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Senior Advisor

It seems like those that don't want to pay taxes have the power and influence

 

 Corporations don't want to pay taxes? Let's cut corporate tax rates or eliminate them.

 

Shareholders don't want to pay taxes so lets give them a favorable rate and eliminate the estate tax.

 

Corporations hide income off shore so they don't have to pay US taxes. Well lets give them a discount so they can bring the cash home.

 

Brilliant reasoning in that we reward bad behavior with incentives and they still batch about paying taxes.

 

If we lowered corporate tax rates to 10% they would still cheat to lower their taxes. Some miracle small number isn't going to dissuade them from avoid what they can.

 

A couple with a $5 m estate exemption are still going to try to avoid taxes even though they have had $5 M in capital gains forgiven.

 

It simply doesn't pay to give those folks a break. They will not be satisfied with anything less that a 100% exemption. Proof is in all the complaining about the current tax rates.

 

So the key is to assess taxes that cannot be avoided. A transaction tax meets that requirement. A dollar changes hands it gets taxed. A low tax rate attached to every single monetary transaction. Whether you buy a tractor or a movie ticket. A television or a locomotive. Lunch in a diner or stocks on wall street. Evcerybody pays according to their ability to pay. If you got enough cash to buy 100 shares of Bershire Hathaway or a gallon of milk, you pay the same rate.

 

Income has nothing to do with it. Your gallon of milk may cost you $3.05 instead of $3. Small and painless

and when you transfer that $10 million farm to your kids you get to pay the same puny transaction tax rate

25 Replies
Senior Contributor

Re: It seems like those that don't want to pay taxes have the power and influence

Kraft-T

 

First, one of the iron rules of economics is that big corporations (i.e. Wilshire 5000 companies) do not pay taxes. They only collect them. Raise the corporate tax rate and you will soon discover a corresponding increase in the price of whatever goods or services are being offered by a company. The business is merely collecting (i.e. passing along to) the new taxes from their customers.

 

That said, and if I am understanding your post correctly, you are calling for a consumption tax. In my opinion, it is a very good idea, but I would first insist on repealing the XVI Amendment to the US Constitution. Taxing folks for what we consume is certainly better than taxing them for what they produce. However, I fear the current batch of "Washington DC/Wall Street Patriots" would only see a consumption or value added tax as an additional source of revenue for new government spending. If that makes sense. 

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Senior Advisor

Re: It seems like those that don't want to pay taxes have the power and influence

Good post Kraft-T - The problem is it's just to dam simple -

 

But would also say that 27's last sentence or so makes a good point .

 

BTW Bull's are are CBS - Double BTW - Thats 4 legged bulls

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Senior Advisor

Re: It seems like those that don't want to pay taxes have the power and influence

If indeed that was true, why would any corporation oppose a high corporate tax rate? After all they would only raise prices to consumers.

 

I don't think corps price things according to cost. They price things based on demand or based on competition. You can bet if Ford raised or lowered its price, GM and other companies would adjust their prices accordingly.

 

Of course cost of production is important  but they don't price them cost plus 10% They price them according to what the market will bear.  

 

 

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Senior Advisor

Re: It seems like those that don't want to pay taxes have the power and influence

Of course cost of production is important  but they don't price them cost plus 10% They price them according to what the market will bear

 

Sort of like N prices K-T -- Didn't cost any more to produce last year as 3 years before , but corn was up so everybody what'd a piece of the pie .

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Senior Contributor

Re: It seems like those that don't want to pay taxes have the power and influence

KraftT asks: "If indeed that was true, why would any corporation oppose a high corporate tax rate?"

 

Answer: While corporations do pass along to their customers those taxes that are levied against the company, the price ceiling at which the customer begins to rebel is not infinite. Just as trees do not grow into the sky, there are limitations to what a market will pay for any good or service.

 

Again, in economic terms, the pricing rule that applies here is something called "alternatives and substitutes." Whenever a price becomes too high (or intolerable), then the buyer will seek out an alternative or substitute to whatever it is they are purchasing. An example of this is cigarettes. When the price becomes too high, smokers begin to grow and roll their own, buy their smokes via a presumably thriving black market (see: NYC) or perhaps, just give up the nasty habit altogether. Note that any alternative taken will also deprive both the state and the cigarette manufacturer of any previously realized taxes and profits.

 

My larger point is that simply raising corporate taxes is no guarantee for increased government revenue. In fact, sometimes it can backfire as consumers, corporations, and their middlemen all become increasingly innnovative in their efforts to legally and illegally avoid (i.e. they seek out alternatives and substitutes) paying for products or services that they consider excessive or unjust (e.g. Boston Tea Party, Dec 1773).      

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Senior Advisor

Re: It seems like those that don't want to pay taxes have the power and influence

That's the same argument that i use., make me pay too much income tax and i will make the grain buyer pay more for my corn or beans.

 

I think it is a flawed excuse by those that insist on low taxes. How much less do you think mercedes would take for their GL 550 if they didn't have to pay taxes?

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Senior Contributor

Re: It seems like those that don't want to pay taxes have the power and influence

Kraft-t: "That's the same argument that i use., make me pay too much income tax and i will make the grain buyer pay more for my corn or beans."

 

Response: Just note that there are always price ceilings on anything you wish to pass along to your customer. An example of this was seen in 1990 when George (Read my lips) Bush signed into law a 10% luxury tax (a.k.a. Yacht Tax). The bi-partisan "Washington DC Patriot" rationale for this new tax was that the really rich in this country would happily step forward to do their civic duty and pay the freight.

 

Unfortunately, and to the utter surprise of the DC political elites, the rich rebelled. They declined to pay the new tax by making  their new yacht (and private airplane) purchases with overseas vendors. In other words, they were predictably pursuing efforts to seek out "alternatives and substitues" to what they considered an unfair price or tax. But the yacht tax story and the mischief created does not simply end there. If only...

 

What followed was the two year destruction of the East Coast yacht making industry. It goes without saying that thousands of skilled and previously well paid workers lost their jobs in the process. In the end, it was no less than liberal Ted Kennedy (D. MA) who led the charge to repeal the luxury tax. The repeal was quickly signed by a very grateful Bush in 1992. Alas,too late to save his reelection campaign.

 

http://articles.baltimoresun.com/1991-06-09/business/1991160128_1_luxury-tax-yachts-harrison

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Senior Advisor

Re: It seems like those that don't want to pay taxes have the power and influence

Everubody uses their same pitiful excuse why we should not tax them. Don't tax me because i am a job creator. Don't tax me because i buy machinery and cars and pickups. Don't make me pay estate taxes bause i alreadfy paid tax on that, but fails to mention that there is 3 million of capital gains that aint ever been taxed.

 

Then I remember back in the days of cash for clunkers. What a squeel we heard from the farm community because those lousy city folks were getting a subsidy to trade their old car off. You would have thunk that Obama gave the working folks the whole shebang. MY God! i wanted to buy a used car for my kid but I couldn't get one cheap!

 

I should pay taxes and so should everybody that makes money. No excuses. My earned dollar is just as precious as miTTs capital gain and I I can afford to pay taxes he sure as heck can. THere is indeed class warefare. The investor class versus the working class nd the investor class has bought the tax code and they never will be satisfied.

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Honored Advisor

Re: It seems like those that don't want to pay taxes have the power and influence

Does anyone really WANT to pay taxes? I think it is the ones that manage not to, but still exercise political influence, that trouble me!
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