Build your own tax policy!

[agamemnus]

How about a progressive rate on CORPORATIONS?

50K or below: 0%
above 50K-250K: flat 15%.
above 250K-1M: 20%.
above 1M-10M: 25%
above 10M-100M:30%
above 100M-500M:37.5%
above 500M:42.5%

Individual tax rates will be exactly the same. No marriage penalties or benefits to the tax code.

EDIT:
For individuals, all (college-level) education tuition (tuition only) costs and medical bills can cover income as an expense for a period of 15 years from the initial purchase; the amount expensed for the current year can be chosen freely from remaining credits.

No other federal income tax deductions will apply for either individuals or businesses.

States will be penalized for taxing the first $50K that individuals or businesses make by [their rate on that $50K - 5% (non-negative numbers only)] via various deductions to federal->state transfers.

[Loki]

Sounds like a great idea if you're the leader of Singapore, Ireland, Brazil, or Luxembourg.

[GGT]

Nice effort, but our tax code needs to be simpler, not more complicated. Besides, if Corporations are People.....then what's the definition of Individual?

[agamemnus]

Nice effort, but our tax code needs to be simpler, not more complicated.

You can fit this tax code on a quarter of a page, though.. besides the definitions, of course...

Besides, if Corporations are People.....then what's the definition of Individual?

Well, a corporation can't go to college to rack up tuition costs, nor can it get sick... I suppose the state penalty for taxing individuals would require defining an individual. Well, then let's add businesses there, too. Now all the taxes are the same except for the tuition/health care (at least the health care not paid by the government) credit.

[GGT]

You can fit this tax code on a quarter of a page, though.. besides the definitions, of course...

CPAs and Tax Attorneys would never support this effort. And they have plenty of lobbying power, ya know.

Well, a corporation can't go to college to rack up tuition costs, nor can it get sick... I suppose the state penalty for taxing individuals would require defining an individual. Well, then let's add businesses there, too. Now all the taxes are the same except for the tuition/health care (at least the health care not paid by the government) credit.

Sounds like a logical reason to support Universal Healthcare and Universal Education.

[agamemnus]

I agree with Mitt Romney that states should determine their own health care system, but I do think that the federal government has a role to play in providing health care, in terms of funding. That could be accomplished via tax credits for individuals for health-care costs as well as reimbursing states for various medical procedures, pills, and hospital stays, set at specific costs, like medicaid.

[RandBlade]

You can fit this tax code on a quarter of a page, though.. besides the definitions, of course...

Bollocks.

Firstly it wouldn't work. Who in their right mind would base a 500M company in a nation with such an exhorbitant rate? The UK (not exactly a tax haven) alone has corporate tax rates in the 20s (24% this year coming down to 23% next), Ireland has lower.

Secondly write your one page however you want. If I had a company in too high a rate (any) first thing I'd do is get my lawyers to read your one page and split the company into multiple ventures each on a lower rate.

[agamemnus]

Bollocks.

Firstly it wouldn't work. Who in their right mind would base a 500M company in a nation with such an exhorbitant rate? The UK (not exactly a tax haven) alone has corporate tax rates in the 20s (24% this year coming down to 23% next), Ireland has lower.

Then don't. Don't base it here. But if you are making money here (USA), we will collect on all your US earnings anyway... you might as well base your corporate HQ here since it is a cost center; it doesn't generate revenue, and we have the talent; also, we are not bankrupt due to new tax laws which I just implemented (as dictator), which means our economy is stable... better than what you can say for the rest of the world, which is either zombie-land or biker-gang land.

Secondly write your one page however you want. If I had a company in too high a rate (any) first thing I'd do is get my lawyers to read your one page and split the company into multiple ventures each on a lower rate.

Ah, nice try, but your individual companies will not be allowed to collude in the market, so you're just killing their efficiency.

[Loki]

This seems like a great way to catch up to Greece!

[Nessus]

You're so pessimistic about Romney/Ryan

[wiggin]

Ag, as others have mentioned having progressive taxes on corporate profits is a recipe for disaster. There's the wealth flight issue you also get with individuals, but there's a more subtle and fundamental critique. Inequality in income among individuals can, at extremes, be considered a bad thing due to a number of reasons. But income inequality among companies is a fantastic thing. We'd love to have large companies making lots of money and employing lots of people. Small businesses are great, but we largely like them because they can become large businesses. We want there to be a big disparity between the largest and smallest businesses, so why should we discourage the formation of large businesses in the country?

Also, doesn't your tuition deduction amount to a huge subsidy for colleges?

[RandBlade]

Then don't. Don't base it here. But if you are making money here (USA), we will collect on all your US earnings anyway... you might as well base your corporate HQ here since it is a cost center; it doesn't generate revenue, and we have the talent; also, we are not bankrupt due to new tax laws which I just implemented (as dictator), which means our economy is stable... better than what you can say for the rest of the world, which is either zombie-land or biker-gang land.

Wait are we talking a corporation tax (on profits) or a sales tax (on sales). Either is far too high, but a sales tax is mentally high. If its profits then I again can't see any reason to invest in a nation that'd take half versus a nation that'd take a quarter.

