not a sensible tax policy. Ideally we’d adopt a non-distortive head tax but this is just wildly impractical so I think a revenue tax is the next best thing, so long as it is applied consistently. 2. Corporations are not people and their primary responsibility is to help promote free trade. Taxes have a well-known effect on discouraging trade and I’d rather the rate be zero or almost zero. This goes doubly for sales taxes. The research I’ve read on VATs is more promising, though. 3. Negative income tax schemes avoid welfare traps very well. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [January 23, 2012, 7:34pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/63 "2012-01-23T19:34:02Z")
> [@Jas09](#): > > I have heard this argument, and admit that it is at least somewhat compelling. However, it does raise a question in my mind: > > If corporate income taxes were reduced to zero percent tomorrow, would consumer goods drop in price? > > It seems to me that the answer is no - the price of a good or service is based on what the market will bear. Any reduction in price would only be due to new suppliers entering the market and increasing the supply. Now perhaps the reduced corporate tax would enter into this, but as someone not trained in economics I’m not sure I can see how. > > An example: Currently I make widgets and the entire cost (material, labor, etc) is $9 per widget. I can maximize revenue by selling these at $10 per widget. My $1 profit is taxed at 30% for an after-tax profit of 70 cents per widget. > > What part of that changes if the corporate income tax rate goes to zero? Or if it goes to 50%? Well, lets say I also make the widgets and have pretty much the same cost structure you have. I decide to lower the price by $.30, and keep my margin the same. What do you do? The price is whatever the market will bear, assuming someone can make it for that price. Sure, some items will sell for below cost, but you can’t have an entire economy run that way. It’s also makes our products more competitive for export to countries with lower corporate tax rates. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [January 23, 2012, 7:54pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/64 "2012-01-23T19:54:09Z")
> [@John\_Mace](#): > > It’s also makes our products more competitive for export to countries with lower corporate tax rates. If you believe in the theory of costs being passed on, the corporate rate should have no net effect. The government is getting its tax money from somewhere. If it is people, then they’ll demand higher salaries to cover their taxes, which will raise prices. If it is corporate taxes, then that will raise prices, too. Unless you think there are costs which can’t be passed on for some reason, then it doesn’t really matter who is taxed what; it matters how efficient your government is with the money it collects. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [January 23, 2012, 7:55pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/65 "2012-01-23T19:55:49Z")
> [@Evil\_Economist](#): > > I’ll tell you, but you won’t like the [answer](http://www.jstor.org/pss/2138579). The link you gave gives no relevant info. I can show you evidence that charitable giving increased as tax rates went down. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [January 23, 2012, 8:03pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/66 "2012-01-23T20:03:02Z")
> [@erislover](#): > > If you believe in the theory of costs being passed on, the corporate rate should have no net effect. Sure it would. If our exports are more competitive, that’s foreign money coming into the US that wouldn’t otherwise be there. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [January 23, 2012, 8:10pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/67 "2012-01-23T20:10:09Z")
> [@John\_Mace](#): > > Sure it would. If our exports are more competitive, that’s foreign money coming into the US that wouldn’t otherwise be there. I don’t understand what you’re saying, could you address the rest of that post? ---
**Author:** ![Evil\_Economist](https://avatars.discourse-cdn.com/v4/letter/e/c89c15/32.png) [@Evil\_Economist](https://boards.straightdope.com/u/Evil_Economist)\ **Post date:** [January 23, 2012, 8:17pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/68 "2012-01-23T20:17:57Z")
> [@Terr](#): > > I can show you evidence that charitable giving increased as tax rates went down. Cool, do that. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [January 23, 2012, 8:25pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/69 "2012-01-23T20:25:17Z")
I don’t mind a company expencsing out COGS or payroll when calculating the taxable profit. I do mind them expensing out Lear Jets, stadium naming rights, retreats to Burmuda, etc. The problem is that there is a lot of grey area. What do you do with the expenses associated with a new factory or an advertising campaign. The real problem is the differences associated with what individuals can expense out and companies. For example, I need a doctorate to teach in a university. As an individual, I cannot expense it out as a a work expense BUT if a private (to keep it simple) university hired me and paid for my doctorate, they get to expense it out of their profits. Can I expense out the cost to drive to work? No, but I believe a company can if they provide a car to an exec. ---
