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Politics : Formerly About Advanced Micro Devices
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To: Tenchusatsu who wrote (478388)5/6/2009 3:44:53 PM
From: i-node  Read Replies (1) of 1573925
 
Businesses do indeed pay income taxes. It's up to the business to determine how to make up for the additional expense. Saying the customers pay them kind of ignores the fact that prices are set by the market.

Saying the corporations pay them ignores the fact that capital formation requires a particular return on invested capital.

This argument has gone on for years, but in the end, if corporations can't provide a suitable after-tax return, there will be no capital available for corporations to operate with in the first place.

If I started a business, I'd sure like to enjoy the tax advantages of incorporating in the Cayman Islands, but I really doubt I'd have that luxury.

This is the reason most close corporations today are formed as S Corporations or as a corporation operating under partnership rules, with a pass-thru of profits to the shareholders.

The bottom line is that if you do anything to cut after-tax profits, those costs must be passed on to the customers or shareholders return will be diminished. The argument then becomes, "Do the capital markets trump the markets for goods?", and while in the short run, perhaps the market for goods wins out, in the long run, the return on invested capital has to be there or you just won't have corporations in the first place.

taxfoundation.org

It is one of those debates that economists have disagreed about for years; I remember it was a popular argument when I studied tax policy many, many years ago. I don't think anything has really changed things in the interim.
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