Your economy would collapse, not be stable. As for the rest of the world I'm wondering is the UK zombie-land or biker-gang land in your eyes?

[RandBlade]

Incidentally the notion that you would build corporate HQ in the US as its a "cost centre" to offset your mammoth taxes shows a complete lack of understanding of how businesses work, especially multinational businesses.

If the HQ investment goes into the US I can only offset the raw costs of HQ and make no profit on it. Not good, especially for any franchise-based system.
Alternatively I take HQ out of the US and place it anywhere else in the world with a sane tax system. HQ then levies maximised charges against American operations. HQ becomes (as it should be) a profit centre and US profits are minimised.

The latter is how it of course works in the real world, no business HQ is a charity.

[Asmodian]

How about a progressive rate on CORPORATIONS?

50K or below: 0%
above 50K-250K: flat 15%.
above 250K-1M: 20%.
above 1M-10M: 25%
above 10M-100M:30%
above 100M-500M:37.5%
above 500M:42.5%

Individual tax rates will be exactly the same. No marriage penalties or benefits to the tax code.

EDIT:
For individuals, all (college-level) education tuition (tuition only) costs and medical bills can cover income as an expense for a period of 15 years from the initial purchase; the amount expensed for the current year can be chosen freely from remaining credits.

No other federal income tax deductions will apply for either individuals or businesses.

States will be penalized for taxing the first $50K that individuals or businesses make by [their rate on that $50K - 5% (non-negative numbers only)] via various deductions to federal->state transfers.

If you are going for simple and acceptable then you should move to flat right for individuals rather then progressive rate for the companies. I am greatly motivated to move back to Russia with its 13% flat tax rate and Switzerland is a solid step better most of the rest of the word in taxation (granted I should probably just move to a better canton then geneva) .

[RandBlade]

My ideal would be flat across the board: Corporation, personal and sales. Not necessarily the same flat rate for each, but flat for each.

[EyeKhan]

How about a progressive rate on CORPORATIONS?

50K or below: 0%
above 50K-250K: flat 15%.
above 250K-1M: 20%.
above 1M-10M: 25%
above 10M-100M:30%
above 100M-500M:37.5%
above 500M:42.5%

Individual tax rates will be exactly the same. No marriage penalties or benefits to the tax code.

EDIT:
For individuals, all (college-level) education tuition (tuition only) costs and medical bills can cover income as an expense for a period of 15 years from the initial purchase; the amount expensed for the current year can be chosen freely from remaining credits.

No other federal income tax deductions will apply for either individuals or businesses.

States will be penalized for taxing the first $50K that individuals or businesses make by [their rate on that $50K - 5% (non-negative numbers only)] via various deductions to federal->state transfers.

Do you have any idea how much revenue this would produce?

[Loki]

It would produce lots of revenue for any developed country that didn't implement it.

[Veldan Rath]

It would produce lots of revenue for any developed country that didn't implement it.

Anyhoo, eliminate all federal taxes, go to a national consumption tax (23%). Monthly prebate to every household to cover the expense of taxes on the Nessecities of living.

This requires the repeal of the XVI of course, and then have the States collect the revenue for the Fed (and the States get to keep 1% for their trouble).

[RandBlade]

Anyhoo, eliminate all federal taxes, go to a national consumption tax (23%). Monthly prebate to every household to cover the expense of taxes on the Nessecities of living.

This requires the repeal of the XVI of course, and then have the States collect the revenue for the Fed (and the States get to keep 1% for their trouble).

Any overly-simplistic tax system that says "abolish the others" is equally doomed to failure.

For one thing a national consumption tax (if it were the only tax) would need to be set at such a high level (its not really 23% to start with even if you believe their numbers) that it'd raise a lot less than you expect as it will be avoided. Not only would the black market absolutely flourish in ways that make prohibition seem small fry, but anyone with any serious shopping to do anywhere near the Canadian border would cross the border and simply avoid it so the effective tax rate would be 0 on those purchases. It would also severely damage the tourism industry.

Any tax set too high will cause people to try and avoid it. Best tax system is a simple flat system that is low and flat across all styles of transactions that you can cover not just one.

[Veldan Rath]

I would suggest you read the Fair Tax Book by Neal Boortz and Congressman Linder.

It addresses your concerns.

[agamemnus]

If its profits then I again can't see any reason to invest in a nation that'd take half versus a nation that'd take a quarter.

Or, perhaps the country would instead re-organize into companies who have yearly incomes of 100M or less, which means fewer bailouts for too-big-to-fail companies, fewer politicians selling out their states and local governments to give tax breaks to huge companies and get them to move their factories there (thus getting said politicians re-elected). More economic stability overall.

If the HQ investment goes into the US I can only offset the raw costs of HQ and make no profit on it. Not good, especially for any franchise-based system.
Alternatively I take HQ out of the US and place it anywhere else in the world with a sane tax system. HQ then levies maximised charges against American operations. HQ becomes (as it should be) a profit centre and US profits are minimised.

The latter is how it of course works in the real world, no business HQ is a charity.

