from the that-will-help-reduce-the-deficit,-right? dept.
The White House and congressional Republicans are finalizing a tax plan that would slash the corporate rate while likely reducing the levy for the wealthiest Americans
[...] The plan would likely cut the tax rate for the wealthiest Americans, now at 39.6 percent, to 35 percent, people familiar with the plan said Monday. They spoke on condition of anonymity ahead of a formal announcement.
In addition, the top tax for corporations would be reduced to around 20 percent from the current 35 percent, they said. It will seek to simply the tax system by reducing the number of income tax brackets from seven to three.
[...] Republican senators on opposing sides of the deficit debate have tentatively agreed on a plan for $1.5 trillion in tax cuts. That would add substantially to the debt and would enable deeper cuts to tax rates than would be allowed if Republicans followed through on earlier promises that their tax overhaul wouldn't add to the budget deficit.
https://www.apnews.com/d7929cdd15c3437db07147d219b391c4
(Score: 5, Informative) by Anonymous Coward on Tuesday October 17 2017, @07:58AM (11 children)
Yes, of course they are! How could they not? After all the money the Koch Bros, the Mercers, Sheldon Adelson, Peter Thiel, T. Boone Pickens, and a whole lot more, contributed to getting their tax rates reduced, do you think the Donald could do what is right for the Nation, at the risk of sleeping with the fishes? (and no, we are not talking about Melania here, and frankly, I resent the inference. Get your minds out of the money. )
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @10:57AM (10 children)
The real question is how much they plan to close tax loopholes. Companies like GE, Google, or Apple pay little or no taxes under the current system through clever paperwork. Collecting 35% of nothing is worse than 20% of something.
But this is Donald Trump and the Republican Party, so I'm not holding my breath that corporate taxes will be applied more evenly.
(Score: 3, Interesting) by takyon on Tuesday October 17 2017, @11:13AM (8 children)
Hasn't repatriating Apple's pile of overseas cash been on the agenda for years now? It's not like they aren't thinking about it. One news report I read suggested that 20% or 15% would not be low enough to convince companies to make a one-time repatriation of $. They would want it taxed as low as 10%.
As for the many loopholes in the tax code, they got there in the first place because politicians and lobbyists wanted them there. Forget the swamp, getting rid of those might be like draining an ocean.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 3, Insightful) by Thexalon on Tuesday October 17 2017, @11:58AM (7 children)
Why would they want it taxed at 10%, when they've figured out a way to tax it at 0%? The claim that they'll repatriate all that cash and willingly pay a bunch of taxes if we just do as we say is bonkers.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Informative) by takyon on Tuesday October 17 2017, @12:11PM (1 child)
https://www.nytimes.com/2017/04/05/business/dealbook/repatriate-corporate-cash-trump.html [nytimes.com]
https://www.cnbc.com/2017/04/28/companies-are-holding-trillions-in-cash-overseas.html [cnbc.com]
https://www.brookings.edu/opinions/dont-fall-for-corporate-repatriation/ [brookings.edu]
I think the basic argument is that if the companies are doing nothing much with the cash overseas, they might get more value from moving it back to the US, even with a 5-10% hit. One thing they definitely might do is use the cash for mergers/acquisitions.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 5, Informative) by n1 on Tuesday October 17 2017, @04:03PM
My understanding of how it works now (I am not a PwC/KPMG/Deloitte account manager) ... US corporation gets a loan using offshore division as collateral... or, US corporation borrows from offshore division directly... It's all cheaper than any taxes, and even if it's only cheaper by a small amount, that's enough, and gives you more options later, having your cash in different divisions and jurisdictions, currencies etc when you're a large multinational corporation.
In the latter, this enables the US corporation to minimize tax even further by any potential profit from the capital spent ends up as fees and interest payments to the offshore company.
This is also done by individuals who run large companies... You get paid a token salary $1-$10,000 but you acquire loans using your stock holdings as collateral. So you can have a multi-million income from low interest loans, have an effective tax rate of 0% and pay a little interest, paid with your token salary, dividends or other investments, which may be tax deductible also.
(Score: 1) by khallow on Tuesday October 17 2017, @02:09PM (4 children)
Because tax is not income. Taxing at 10% can still be more profitable than having it sit somewhere at 0%, assuming of course, that 0% is the actual rate they are paying on the meager interest income they would get from cash sitting around.