**Author:** ![Chessic\_Sense](https://avatars.discourse-cdn.com/v4/letter/c/7c8e57/32.png) [@Chessic\_Sense](https://boards.straightdope.com/u/Chessic_Sense)\ **Post date:** [January 23, 2012, 8:40pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/70 "2012-01-23T20:40:41Z")
> [@Ludovic](#): > > It has to do with the CEOs that take some of the profit and then “pay taxes like people”. Except they don’t. They pay lower marginal taxes than “Johnny the cashier”\* because they structure their pay – _whether or not it’s actually from invested capital gains_ – to appear to be capital gains. > > \*Or even lower taxes full stop, if you count the employer’s portion of payroll taxes. Then change the capital gains rate for individuals. What’s that have to do with how corporations are taxed? > [@erislover](#): > > I don’t actually want to tax corporations like people. > [@erislover](#): > > I am not asking for fair tax, I’m asking for it to be consistent So which is it? People and corporations should be taxed the same way, or not? > [@erislover](#): > > for some reason wage earners are molded wholly out of tax laws and forced into a class that has no other reason to exist, except to tax more than the people making the rules. You’re pretending that it’s the percentage that’s important instead of the absolute dollars being paid. That’s how you maintain the fantasy that poor people are getting screwed on taxes like the rich are making out like bandits. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [January 23, 2012, 8:46pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/71 "2012-01-23T20:46:08Z")
> [@Chessic\_Sense](#): > > Then change the capital gains rate for individuals. What’s that have to do with how corporations are taxed? What makes you think it was about how corporations are taxed? ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [January 23, 2012, 8:47pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/72 "2012-01-23T20:47:09Z")
> [@erislover](#): > > Of course it can! Are you going to sit here and tell me sales taxes don’t exist? I said it wouldn’t be practical to tax _gross revenue_ in the same way as wages. Gross revenue, at least on a financial statement, refers to total revenue over a certain period of time. Yes, if you want to tax the revenue stream directly you could make corporations pay corporate income tax at the point of sale. What would happen is a $1 apple would cost 1.35. .05 for sales tax passed on to the consumer (and collected by the business to be given to the state assuming 5% sales tax) and $0.30 for corporate income tax, passed on to the consumer. This is actually a good example, because it shows what a corporate income tax really is: an excise tax that will be paid for by the consumer. (Not all consumers are individuals, some companies don’t even sell to individuals, but all corporations ultimately are doing something that at some point provides either a product or a service that has value to some individual somewhere and corporate excise tax just increases the costs for that individual to receive the service or good.) > [@](#): > > I’m trying to envision a world where revenue taxes cannot work on business for the _exact same reason_ and I admit I am totally at a loss. There really is no deep philosophical difference between businesses and individuals when it comes to taxation. Both need places to conduct themselves, both need to invest in the future, both have costs associated with their product. I’m sorry, but you don’t get to have it both ways. Frankly, revenue taxes are silly and individuals are treated like shit, while corporations and the very wealthy end up basically paying a tax on savings. (Which is also a little stupid for other reasons but it’s tangential.) If businesses can do it, and if I can start a business, then god damn it, I can do it. Except I can’t, because for some reason wage earners are molded wholly out of tax laws and forced into a class that has no other reason to exist, except to tax more than the people making the rules. You’re confusing issues here, the corporate income tax rate has nothing to do with Mitt Romney or Warren Buffet paying sub-20% effective Federal income tax. > [@](#): > > We both know this is the case. What no one seems willing to say but me is that this is nonsense, if it grants such concessions to anyone else. That’s not even what I am talking about. I am not asking for fair tax, I’m asking for it to be consistent. If we’re a classless society, then we’re a classless society, and that’s that. Here’s how everyone pays taxes. You want corporations to be people-like? Then they’ll pay taxes that way, too. Is this “fair”? I doubt it. I’ll leave fairness to the far left. The truth is, the right cries about taxes all the time, but _this_ tax scheme, which doesn’t even try to be “fair” or “redistributive”, would in fact help the poor, because they just don’t have any savings to tax. The very fact that there is resistance to this idea from people who think I am a flaming liberal (not counting you in this) just goes to show you that the right _actually knows it treats individuals like shit_ and cannot even _imagine_ treating the rest of them like that. If you can’t see how fucking pathetic that is, this conversation is just over. > This just makes no sense and I cannot believe you would even suggest it. Taxes are used both to generate revenue and to incentivize and disincentivize behavior. Excise taxes on