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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Mark Adams who wrote (3134)	10/17/2001 1:39:58 PM
From: Don Lloyd	Read Replies (2) \| Respond to of 24758

Mark - ...Corporations are separate legal entities, who enjoy and convey certain benefits to their owners. As such, on the face they deserve to be taxed just as individuals on the face. However, the stronger case for taxing corporate entities is their real world use in managing tax liabilities for higher networth individuals, who own or control the bulk of privately held corporations.... Your use of the word 'deserve' would seem to indicate a predilection in viewing the world through envy-colored green glasses, as well as a tendency to want to control it. Everything you bring out is, at best, an argument to eliminate the income tax, of all flavors, completely. When the Federal Government imposes a massive and involuntary tyrannical income tax system on everyone, it hardly seems appropriate to complain that people then act to mitigate its effects to the small extent that they can do so. Regards, Don

To: Mark Adams who wrote (3134)	10/17/2001 3:33:07 PM
From: ahhaha	Read Replies (1) \| Respond to of 24758

Corporations are separate legal entities, who enjoy and convey certain benefits to their owners. As such, on the face they deserve to be taxed just as individuals on the face. But the owners are taxed again after the corporate benefit is already taxed. Further, the corporation acts more in the interest of those who don't own it. The beneficiaries are the public at large. So the taxation they incur is a tax on the public at large. The public taxes the corporation and the corporation merely passes the tax back to the public in higher prices. This is independent of any degree of competition. The result is that the corporate tax just makes the corporation less efficient at meeting its primary responsibility of supplying the public with what the public demands. However, the stronger case for taxing corporate entities is their real world use in managing tax liabilities for higher networth individuals, who own or control the bulk of privately held corporations. High net worth individuals don't own or control the bulk of privately held corporations. Your Baran and Sweezy is showing. The public at large, mostly middle class, are the owners. You forget your basic pension theory. This statement is incoherent: However, the stronger case for taxing corporate entities is their real world use in managing tax liabilities for higher networth individuals, I read it to mean that corporations are taxed to make sure that greedy capitalist pigs who would hide behind the corporate form to avoid taxes pay their fair share. If that is your intent you're saying that less is better for some and the only justification for such a claim is the Robin Hood theory of economics. The only problem is that when you attack some individuals who have money, they don't use their money so much to get more money. Nothing trickles down. As the Democrats insist nothing is worse than letting the pigs escape the retribution of war on wealth. Less is better for everyone if it keeps a few from getting more. An individual/group that decides to incorporate has the choice of electing use of a pass through structures, that eliminates the double taxation issue while retaining limited liability. Please tell me what's the difference in the effective rates between these alternatives. So they voluntarily subject themselves to the corporate taxes. Why? Well, for many reasons. This is a tacit admission that there is no difference in the effective rates. An individual who wants to build networth can elect to retain earned income inside the corporate shell, paying the corporate tax rate at 15% or 25% rather than personal income tax rates which in some locals can exceed 50%. But as soon as that money is brought out of the "corporate shell" it is taxed again at full ordinary rates. So what is the purpose in accumulating fictitious money? You can fool bankers to give you loans? Then a corporation can buy assets with pretax income, further reducing bottom line income yet increasing the resources available to the individual/group that control that corporation. What good are assets if they generate income inside the "shell"? The beneficiaries don't get the results of the generation until they take it out of the shell. Then it is heavily taxed. The only shell that is going on here is a shell game. For example, the corp can buy a company car and provide use of it to employees/owners. A corporation can pick up the tab for business travel, say to Hawaii for board meetings. Just like in your previous discussion about paper shuffling you seem to think that someone can get something for nothing. The above example doesn't change the taxing consequences, since the form of cost of doing business is different in comparison to say sole proprietorship. Keeping expenses in the corporate shell diminishes the total worth however it is accounted. If corporations and individuals are taxed at a flat 10%, please tell me the worth of your argument. Finally, it is often possible to use a set of corporate entities to effectively change the characterization of income. For example, a hotel owner can have one entity hold the mortgage and lease facilities to another entity, who operates the ongoing business. Income transfer in the form of rents may be treated at tax time differently than income thrown off by the active operations or salaries. This example shows how high taxation drives people to circumvent paying taxes. The thing is that the example fails to accomplish its end. You've omitted many critical details that make this method a wash. In fact, this claim, "Income transfer in the form of rents may be treated at tax time differently than income thrown off by the active operations or salaries", is fraud since it is explicitly intent to deceive and the owner will be audited monthly. In conclusion, it is common to use privately held corporate structures to effectively reduce total tax burdens. It isn't common. It was decades ago but the IRS knocked that one down. It isn't effective because taxes on unrealized income presumably hiding in corporate shells would become realized and payable. By taking the corporate tax to zero, you are reinforcing this behaviour and increasing the effective distortions that the tax rate differentials create. Isn't there a valid business expense whatever form it may take? To what behavior are you referring? The behavior based on your false assumption that "goodies" can be hidden from the IRS inside a corporation under the guise of business expense? Outside of this childish punishment bag tell me what is the value lost when an efficient entity like a corporation is constrained from being more effective at what it does by being taxed? You give up a lot just to punish which gets nothing. The illogic of it is astounding as rationalized ulterior motives to falsely solve the class struggle always are. What is this obsession with what others get in life? It's all built on the materialistic view that the only thing that counts is material. No wonder it's primarily the rich who resist efforts to cut taxes on capital gains and corporations. They seek to differentiate themselves from the slobs. Cutting these taxes would surely make most so well off that the rich fear their presumed superiority would not be so well delineated.