(Score: 1, Informative) by Anonymous Coward on Tuesday October 17 2017, @03:52PM
I don't buy it. Hell, taxing at 90% is still more profitable than having it sit somewhere at 0%...
(Score: 2) by bob_super on Tuesday October 17 2017, @05:25PM (2 children)
> Taxing at 10% can still be more profitable than having it sit somewhere at 0%
You're conflating two separate things.
My neighbor manages a chunk of the money of a giant SoCal biotech company. They have an 11-figures sum of investments. They told him to be safe, so he gets 6% annual return on his 10-figures portfolio.
They are considering whether repatriating some of that cash may be worth it for dividends and good will, versus buying and investing outside of the US. Waiting to see what D.C. comes up with, while raking in that 6%.
No billions ever sit at 0%.
(Score: 1) by khallow on Tuesday October 17 2017, @08:33PM (1 child)
Indeed. If that money is in Ireland, then they're paying 12.5% for a corporate tax rate. That's among the lowest [taxfoundation.org] in Europe.
(Score: 4, Informative) by bob_super on Tuesday October 17 2017, @11:31PM
> If that money is in Ireland, then they're paying 12.5% for a corporate tax rate.
Or 0.0001%, like Apple...
https://en.wikipedia.org/wiki/Double_Irish_arrangement [wikipedia.org]
And that's on the profits of the company and its investments, not on the total assets.
(Score: 2) by Thexalon on Tuesday October 17 2017, @07:26PM
My guess is: not at all.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Offtopic) by realDonaldTrump on Tuesday October 17 2017, @08:31AM (6 children)
Folks, you want an S corporation, I call it a pass-through corporation. Like The Trump Organization LLC. It turns your income into corporate income. And we're cutting the corporate income tax, big time. So talk to your tax guy. It's gonna be great! #MAGA 🇺🇸
(Score: 5, Funny) by FakeBeldin on Tuesday October 17 2017, @10:52AM (5 children)
You're moderated funny.
Around here, corporate tax rates are below individual tax rates. By about 10 percentage points - if you're in a low tax bracket. So if you could get taxes to tax you as a company, your tax rate would drop drastically.
I don't think that's very funny.
(Score: 2) by realDonaldTrump on Tuesday October 17 2017, @01:08PM (4 children)
Talk to your accountant, talk to your tax lawyer. Set up a few pass-throughs (I have over 400). Trust me, you'll be laughing all the way to the bank. But don't laugh yourself to death, because there's a tax on that. If you're worth anything there's a tax. The estate tax, I call it the DEATH TAX. Which we're working on. I want to get this absolutely right. We’re going to do something about it. I thank you for your support. 🇺🇸
(Score: 3, Insightful) by Anonymous Coward on Tuesday October 17 2017, @03:05PM
yeah i would be doing that except companies are getting tough on consultants because of that whole h1b thing.
be salaried as an employee or watch the job get handed to offshore resources now that we cant have one here for you to work with as a minion
and of course part of this plan is to eliminate the mortgage deduction and eliminate the property tax deduction.
in short, because he's saving the middle class like me, if this all passes as proposed, i get:
being squeezed into being an employee and not being able to easily benefit from the corporate tax rate deduction
loss of mortgage deduction
loss of property tax deduction
its like punishment for trying to achieve
but i might be able to write off business investments for assets that I can no longer buy nor expense if my company no longer does business the way it used to! yay!
maybe i should invest in the pharma and alcohol and gun industries, to help numb the pain with the oh wait no insurance coverage unless i get salaried too because of the insurance industry now back to its freedom enriching ways of chaining people to an employer and doing nothing to control costs and everything to increase them! woo
(Score: 2, Funny) by Anonymous Coward on Tuesday October 17 2017, @05:01PM (2 children)
Why don't you try working on the DEATH TAX from the other side?
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @07:55PM (1 child)
And have President Pence? What's wrong with you?
(Score: 1) by realDonaldTrump on Wednesday October 18 2017, @02:37AM
I'd better remind .@VP Pence I'm not gay. Because he wants to hang all the gays. LOL!
(Score: 2, Funny) by Anonymous Coward on Tuesday October 17 2017, @08:52AM (2 children)
TMB, Inc., or The Mighty Buzzard, Incorporated, stands to gain at least five bucks out of this deal! And you call this journalism?
