Simple question complex issue... [Archive] - Debate Policy

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revelarts

08-11-2015, 12:07 PM

fj1200

08-11-2015, 12:30 PM

Ever since i've been serious about politics I've been told by friends on the right that lower taxes on corporations means that MORE jobs and greater economic growth for all.
I've always agreed with that in principal though i've had suspicions in it's practice.

Now Trump wants to ZERO corporate tax with that view in mind.
Below is a chart of Corprate PROFITS over the last few years.
So here's the question, if MORE corporate profits equals more jobs and better general U.S. economy why don't we see it?

One fallacy you've presented is that the US hasn't had a cut in the corporate tax rate in decades while practically every country in the world has lowered their rates. We also have a territorial tax system which taxes profits no matter where they occur in the world; we are also unique in that respect which causes corporations to keep profits overseas keeping them from being taxed here. In short, our corporate tax system is awful. I've posted studies that suggest that domestic corporate tax rates benefit domestic labor at a cost of our own people.

With all of that on the table this is one area where I agree with Trump (if he would still propose it) that we should have a zero corporate tax rate incumbent with zero corporate "welfare." It wouldn't necessarily be a revenue loser because it would just shift taxes from the corporations to the real entities that are the real payers and not the corporate "pass through" entity. I think you would have three things happening; wages would go up, dividends to owners would go up, and prices to the consumer would come down. Not necessarily all at the same time but long-term.

Also, it appears your bottom chart isn't normalized in constant dollars. It might behoove you to post historical profit margins.

revelarts

08-11-2015, 12:58 PM

...

With all of that on the table this is one area where I agree with Trump (if he would still propose it) that we should have a zero corporate tax rate incumbent with zero corporate "welfare." It wouldn't necessarily be a revenue loser because it would just shift taxes from the corporations to the real entities that are the real payers and not the corporate "pass through" entity. I think you would have three things happening; wages would go up, dividends to owners would go up, and prices to the consumer would come down. Not necessarily all at the same time but long-term.

.....

"...incumbent with zero corporate 'welfare.'..."

if this were attached at the hip with Zero corporate tax i might think it was almost a realistic option.

But FJ the increase in profits in from 90s alone is from 400 billion to over 2000 BILLION how is that not "tricking down".
With no corporate taxes how would the excess BILLIONS come back? would cooperation increase in wages? Really? that would be the move. WHY? Why increase wages much wen they accepted the jobs at the lower rates? high end corporate types may demand more but unless there already profit sharing in place across the board in the company i'm not sure why wages would increase. or even more jobs open up. if the current crew are getting it done.

Dividends? OK that helps mostly the high end investortors and retirees seems to me.

fj1200

08-11-2015, 01:09 PM

"...incumbent with zero corporate 'welfare.'..."

if this were attached at the hip with Zero corporate tax i might think it was almost a realistic option.

But FJ the increase in profits in from 90s alone is from 400 billion to over 2000 BILLION how is that not "tricking down".
With no corporate taxes how would the excess BILLIONS come back? would cooperation increase in wages? Really? that would be the move. WHY? Why increase wages much wen they accepted the jobs at the lower rates? high end corporate types may demand more but unless there already profit sharing in place across the board in the company i'm not sure why wages would increase. or even more jobs open up. if the current crew are getting it done.

Dividends? OK that helps mostly the high end investortors and retirees seems to me.

That is an acknowledgement of the inputs to business. Among other things, capital and labor. Capital would receive more pass through "profits" to be taxed at their particular rates. Labor on the other hand wouldn't get a "raise" until they are able to demand higher wages; at which point they would be taxed of course. I point you to the 90's where corporate profits were lower historically but labor was demanding, and getting, large raises because there was a shortage of employees when we had extremely low unemployment rates.

Your question though is nothing more than supply and demand, of labor, of capital, etc. BTW there are already corporations and businesses that have zero corporate tax rates; Sub S corp.s, LLCs, partnerships, etc. And no question that profits are higher but I think you're leaving out large parts of the equation.

http://blogs.reuters.com/macroscope/files/2014/01/corpprofit-1.jpg

revelarts

08-11-2015, 03:05 PM

That is an acknowledgement of the inputs to business. Among other things, capital and labor. Capital would receive more pass through "profits" to be taxed at their particular rates. Labor on the other hand wouldn't get a "raise" until they are able to demand higher wages; at which point they would be taxed of course. I point you to the 90's where corporate profits were lower historically but labor was demanding, and getting, large raises because there was a shortage of employees when we had extremely low unemployment rates. Your question though is nothing more than supply and demand, of labor, of capital, ..

So that right there exposes as a falsehood the idea that "more corporate profits via less taxes>corporate growth = higher wages and more jobs better economy"
If the REAL reasons for higher wages etc are supply and demand of the labor pool and labors DEMANDS for higher wages.

