The million dollar compensation thing not only didn't work because they compensated them in other ways, but it set the salary bar AT a million dollars for guys who were making less.

They'll find a way to define the lowest paid worker in ridiculous ways, and they'll find other ways to compensate the executive.

And they won't let their tax burden rise. You want to start somewhere, start with making the income for tax purposes the same as income for purposes of reporting earnings.

Or my preferred solution--get rid of the tax entirely, resume taxing dividends, tax capital gains as normal income and lower the maximum deductible mortgage to 100,000.  And lose the payroll tax cap.

The corporate income tax is a terrible tax. It's impossible to figure its incidence, but it is certainly not borne entirely by its intended target, shareholders (I'd argue not even primarily, but who bears it depends on elasticities that are hard to calculate)  Cost of compliance (and avoidance) probably cost more than the tax generates in revenue, and the impact on decision-making caused by the tax probably represents a net loss to the society. 

But, no, this wouldn't work.
 

Investors should love the idea.  Investors don't like the millions they pay CEOs and the CEOs retirements are obscene.

Some pay themselves millions just before bankruptcy.  The salary doesn't match the competency at times.

The Bushites declared war on the rest of us a long time ago. We have been trying to figure it out.  It is time to fight back.

Yes, I anticipated this response.  The central point is that corporations don't pay taxes. People pay taxes.  The corporate income tax is intended to tax shareholders of corporations.  It does not succeed in doing so.  And it incurs substantial compliance expense in failing to do so. Better to tax the shareholders directly.

Eliminating the corp tax would end the situation you cite, if it were combined with the removal of special treatment for capital gains and dividends.  

But the corporate income tax distorts all this. Income from corporations eventually reach individuals--in the form of wages, dividends or capital gains. Tax policy should tax those individuals, not the intermediaries.  One can talk about expense accounts and other methods used to disguise income, which should themselves be taxed. That's tricky in practice--whether going to a Knicks game with a client is income or not depends on how I feel about watching basketball and how I freel about the client.  But the corp income tax exacerbates this problem, because the firm can deduct the ticket.  It's entirely different if the firm pays for my ticket out the shareholder bottom line. It'd still happen, but the incentive for compensating people this way would be diminished.

My fundamental objection to the corporate income tax is that it has no clear incidence. It's not clear who really pays it. It's intended to be a tax on shareholders, but there are a number of businesses where it is unlikely that shareholders pay the tax. A polar case is the tobacco industry. I'm quite certain, given the price elasticitiy on tobacco products, that consumers pay the tax.  Likewise, in industries where workers have poor bargaining positions, I believe they pay the tax.  It's hard to work this out--the  elasticities are hard to calculate. But that is part of the point.  The incidence (who actually pays it) of the tax is hard to figure out.

Replacing the corporate income tax with direct taxes on people who receive income from  shares would clarify the incidence.  The intent of the corp tax is to tax shareholders. It's a heckuva lot easier to tax shareholders directly than it is to tax them through their corporate shareholdings.

And it's cheaper. Instead of making corps pay tax, making individuals pay tax is simpler.  They receive dividends, or capital gains.  There's no need to calculate the depreciation schedule on  an airplane or a bespoke manufacturing device. (This schedule, by the way, turns out to be a path for corruption; if you can "lobby" a congressman to define the depreciation schedule for your machinery to be shorter than its actual useful life, you've been given free money. Eastern Airlines stayed in business showing a decade of losses in this way.) 

Making Exxon pay a tax is meaningless. Ultimately some individuals pay those taxes. Best to make it clear who those individuals are.

My fundamental objection to the corporate income tax is that it has no clear incidence. It's not clear who really pays it.

Metaphysics. What do you mean by "who 'really' pays it"?

If what you're saying is that disguising a tax's effect on human individuals is bad because it mucks up rational incentive-based decisionmaking for those human individuals, then you'd have to argue for elimination of the whole legal fiction of the corporation, which also mucks up rational incentive-based decisionmaking for all the individuals involved with it. It incentivizes them to make decisions for the welfare of the corporation, not for themselves or any other individuals - and it's "not clear who really" benefits from these decisions.

I too am in favor of clarity. The way to stop corporations from figuring ou ways to get around the tax system is to have people at the IRS who stop corporations from figuring out ways to get around the tax system. The way to do things, in general, is to do them.