(Score: 2) by The Mighty Buzzard on Tuesday October 17 2017, @10:50AM (1 child)
So? You got something against single mothers? No, of course I'm not one. I do my best to put as many as I can through school [yimg.com] though.
My rights don't end where your fear begins.
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @03:55PM
> I do my best to put as many as I can through school [yimg.com] though.
Your best obviously isn't good enough; that woman apparently hasn't eaten anything for a month. Hint: don't use monopoly money for tipping! :D
(Score: 5, Insightful) by Anonymous Coward on Tuesday October 17 2017, @09:15AM
This submission obviously should have been rejected as flamebait! All is does is to stir up hatred amoungst the lower classes against their betters, the rich. Propaganda like this has no place on the front page of SoylentNews. And it paints with a broad brush, making us think that everyone in the alt-right is a richie, when that is patently not true! Some of them are really poor, but also really stupid. And some of them are just enough well-off to think they are not poor. Suckers. And some, some are actually the beneficiaries of very bad economic pay offs, like PayPal, and Suck-my-cock-online.com. You might not have heard of that last one. Same venture capitalist, though!
(Score: 4, Insightful) by lentilla on Tuesday October 17 2017, @09:25AM (1 child)
Of all the things that could be done to "simplify" a taxation system, reducing the number of tax brackets ranks very low on a very long list. The whole idea of brackets appears to be a hang-over from the pre-calculator age.
(Score: 2) by Immerman on Tuesday October 17 2017, @02:12PM
How else would you suggest the functionality of a configurable nonlinear tax rate could be achieved? You might manage to fit a complicated curve to your desired varying tax rate, but to what end? It's not going to make the calculation any simpler, especially since brackets result in a tax curve that's piecewise linear, requiring only a quick table lookup to find your bracket and the starting and finishing endpoints and a fairly linear calculation. And even with that level of simplicity, they still create large tables of pre-calculated approximate taxes for narrow income bands so that you can just look up your total taxes owed and not worry about the bracket-related calculations at all.
(Score: 4, Informative) by pTamok on Tuesday October 17 2017, @10:41AM (9 children)
If the drop in corporate tax rate is accompanied by laws to prevent USA domiciled corporations holding profits untaxed overseas ("offshore corporate income tax deferral"), then it could increase revenues.
2014: Reuters:Untaxed U.S. corporate profits held overseas top $2.1 trillion: study [reuters.com]
2013:Business Insider: Top 10 Companies With Ginormous Sums Of Cash Parked Overseas [businessinsider.com]
2014:CRN:Overseas Profits And The U.S. Tax Rate: Why IT Vendors Say Their Hands Are Tied - issuing bonds instead of repatriating profits. [crn.com]
2016:President elect Trump proposed decreasing applicable tax rate to 10% for overseas profits [broadstreetalerts.com]
https://en.wikipedia.org/wiki/Companies_of_the_United_States_with_untaxed_profits [wikipedia.org]
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @10:55AM
Yes, but it rewards the companies that took their money overseas and punishes the ones that did not.
It may be the least evil option we have, but it's still a stick in the eye for any corporations that didn't play the same money-shuffling games.
(Score: 2, Informative) by Anonymous Coward on Tuesday October 17 2017, @12:09PM (4 children)
The Tax Policy Center seems to have done a very detailed analysis including what you mentioned and concluded that:
"the federal debt would rise by at least $3.0 trillion over the first decade"
Also, the Republicans who wrote the plan also assume that it will increase the deficit. They are, obviously, much more optimistic about the numbers:
"Republican lawmakers reportedly plan to craft a budget that assumes up to $1.5 trillion in additional red ink over a decade."
http://www.taxpolicycenter.org/publications/analysis-house-gop-tax-plan [taxpolicycenter.org]
http://www.npr.org/2017/09/27/553860929/republicans-outline-biggest-tax-code-overhaul-in-a-generation [npr.org]
(Score: 3, Insightful) by Anonymous Coward on Tuesday October 17 2017, @01:12PM (3 children)
Why would Republicans ever want to reduce federal debt?
They love complaining about it, it gets them votes, and they get to shut down the government once every year.