cigarettes are both good revenue and part of disincentivizing smoking. Some wonder if it really _is_ that, and complain it’s just away to milk more money out of smokers, but that _intent_ is clear. An excise tax on corporations (which is all that an income tax on corporations is) simply results in fewer transactions being made. It isn’t “just” passed on to the consumer, it **is** passed on to the consumer because a corporation won’t operate at a loss and each industry has a profit margin that will make it worthwhile to operate in the industry, and while there will be differences of opinion based on business strategy about what profit margin is acceptable (meaning some businesses will accept a lesser margin than their competitors, see Costco vs. other warehouse stores) in general costs that would dramatically alter the profit margin will simply be passed on to consumers by most companies. However, an excise tax can still be (and is) bad for the corporation even though they aren’t eating the direct costs. Their product is now more expensive, which means they will sell fewer amounts of the product (the $1.35 apple will not sell as well as the $1.00 apple) and their total revenue will decrease. So a corporate excise tax isn’t putting it to the man and getting rid of Wal-Mart’s “evil” profit margin. Instead, it is reducing Wal-Mart’s _total gross revenue_ which means less money for expansion, less money to pay employees and etc. Or, cynically if you think companies just lie and deflate their profit margin, it means less _total money_ to lie about and write off as fraudulent expenses (and thus less money to give out as golden parachutes and etc.) But the money isn’t going to go towards the workers, the money just doesn’t “go” that’s why excises taxes cause a deadweight loss. In the most idealistic scenario, corporate tax deductions are designed to incentivize things _other_ than just giving the money back to investors as dividends. Not necessarily because dividends are bad, but because maximizing profit is the natural goal of a corporation it is seen (by some) as desirable to try and “force” corporations to invest money in training, to invest money in benefits packages and etc…and by making it to their financial benefit you can “short circuit” the native profit motive of corporations and cause them to do things that are good for society (have employees with good benefits packages and training opportunities.) Whether or not such tax incentives are appropriate government policy, and whether tax incentives even really _are_ used that way (versus that just being the “excuse” and the real use of tax incentives being some evil capitalist corruption inserted into the tax code by Demonpublicans) are matters of opinion mostly influenced by your political bent. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [January 23, 2012, 8:56pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/73 "2012-01-23T20:56:53Z")
The thing people are missing is corporations _aren’t real people_. I don’t want to open a debate on corporate person hood. I’ll settle it, though: corporate person hood is **right** , it is **necessary** , it is **universal** in almost all of the world, and it is **not** injurious to society. But, the legal doctrine of corporate person hood doesn’t mean corporations are real people. At the end of the day, all the money that moves through a corporation is ultimately going to end up as some form of personal income. Every dollar that Wal-Mart collects ultimately becomes income for someone. When it goes back out as wages, that’s a direct form of it becoming income. When it goes back out as Wal-Mart buying things, then it becomes revenue for the company/person that is selling that thing and eventually becomes income to people. Even when Wal-Mart basically keeps it as liquid assets or cash or saves it, it eventually becomes some sort of income (although savings is the closest money can get to being put to sleep). The only exceptions would be money that Wal-Mart takes as cash and buries in the earth, or something. So realistically this idea that you can tax Wal-Mart corporation and “stick it to them” without _taxing people_ is fallacious. Generally speaking I think the people that feel the effects of a corporate income tax are more likely to be lower and middle income than high income. The best way to tax high income people is by taxing high income people. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [January 23, 2012, 9:12pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/74 "2012-01-23T21:12:32Z")
> [@Martin\_Hyde](#): > > Yes, if you want to tax the revenue stream directly you could make corporations pay corporate income tax at the point of sale. What would happen is a $1 apple would cost 1.35. .05 for sales tax passed on to the consumer (and collected by the business to be given to the state assuming 5% sales tax) and $0.30 for corporate income tax, passed on to the consumer. And if you tax consumers, they demand higher salaries and that’s passed on to corporations. So so so. > [@](#): > > You’re confusing issues here, the corporate income tax rate has nothing to do with Mitt Romney or Warren Buffet paying sub-20% effective Federal income tax. I don’t agree. The reason the wealthy don’t pay high taxes and the reason big corporations don’t pay high taxes are the same. But it’s not in the tax code. As far as the tax code goes, of course, you are