BTW there are already corporations and businesses that have zero corporate tax rates; Sub S corp.s, LLCs, partnerships, etc. And no question that profits are higher but I think you're leaving out large parts of the equation.

http://blogs.reuters.com/macroscope/files/2014/01/corpprofit-1.jpg

Frankly I'm not sure what that chart is suppose to be explaining (how can GDP be a strait line?) but as you say it doesn't negate the HUGE corporate profits that have been had over the past 30 years.

fj1200

08-12-2015, 08:05 AM

So that right there exposes as a falsehood the idea that "more corporate profits via less taxes>corporate growth = higher wages and more jobs better economy"
If the REAL reasons for higher wages etc are supply and demand of the labor pool and labors DEMANDS for higher wages.

It's not necessarily a falsehood as it is not directly related. Our current structure causes certain things to be while a different structure, i.e. a zero corporate income tax rate, would cause different things to be. I've pointed a couple of things out that you could address or you could just be happy with your current mindset. I'm good either way. :)

Frankly I'm not sure what that chart is suppose to be explaining (how can GDP be a strait line?) but as you say it doesn't negate the HUGE corporate profits that have been had over the past 30 years.

Because it's a ratio and it illustrates profit margins over time rather than your misleading graph. BTW, you haven't addressed your fallacy that I pointed out in my first response. Profits were not HUGE in the 90's like they're HUGE today and we had essentially the same corporate environment then as we do today; Look for the differences.

revelarts

08-12-2015, 08:27 AM

It's not necessarily a falsehood as it is not directly related. Our current structure causes certain things to be while a different structure, i.e. a zero corporate income tax rate, would cause different things to be. ...
wait wait wait.
ok,
Does lower or ZERO corporate taxes naturally produce higher wages for the middle and lower classes, more overall U.S. employment and an overall better economy?
THATS is the mantra that conservatives have been asked to believe for the past 50 years.

so, Yes or No.

If those are OTHER factor at play to achieve that goal then what percentage would you say they play?
lower corporate taxes 0%-10%, labor demands 40%-50, labor pool 50%-60%?

fj1200

08-12-2015, 09:59 AM

wait wait wait.
ok,
Does lower or ZERO corporate taxes naturally produce higher wages for the middle and lower classes, more overall U.S. employment and an overall better economy?
THATS is the mantra that conservatives have been asked to believe for the past 50 years.

so, Yes or No.

If those are OTHER factor at play to achieve that goal then what percentage would you say they play?
lower corporate taxes 0%-10%, labor demands 40%-50, labor pool 50%-60%?

I know you're looking for a simple answer to a complex issue but I'm not really going to give you one. Think to yourself what does a high rate do? Encourages foreign outsourcing, encourages lobbying for this year's tax breaks, restricts growth, etc. Those IMO lead to lower wages for middle and lower classes. So removing the high rate removes those outcomes. Some links:

For example, if the corporate income tax were eliminated, the size of the economy would grow by 6.1 percent in the long run. This would lead to more jobs and higher wages. The additional growth would leave total federal revenue virtually unchanged in the long-run, though the government would likely lose revenue as the economy adjusts. In the long run, the loss of corporate tax revenue due to cutting the corporate tax rate is recouped through the combination of increased economic growth and the distribution of the untaxed money to taxpaying individuals.
http://taxfoundation.org/blog/cut-corporate-tax-rate-would-provide-significant-boost-economy

Finally, many want to tax corporate profits as a means of redistributing wealth. That is, we tax corporations to increase the overall progressivity of the system. In the era of endless debate over income inequality, this is a potent argument. That, of course, assumes that the corporate tax burden falls squarely on the heads of fat-cat shareholders. But many, if not most, American workers are shareholders through 401(k) or pension plans. Besides, there has been a 40-year discussion over the incidence of the tax. Some economists believe the burden falls on owners of capital in the form of lower returns. Some think the burden falls on consumers in the form of higher prices. But lots of people think the burden falls on labor in the form of lower wages, especially in a global economy. If the burden is falling on labor, the corporate income may be exacerbating income inequality.
http://www.forbes.com/sites/taxanalysts/2015/05/07/the-highest-corporate-tax-rate-should-be-zero/

There's some pro/con stuff at this link but you'll find this study interesting I bet:

Raising corporate income taxes lowers worker wages, which leads to increased unemployment. Using 1970-2007 data from the United States, a Tax Foundation study found that for every $1 increase in state and local corporate tax revenues, hourly wages can be expected to fall by roughly $2.50. [10] (http://corporatetax.procon.org/view.resource.php?resourceID=005141#10) Lower wages for workers results in a decreased ability to buy goods, which leads to lower income for businesses and a net increase in unemployment. [11] (http://corporatetax.procon.org/view.resource.php?resourceID=005141#11)
http://corporatetax.procon.org/

But I must identify your fallacy again, this hasn't been anywhere close to the mantra that lower rates on income has been. As to your last paragraph??? I have no idea what you're getting at.