(Score: 2, Insightful) by Anonymous Coward on Tuesday October 17 2017, @03:58PM (2 children)
Mmm, the republican approach to financial responsibility: spitting in your soup, then complaining that the waiter spat in your soup. Works every time!
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @08:17PM (1 child)
The Republican approach to life: "I got mine, screw you."
The Republican approach to paying bills: "Let my neighbor's kids pay for it."
The Republican approach to big government: "DIE BIG GOVERNMENT! DIE DIE DIE! NO MORE MONEY FOR YOU! DIE ALREADY!"
The Republican approach to health care: "We demand death panels! Let them be run by an oligopoly and KEEP BIG GOVERNMENT OUT OF IT!"
...and then they go full retard:
The Republican approach to defense: "Help me big government! The terrorists are attacking me! Protect me! Big government for ever! We love our big government protectors!"
(Score: 2) by tangomargarine on Wednesday October 18 2017, @02:49PM
"...oh wait we control all the branches now? I guess nevermind. Smaller government means less taxes for rich dudes, right? Close enough?"
But we already know "smaller government" just means "less of what the other party likes; more of what we like." Cutting education and healthcare and even more money for our ridiculously overfunded military.
After the bullshit about Republicans complaining about Obama death panels that term has lost all impact on me.
"Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
(Score: 4, Informative) by tangomargarine on Tuesday October 17 2017, @06:24PM (2 children)
Hey, there's this new crazy idea I've been working on: how much more would revenues increase if we just stopped cutting rich asshole taxes?
"Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
(Score: -1, Flamebait) by Anonymous Coward on Wednesday October 18 2017, @12:20AM (1 child)
Everybody who is more successful than me is stupid AND evil! How incredibly convenient!
(Score: 2) by tangomargarine on Wednesday October 18 2017, @02:45PM
No, the 1% is a far cry from "everybody who is more successful than me."
And I never said they were stupid or evil; I implied the representatives that keep giving them tax cuts are the stupid ones. It takes some level of competence to stay rich (anybody can win the lottery; it's what you do with it afterwards that says stuff about you).
"Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
(Score: 2) by bradley13 on Tuesday October 17 2017, @12:31PM (6 children)
Just to play devil's advocate: this is not necessarily bad. In the end, money is spent by people, by individuals. You own company stock, they pay you dividends, or you sell the stock and make capital gains. Alternatively, you work for a company, they pay you a salary.
Would it not be a simple, and completely fair tax system to eliminate corporate taxes entirely, and tax individuals on the totality of their income: capital gains, dividends, salary, whatever?
Everyone is somebody else's weirdo.
(Score: 4, Insightful) by Anonymous Coward on Tuesday October 17 2017, @12:56PM (4 children)
That's a pretty stupid system. If you are wondering why,
1. companies pay taxes on profits, not expenses.
2. any expense that is part of normal course of business, is pre-tax (company dinners, etc. have additional considerations because these were abused by executives and owners)
3. dividend taxes have partial credits because they are taxed for entities receiving them (yes, dividends go to other companies too)
4. capital gains have nothing to do with actual companies profitability -- they are reflection of company's *net assets* (or future net assets), if anything.
5. salaries are expenses, so companies don't pay taxes on that
Companies with no tax means I could just start a company and becomes its employee. Then my wages go into that company from another company - B2B transaction. And since there is 0 tax, well, I don't pay tax. I then just pay myself whatever I need to live on and rest I can invest, pre-income tax into something else. Or it can just sit there, before income taxes. Then when I retire or quit early, I continue to take that pre-tax money out of the fake company at a rate that lowers my normal taxes.
Heck, I could make that company buy everything for me, my house could be corporate. My food could be company expense. Why pay any taxes??
And this is the primary reason why corporations MUST pay the same income taxes as regular people do. Otherwise you will get shell companies just to avoid paying taxes. And then only the poor end up paying all the taxes.
Is this clear now to you why your idea is not very smart?
Oh right... US already has a system for some. It's called Churches.
Furthermore, anytime someone bitches about "companies are paying too much income taxes so they can't employ people" -- then now you know that these people just need to be kicked in the balls because they know nothing about corporate tax accounting and how salaries are expensed.
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @01:00PM
Just to add a note, CAPITAL GAINS have nothing to do with actual companies. They are changes changes in capital between two different transactions of something. This can be turnips or Goldman Sachs stock or your car in the driveway.