right. > [@](#): > > Taxes are used both to generate revenue and to incentivize and disincentivize behavior. Excise taxes on cigarettes are both good revenue and part of disincentivizing smoking. Some wonder if it really _is_ that, and complain it’s just away to milk more money out of smokers, but that _intent_ is clear. This is true, and this is why taxes on savings (net revenue, profit, whatever you wish to call it) has its own problems. The problem with taxes that aren’t head taxes is that they can be avoided. “Clever” policy wonks then turn around and say that we can use this expectation of avoidance to encourage and discourage behavior. But I think this is tangential. > [@](#): > > An excise tax on corporations (which is all that an income tax on corporations is) simply results in fewer transactions being made. All avoidable taxes have this effect, full stop. There’s nothing magical about taxing corporations in lieu of people, or vice versa. > [@](#): > > But the money isn’t going to go towards the workers, the money just doesn’t “go” that’s why excises taxes cause a deadweight loss. You read a specificity that is non-existent. Everything but a head tax has this deadweight loss. (As does monopoly pricing, for what I think are interestingly similar reasons.) ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [January 23, 2012, 9:24pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/75 "2012-01-23T21:24:18Z")
> [@erislover](#): > > And if you tax consumers, they demand higher salaries and that’s passed on to corporations. So so so. To a degree, yes. But either way you’re raising taxes on individuals, and you won’t ultimately just create more wealth by raising taxes higher and higher. > [@](#): > > All avoidable taxes have this effect, full stop. There’s nothing magical about taxing corporations in lieu of people, or vice versa. Right, but you have to question whether you want more deadweight loss or less. > [@](#): > > You read a specificity that is non-existent. Everything but a head tax has this deadweight loss. (As does monopoly pricing, for what I think are interestingly similar reasons.) All taxes eventually are paid for by individuals. If you want to raise taxes on corporations because you think individuals pay too much, then it won’t do you much good. If you feel corporate tax is unfairly generous and personal taxes are unfairly harsh, I ask how you would rectify it? Taxing corporations just like people just means the accounting looks different, but if you keep the overall tax burden for _society_ the same, it means each individual has a certain tax burden. It doesn’t really matter if they are paying that burden through withholding or at the cash register, they are paying that burden. If you want to raise taxes on corporations because you think it will close budget gaps, it can do that in some limited sense, but in the larger sense the more taxes corporations pay the less people who work for corporations earn so the less income tax receipts so you can only close budget gaps so much through corporate taxation alone. But ultimately taxation comes down to this: Society has to pay taxes to maintain certain government services. If you don’t pay enough, you run deficits and public debt is created. If too much deficit spending occurs it can cause serious problems for the economy as a whole. Everything else is all water under the bridge. If you want 300 million Americans to pay $3 trillion in taxes then it really doesn’t matter if you get it from them through capital gains, income, corporate excise, sales, tariffs or etc. If your goal is for the wealthy to pay more relative to the poor, the best single way to do that is to tax the wealthy on their income directly. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [January 23, 2012, 9:30pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/76 "2012-01-23T21:30:19Z")
> [@Evil\_Economist](#): > > Cool, do that. > **[w14237.pdf](https://www.nber.org/system/files/working_papers/w14237/w14237.pdf)** > > 447.70 KB Figure 3, page 51. Note the charitable giving at all levels going up starting around 2000. As the tax rates went down. Also note that the giving is measured as percent of income, not in absolute terms, so the relative boom or depression at the time does not explain it directly. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [January 23, 2012, 10:22pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/77 "2012-01-23T22:22:53Z")
Not so much a question of whether or not corporations are people so much as a question of whether or not they are citizens. I’ve no doubt their executives all proudly wear their flag lapel pins, but when I read about corporations who have massive profits and yet manage to pay but niggling taxes, and in some cases actually receive bonuses and subsidies, one has to wonder. But they are multi-national now, aren’t they, unburdened by parochial loyalties to any particular nation, they are free to worship at the altar of the Free Market, blessings and peace be upon it. Haliburton leaps to mind, or slithers. Certainly they have the rights of citizens, they can petition for a redress of grievances. My understanding is that they are quite vigorous in their pursuit of that particular civic duty, fostering warm and friendly relationships with our nation’s lawmakers. Perhaps it is regrettable that they cannot actually vote. I certainly don’t regret that, but perhaps… ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [January 23, 2012, 10:25pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/78 "2012-01-23T22:25:52Z")
