Re:Facebook Q3 2020
by ChrisLomont on Thursday October 29, 2020 @08:53PM
(#24937962)
How are they a tax dodge? The owners are taxed whenever they try to get cash from the business.
It’s like claiming a house is a tax dodge because the owner isn’t taxed every quarter in the increase in value. In both cases the owner gets taxed when gains are realized.
Corporate income is mostly a way to get incremental cash for govt. But the tax comes gets paid by stocks, effectively taxing pensions, 401ks, etc., without people thinking about it.
As a way to check it, there’s academic papers demonstrating every dollar held by a company is matched in market cap - company loses X in cash, market cap drops X.
So the company isn’t really paying - it’s shareholders that pay. They ultimately lost the value.
Because the rich don't tend to sell their stock on regular basis for income: to maximise wealth, they re-invest.
Corporate taxes ensure this tax is actually realised on a semiregular basis.
Because otherwise they make great tax dodges.
> All of that money will eventually be income for an actual person (employees, shareholders) who will be taxed on it, most likely at a rate above 24%.
No, it doesn't. The stuff that becomes employee income mostly isn't taxed as corporate income (its a deductible business expense). If it is distribute as dividends, its taxable to the recipient, but certainly that doesn't happen with all after tax corporate profits. Its very common for most investor returns to come as capital gains with the money retained/reinvested in the business.