Member Since: 14th Apr 2010
24th Jan 2019
Massive collusion among management is difficult, but not impossible to detect.
19th Oct 2012
I would disagree with that old chestnut that taxes depress economic growth. Usurious tax rates and zero tax rates have exactly the same effect in that the exceptionally high rates will be avoided at all costs to the point of creating a shadow economy out of reach of the taxman, encourage cheating and disregard for success.
Zero tax rates encourage nothing in that the infrastructure of defense, roads, inspections, courts and the common good are beggared by a lack of funding. Without the basic infrastructure, little business can be conducted and again there is a death spiral.
I disagree that taxes on net profits are a burden on shareholders and employees and offer that corporations would retain the excess profits thus generated by a zero tax rate in order to fund higher salaries for the top executives. In other words, the CEO, President and so on would justify the enormous profits thus produced as having been a result of their own efforts alone and so be deserving of higher salary, lest they should go to another company to work the same accounting magic.
There is a sweet spot that with intelligent application of straightforward tax rules and rates as well as tax money well spent, which will encourage prosperity in business and the population as a whole. The rich must pay their fair share as they gain more profit from a stable government, educated population, good roads, uncorrupted legal system and defense than the less wealthy. They are wealthy because of this and not in spite of it. They have applied their own efforts to achieve that wealth, certainly, but could not do so on a grand scale in a chaotic and broken environment.
18th Oct 2012
US Corporate Taxes
It is true that the US Corporate tax rate is a staggering 35% of net profits. It was said that when the tax rate was reduced from 50% to 35% in the USA, corporations would flourish, invest more and do more domestic business. Thus begins the race to the bottom. Additionally, accelerated depreciation and other tax breaks were instituted. The net effect was a real rate of 10% for most and 0% for a few.
Rather than prosper, operations moved offshore to lower wage, lower tax jurisdictions just as quickly as if rates had remained.
18th Oct 2012
The bidding war starts the race to the bottom, with each nation trying to outdo the other with lower and lower rates, more incentives for firms to locate in their jurisdictions.
In the USA, the competition is between states who offer incentives and grants for factories and firms to do business within their borders. After the tax breaks expire, the firms begin a bidding battle with other states to get a better deal and only the corporation wins; government panders to this model and loses tax revenue as the firm moves out and abandons its facilities.
The solution is to level tax rates across nations, uniting and cooperating rather than competing and restructuring tax law around cost center accounting so that true profitability is taxed regardless of location.