> [@Martin\_Hyde](#): > > To a degree, yes. But either way you’re raising taxes on individuals, and you won’t ultimately just create more wealth by raising taxes higher and higher. This is some phantom of a cartoon liberal you’re arguing with because I don’t know anyone at the dope who thinks you can create wealth through taxation. > [@](#): > > Right, but you have to question whether you want more deadweight loss or less. I don’t have to question _that_. I would like to question _distortions_ brought about by creating classes out of whole cloth from tax legislation. If we can rectify that, _then_ we can discuss how much deadweight loss we’re willing to live with. > [@](#): > > If you feel corporate tax is unfairly generous and personal taxes are unfairly harsh, I ask how you would rectify it? I gave my sketchy proposal above. Mysteriously, it looks a lot like one you mentioned in a different thread. > [@](#): > > Taxing corporations just like people just means the accounting looks different, but if you keep the overall tax burden for _society_ the same, it means each individual has a certain tax burden. It doesn’t really matter if they are paying that burden through withholding or at the cash register, they are paying that burden. Absolutely! Which is why it is bad enough to argue over corporate versus individual tax rates without even mentioning the ridiculous level of distortion in behavior due to current regulation. Corps are encouraged to spend, because they’re going to lose their profits to taxes anyway. Poor and middle class are already overspending, even giving them tax shelters amounts to nothing. And the investment class is living an extremely charmed life. > [@](#): > > Everything else is all water under the bridge. If you want 300 million Americans to pay $3 trillion in taxes then it really doesn’t matter if you get it from them through capital gains, income, corporate excise, sales, tariffs or etc. So long as you are consistent in how you get it, I absolutely agree, see my response to **John Mace** above. But things are different under our current system, driven by endless wonkism in favor of the very wealthy—wealthy individuals, and wealthy corporations. > [@](#): > > If your goal is for the wealthy to pay more relative to the poor, the best single way to do that is to tax the wealthy on their income directly. Unfortunately the people in charge have also decided what “income” really is, which is the barrel we’re currently pickled in, and what started this whole conversation. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [January 23, 2012, 10:42pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/79 "2012-01-23T22:42:59Z")
> [@Cheesesteak](#): > > The average person would spend 10x as much on accountants than they’d save in Federal Income Taxes. “Ok, Sir. I’ve got lines 5 and 7 from June 12, 2011 KMart receipt as being work clothes. That’s another $35. How about this SmashBurger receipt from June 13, was that a business lunch? Ok, and the 7-11 receipt from the same day? Line 3 was a business-related SlimJim? Got it.” Seriously? Your argument is that the paperwork wouldn’t be worth it so we shouldn’t give it to them? Eris is arguing that stuff like RENT and GROCERIES should be deductible. I don’t necessarily agree but these can be significant amounts. > [@](#): > > Considering that a pretty sizable population pays no net FIT to begin with, the value of such a sweeping change seems dubious. And a sizable population pays a lot. > [@Martin\_Hyde](#): > > but corporate taxes are really just excise taxes, and treating them as a great way to make sure the rich pay their fair share is misunderstanding how the economy works. I call bullshit. That is not how the economy works. Companies don’t pass through tax savings unless they have to nor do they pass on tax costs unless they can. Taxing corporations taxes shareholders. If you want to extrapolate beyond that, you might as well say taht atxes on wages is actually a tax on employers because the employees pass on the cost of the income tax onto their employers (who then pass it on to consumers who then pass it on to their employers, ad nauseum). > [@](#): > > You make the rich pay their fair share by making the rich pay their fair share, taxes on corporations just make things more expensive, lead to people buying less things, lead to revenue drops at corporations, which lead to layoffs and less jobs. You can make an argument for reducing corporate taxes and I am not entirely averse to the idea (although I can tell you for a fact that many corporations are) but I don’t think that increasing taxes on net income is going to make corporations make things more expensive. They will maximize profits considering taxes are paid on net profits, it doesn’t affect prices the same way as a increase in a cost of production. However, I do agree that if you want to tax high income, we should tax high income. But, I don’t think that is what eris is saying. > [@erislover](#): > > Correct. Indirectly arguing, because of how _obviously bad_ gross(ish) revenue taxes are. A lot of this is metaphysical tax talk but: I think some people have been trying to tell you that the standard deduction is a proxy for all the things you are talking about, of course this is not