(Score: 1) by khallow on Tuesday October 17 2017, @02:05PM
And there we see the fix. Spending not used for the purpose of the business is taxed as income. The internets solves another problem.
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @02:11PM
I really liked the first two thirds of your thesis, and wanted to sign up to your newsletter, the last third really blew it though. Downer.
(Score: 1, Insightful) by Anonymous Coward on Wednesday October 18 2017, @01:38AM
Any normal large company will avoid earning a profit... yet somehow they stay in business.
So a tax on profit just hurts businesses that aren't sophisticated enough to have a small army of accountants to find the loopholes. We're hurting the small and mid-size companies.
(Score: 0) by Anonymous Coward on Tuesday October 17 2017, @08:09PM
Why don't we have corporations pay all the taxes?
Why don't we just have you pay all the taxes?
There isn't a compelling reason to do any of these things but you'll notice that there are a number of popular and yet stupid arguments for eliminating or lowering corporate taxes. Why?
Because your masters are working hard to educate you.
(Score: 2, Insightful) by Anonymous Coward on Tuesday October 17 2017, @05:34PM (3 children)
GOP has magically stopped worrying about the debt. Their spin is that tax cuts will stimulate the economy to increase tax revenues. But it's highly unlikely because on average companies already have plenty of cash that they are sitting on. More cash just means a taller chair to sit on. The bottleneck is lack of cash in regular consumer pockets; tax-cuts won't solve that because the middle class already pays relatively little tax. I can see making the middle pay none, but if you also cut taxes for the rich, you double the tax-revenue problem. There seem to be a handful of Republicans who will pay attention to the debt, perhaps enough to derail this. Maybe they should tie the tax cuts to the debt level.
(Score: 3, Interesting) by bradley13 on Tuesday October 17 2017, @06:53PM (2 children)
GOP has magically stopped worrying about the debt.
Yeah, that always happens. They aren't called the "stupid party" for nothing.
Seriously, the "establishment" GOP is just the other side of the "establishment" democrats. They all went to the same schools and belong to the same clubs. Note how loud the R's yelled that they would kill Obamacare, and yet now - they have both houses of Congress - somehow nothing happens. They're just ordinary politicians, out for their own gain at everyone else's expense.
If Trump has done nothing else, he has shown the R's for the hypocrites that they are...
Everyone is somebody else's weirdo.
(Score: 0) by Anonymous Coward on Wednesday October 18 2017, @04:21AM (1 child)
My question is where are the goddam tea parties now?
I remember those idiots putting a price tag on air force one every time Obama went somewhere. They whined oooooh he spent 700k on that trip.
Trump can spend that without a peep, and worse, he pays himself by staying at his own properties
Those assholes crawled back into the woodwork like the cockroaches they are.
Talk about hypocrites.......
(Score: 0) by Anonymous Coward on Wednesday October 18 2017, @05:23PM
Apparently you aren't paying attention. I see a lot of that stuff.
Right now they seem to mostly be concentrating on policy issues, because that's top of the agenda given the change in structures. The bad news for them is that they aren't getting much of the change that they wanted - but it's not for a lack of consistency on their part.
In the long run, the folks in DC are shooting themselves in the foot, by giving the populists so much to bitch about. One way or another, that swamp is going to get drained, or blown up. The earlier they set about doing it, the less traumatic it will be ...
(Score: 4, Informative) by meustrus on Tuesday October 17 2017, @07:52PM
Kansas.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 2) by Joe Desertrat on Tuesday October 17 2017, @09:03PM
In no way will this lead to job creation and a more prosperous middle class.
(Score: 3, Informative) by PocketSizeSUn on Wednesday October 18 2017, @12:28AM
I think 20% is still probably a little high (surprised?).
What we (the US) really should be looking to do is to undercut the low (corporate) tax jurisdictions like Hong Kong (16.5%), and Singapore (17%).
These are the highly efficient city states with low taxes that get to tax a small piece of a massive pie. Hong Kong and Singapore are both huge centers of high finance because of their low tax rate.
By competing directly with Hong Kong/Singapore and other places with a similar to US/Europe quality of living getting companies to move their tax jurisdiction / nexus to the US would allow the US to enjoy a huge boon in tax income.
As it is now the US has the high tax policy of Europe while providing the population benefits far below what Hong Kong and Singapore offer.