I mean nothing metaphysical. A fundamental public finance question is the incidence of  a tax. An indirect tax like the corporate income tax makes it difficult to figure out what people pay it.  Corporations don't pay taxes. People pay taxes.  The corporate tax is directed at shareholders. It's by no means clear that shareholders actually pay that tax.  Make no mistake. While there is a check to the Treasury sent by Altria every year, that check comes out of the hide of some collection of taxpayers--people, that is.   Dollars to donuts that those are smokers, not shareholders.

 

 

First off, I am not an economist. 

A few years ago, I went to a discussion about Social Security reform. Thousands had attended throughout America. It was a farce they weren't interested in hearing ides,  only floated two, Higher taxes or cut benefits. 

Some in the assembly suggested raising taxes by 1/2 of 1 % would solve the problem. 

No one could answer me this question: If the government creates the currency, (If it prints to much we have inflation ) 

What if we as a nation looked at this process of injecting the economy with money, we look at it as SEED CORN. 

We don't eat the seed corn but we eat its produce.

When the Federal Reserve central bank meets, they determine to raise the interest rates. What if, when rates were down at 1% WE THE PEOPLE require them to address the Social implications of monetary policy, that 1/2% or what ever amount is necessary to cover the expense of the safety net? Instead of rates at 3% tack another 1/2% or amount necessary to meet SOCIal obligations

We don't always have to tax the beginnning just the produce.
Isn't this what Tax credits do.

We use the seed corn to create the environment that leads to taxation to support projects.

To encourage savings for retirement, healthcare etc. , we tack on a surcharge to every monetary transaction. You buy a car or a house. Everyone who borrows this money, pays a surcharge.  You buyout a company and you borrow, they pay the surcharge.   

President Bush was always saying it was our money, if it's my money, then lets make it work for Us.    

If all taxes collected went to Social Security first, and then dispursed, or borrowed, Social Security would reap the benefit of the resource first. The SEED CORN  

Would this work?          

To Den Valdron

I hope you'll forgive me, but I don't know who you were addressing about narrow minded and fanatic' bumper sticker slogans. If it was directed at my posting I'll address you.
Attacking what another mans income is, making him your object of hatred. Does not Unite the majority of people. 

Forcing current tax revenues, to be spent, on progressive ideals, is the goal isn't it?

Not pitting one American against another. This is divisive politics. Unless this is your goal?

I offered a solution rather than attacking. Because it takes solutions and money to achieve the goal. We need to control the tax revenues we have and direct the spending side. so that we can adequately fund our priorities and not get caught up in the blame game. 

If any CEO or white Collar management, receives compensation for his work. What are you worth? Who says? 
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I was referring to the 'single issue' notion of attacking the Corporate Income tax, on the grounds of 'double taxation' or whatever grounds happen to be lying around right at the moment.

This thread was started to deal with the issue of incredibly excessive CEO and Senior Executive compensation.  Compensation which is not reflected in the compensation levels of other countries.  Compensation which is not reflected in the actual performance of companies.  These issues lead to  a proposal, perhaps worthy, perhaps not, to establish a baseline method of limiting CEO compensation.

Now, a lot of reasonable discussions could come out of that.  Are CEO's compensations in fact unreasonable?  If they are, then why are they unreasonable?  How do compensation issues relate to performance?  What does all this say about corporate governance?  What are the merits of the proposal?  Are there alternative proposals?   There's all kinds of discussions that we could have about this issue which would be meaningful and worthwhile.

What we got is some crank tilting his windmill at the corporate tax as an example of man's inhumanity to his fellow man, or some such.   And in fact, that hijacked the entire thread.

Well and good, but the trouble is that this is then argued simplistically by said crank from a narrow ideological basis, which doesn't address any of the larger issues with regards to corporate taxation.

A fair bit of leeway comes about quite naturally in these sorts of discussions.  We can run through topics far and wide.  I'm all for that.  But that isn't the case here.  There is no wide ranging discussion.   Instead, a discussion has been hijacked by someone propounding a single narrow issue.

Now forgive me for saying this, but that's a misuse of the thread.

Someone wants to talk Corporate Income Taxes, then open up a thread titled 'Corporate Income Taxes' or wait until something relevant to that topic arises naturally.