entirely satisfying because those who itemize are not able to deduct the sort of things you are talking about and frankly we do not have a standard deduction that approximates the level of overhead and that we think a corporations should be able to deduct. We let them deduct million dollar a year rent on madison avenue without regard to whether we think these lavish accomodations are necessary to the production of income, they spend it on a permissible category of expense so it is therefore deductible. However, we have long distinguished between personal consumption and business expense. A college education is arguably amortizable over a career and my commuting expenses are inarguably a necessary cost of earning my income but we do not allow ordinary and necessary expenses to individuals where we do permit it to businesses. Theoretically I could create Damuri LLC (put my parents on teh baord of directors) and mow lawns before I go to college, borrow money from my parents to pay my tuition, provide education to sole employee (approved by the board of directors), pay for housing and food and all sorts of other stuff away from home (deductible if sufficiently far enough away from home and as a condition of employment), buy clothes and pay for rent away from my home base (parent’s basement) collect the salary (assuming I can get an employer who is willing to hire my LLC rather than me personally), pay my expenses and pay taxes on the amount that I distribute to myself. But somehow I think the IRS might not be happy about this. And there is also the issue of getting an employer to go along with this risky tax strategy. > [@](#): > > That’s right. They don’t even pay sales tax on items meant for resale, so why does my car get taxed once when I buy it, and then again when the next buyer buys it? I don’t believe the sedond buyer pays a sales tax in Virginia. They pay a transfer and recordation tax but maybe thats the same thing in your book. > [@](#): > > It’d be an OK compromise. I favor simplicity over other philosophies. To be fair, with all the deductions and credits and exemptions, we have effectively given everyone a 30K or so exemption (WAG). Of course someone who makes 500K and spends 120K on rent might not think a 30K effective exemption is very fair but that’s what we have. > [@](#): > > Yes, it is very convenient to make a distinction without any difference when you then turn around and make the distinction matter. I guess the government thinks wage-earners don’t actually need shelter to work, so deducting rent wouldn’t be directly related to the job? What about electricity? I am curious how you feel this is a sensible policy. Please explain to me which deductions corporations are allowed shouldn’t count for individuals, because it isn’t related to “having a job,” since I apparently don’t understand anything. > I make no claims about my liberalness, and as far as I know this isn’t a party line anywhere. Furthermore, I don’t actually want to tax corporations like people. Of course there are distinctions between people and corporations. Citizens United might have elimianted some of those distinctions but a corporations is jsut segregating off that peice of your tax return that in engaged in a business onto a different tax return, (with different rules). > [@Chessic\_Sense](#): > > Because corporations aren’t people. So how do you feel about Citizens United? > [@Jas09](#): > > An example: Currently I make widgets and the entire cost (material, labor, etc) is $9 per widget. I can maximize revenue by selling these at $10 per widget. My $1 profit is taxed at 30% for an after-tax profit of 70 cents per widget. Corporations try to maximize profit and it is not clear which direction production would move in the face of increased taxes, if it would move at all. > [@Martin\_Hyde](#): > > Taxes on business are fundamentally different than income taxes on individuals. In fact, taxes on corporations predate the income tax, which was created via constitutional amendment in the United States. A few years before, the Federal government started levying an excise tax on corporations. When the constitutional amendment allowing income taxation was passed, the corporate excise tax was renamed the “corporate income tax” but in reality it’s still functionally the same as an excise tax. An excise tax on "“net income” Umm thats called an income tax. > [@](#): > > The distinction is actually very important. There is a fundamental difference between revenue and wages, and it means that practically speaking government _can_ collect taxes based on your earnings but it can’t practically collect tax on gross revenue. Umm, have you heard of excise taxes? ---
**Author:** ![Chessic\_Sense](https://avatars.discourse-cdn.com/v4/letter/c/7c8e57/32.png) [@Chessic\_Sense](https://boards.straightdope.com/u/Chessic_Sense)\ **Post date:** [January 23, 2012, 10:44pm UTC](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172/80 "2012-01-23T22:44:24Z")
> [@Ludovic](#): > > What makes you think it was about how corporations are taxed? Look, man, I’m not going to recap the thread for you. **eris** is clearly comparing corporations to poor people. CEOs don’t even enter the discussion, since CEOs are not corporations. [Previous page](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172.md?page=3) [Next page](https://boards.straightdope.com/t/tax-rates-for-the-superwealthy/610172.md?page=5)