> Taxing a corporation takes operating money away from that corporation to spend on other things.

(1) Does that mean rich people should incorporate?

(2) Taxing a rich person takes operating money away from that rich person to spend on other things.

https://en.wikipedia.org/wiki/Luxury_tax#Luxury_tax_in_the_U...

Rich people were taxed, the industries that depended on them suffered (I'm from Florida, and yacht manufacturing industry alone laid off tens of thousands in the state).

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Your distinction is arbitrary (especially considering point #1).

(1) It's not legal to run your personal expenses through a corporation to evade taxes. People do it, but it's not allowed and they could get fined or worse if audited.

It can be done, but it's annoying.

Your sweaters-for-cats company can pay for a cruise if it's a sales trip to promote the product. So promote the product.

Super annoying, but if it saves a lot of money, people will do it.

(2) is good, right? If people stop buying luxury goods then the resources are going to move to other things which is generally what we want.

> what we want

We being the operative word. Do "we" want people to buy more soylent green and fewer flatscreen TVs? Depends on who "we" is.

I submit that in aggregate what "we" want is what "we" are already buying.

> Does that mean rich people should incorporate

The IRS is already ahead of you there. Although it is a common statement here, you'd be very lucky to pull it off with any reasonable success.

There are some workable tax avoidance strategies, but they typically involve already having a bunch of money and family trusts.

(1) Nonsense. (2) Trickle down economics doesn't work.

I would also like to add that a luxury tax is very different than taxing rich people. I am not a fan of luxury tax at all.

> Trickle down economics doesn't work.

Trickle up economics (is that what you call a luxury tax?) doesn't work.

> August 1993, the Congress decided to eliminate the “luxury tax” since it did not achieve its main objective...According to the tax's critics, these revenues were disappointing and unsatisfactory and also negatively impacted the incomes of the sellers of the luxury items.

Yes the luxury tax is foolish. I Made that comment

In response to (2) pretend that we weren't talking about wealthy people exclusively. If we were arguing about putting money in the hands of individuals to grow demand would you still disagree?

> Taxing a corporation takes operating money away from that corporation

You nailed it. We need a system where "corporate taxes" should be entirely at the shareholder level, and corporations should be allowed to propagate tax liabilities all the way to individual shareholders (so that holding entities aren't taxed). Then we should apply a progressive income tax on any capital gains made by shareholders. That would make our the system fair and economically efficient.

We should apply a progressive income tax on any capital gains, period. They're income. There's no reason why they should be taxed at the rate lower than sweat-of-the-brow income, except to economically advantage the rentier class at the expense of the worker class (since the overall tax bill is the same, you're just shifting money paying for it between these two groups by applying different rates).

I agree that capital gains should be taxed like income except for the fact of inflation. If you hold, say a house for 10 years, and inflation averages 8% a year (remember the 1970's), and then you sell it at the same inflation adjusted value, you will pay a bunch of tax on no real gain. Maybe we could adjust capital gain tax to inflation. This would have added benefit of having a constituency that wants a higher CPI against those who would like to keep it low (for example to keep Social Security payments or other retirement payments from increasing).

Problem is inflation statistics can (and often are) manipulated. Just look at how the government swaps things out of the "inflation basket" when the levels start getting too high. Food, rent, healthcare, college education, etc some of the fastest growing (also unavoidable costs) that are not taken into account for CPI.

Thanks. I would rather have money in the hands of people and companies so that they can do stuff with it. I'm not anti-government, but I believe that people and corporations spend money more effectively for themselves than the government can. We obviously need taxes to fund programs that the free market cannot handle efficiently (healthcare, national parks, national defense, and these are just general categories for rhetorical purposes only).

I mostly agree with that answer, although think that there are virtually no politicians pushing it: those that want to cut one tax want to cut the other two, rather than a revenue neutral adjustment.

Doesn't it create some kind of weird cross-border investing incentives though? I.e. we drop the corporate tax in the US, we could raise the income tax to recoup some of that, but not all of it, due to foreign investors who get taxed in their home countries.

This isn't about taxing individuals vs. taxing corporations.

The unfair part is that small companies (startups and others) can't do any of this fancy tax-dodging.

(there are many arguments for/against taxing individuals/corporations; I think there are good arguments on both sides, but this isn't about that)

You're right. It's about fixing the corporate tax problem.

Every "tax rich people" discussion turns into politicians appealing to the non-rich masses by taxing higher and higher levels of income. When the politicians themselves and the other rich people, simply don't categorize the bulk of their annual earnings as income.

Though somehow a lot of these really big corporations seem to have massive amounts of cash sitting around and are not spending it, at the same time as many governments are imposing austerity on their populations.

Taxes on profits don't hurt companies that actually reinvest. The problem here is companies that act like they reinvest the money and have no profit, while they actually have tons of profits.

It depends what you reinvest in; I know that the (hardware) business which I work for gets taxed on the revenue it spends on capital goods (machinery and tooling) as if it were profit (then we sometimes get to write off some taxes in the future).

One of the reasons 'hardware is hard' is because the government makes it hard.

An expense must be ordinary and necessary and you have to be able to make the argument that the expense had a reasonable intent to make profit down the road.

What is your definition of hurt? Taxing the profit sure seems to me like it "hurts" the company as they have less resources.

Companies that reinvest most of their revenue make small profits. Companies that don't make larger profits, and thus pay more corporation tax where corporate taxes exists.

(By extension, those wanting to abolish corporation tax should come up with an argument why companies that reinvest profits to research or expand should pay more tax - on the goods and services they buy to improve - than companies that do nothing with their large piles of cash except hope it's enough of a war chest to deter others from investing in competing with it)