No, this is income, not sales taxes. If you take the HQ out, you're still paying corporate taxes on US income because you'll need to maintain a legal subsidiary in the US -- a subsidiary that will still pay income taxes. If you keep it in, you can deduct the labor/capital cost of running the HQ from your US taxes.

EDIT:
Interesting unsourced Wikipedia bit on the matter:

Federal corporate income tax is imposed at graduated rates. The lower rate brackets are phased out at higher rates of income. All taxable income is subject to tax at 34% or 35% where taxable income exceeds $335,000. Tax rates imposed below the federal level vary widely by jurisdiction, from under 1% to over 16%. State and local income taxes are allowed as tax deductions in computing Federal taxable income.

[RandBlade]

I would suggest you read the Fair Tax Book by Neal Boortz and Congressman Linder.

It addresses your concerns.

I'm sure those are entirely independent and don't have an axe to grind. That's like arguing with a socialist who then says to read Noam Chomsky as proof.

If the tax is set so incredibly high, why wouldn't people try and avoid it? Why wouldn't there be a major black market? Why wouldn't it affect tourism.

All 3 factors can already be objectively observed for high taxation/costs in the real world and you want to make it much, much higher. High taxation (of any kind) is a bad idea, I'm surprised you're a proponent of high taxes.

Or, perhaps the country would instead re-organize into companies who have yearly incomes of 100M or less, which means fewer bailouts for too-big-to-fail companies, fewer politicians selling out their states and local governments to give tax breaks to huge companies and get them to move their factories there (thus getting said politicians re-elected). More economic stability overall.

Apples not going to divide to sub 100. This happens on the margins.

No, this is income, not sales taxes. If you take the HQ out, you're still paying corporate taxes on US income because you'll need to maintain a legal subsidiary in the US -- a subsidiary that will still pay income taxes. If you keep it in, you can deduct the labor/capital cost of running the HQ from your US taxes.

EDIT:
Interesting unsourced Wikipedia bit on the matter:

Have you ever been involved in operating part of a multinational business? That is NOT how it works. HQ (quite rightly) makes a profit! HQ doesn't just charge it's subsidiaries labour/capital costs but far more important costs: Eg intellectual property, commission, services etc, etc, etc - all must by law (so its not a dodge) be properly accounted for. These deduct from income in the subsidiary and increase it in the HQ.

[Veldan Rath]

Again, I suggest the book as I don't want to get into the nitty gritty of how it works, as you wont read it if I post it anyway. (and the book can explain it better).

Yes I don't like high taxes, but as this idea is to replace all the federal taxes, (including the imbedded taxes in all the products we buy) then this is a wash.

Your blackmarket quips make me giggle.

[ar81]

Bankers caused all this. Nationalize profitable banks and let broken ones to collapse. Nationailzation should last while the money and jobs that were lost, are recovered. After that, they may be returned to the owners.

That would teach them not to start a crisis, for they will be nationalized to recover the money.

[agamemnus]

Apples not going to divide to sub 100. This happens on the margins.

Then they can pay the higher rate.

Have you ever been involved in operating part of a multinational business? That is NOT how it works. HQ (quite rightly) makes a profit! HQ doesn't just charge it's subsidiaries labour/capital costs but far more important costs: Eg intellectual property, commission, services etc, etc, etc - all must by law (so its not a dodge) be properly accounted for. These deduct from income in the subsidiary and increase it in the HQ.

Tax games. Physically, the HQ costs money to run. First of all, we're assuming that the company has overseas subsidiaries that specifically need the HQ's IP and services, and that's not necessarily the case.

The HQ might produce services or research for the company, but that is not net income, even if it allows the company to reduce its net revenue overseas and raise the net revenue at home. The company can just as easily lend intellectual property and offer services to its overseas subsidiaries for free if it wants to pay more taxes overseas and less at home.

[Loki]

They can also do even more of their business overseas.

[RandBlade]

Again, I suggest the book as I don't want to get into the nitty gritty of how it works, as you wont read it if I post it anyway. (and the book can explain it better).

Yes I don't like high taxes, but as this idea is to replace all the federal taxes, (including the imbedded taxes in all the products we buy) then this is a wash.

I would read it and it isn't a wash as only the slightest screw-up and your whole system collapses.

Your blackmarket quips make me giggle.

Why its exactly what will happen - and there is plenty of evidence for.

Its cheaper in the UK to drive to France pick up cigarettes/alcohol and then drive back, so people can do precisely that. And when they do so pick up more than they need and sell them on when they get back.

Most Canadian cities are right on your border - but they won't need to drive there. As soon as you get across the border there'd be massive Costco's built to stock up on and then fill your truck up and drive back home - you'd never need to pay a penny of any federal tax ever.

Tax games. Physically, the HQ costs money to run. First of all, we're assuming that the company has overseas subsidiaries that specifically need the HQ's IP and services, and that's not necessarily the case.

The HQ might produce services or research for the company, but that is not net income, even if it allows the company to reduce its net revenue overseas and raise the net revenue at home. The company can just as easily lend intellectual property and offer services to its overseas subsidiaries for free if it wants to pay more taxes overseas and less at home.

WTF!? Have you EVER reported to/been a subsidiary of a HQ? Or worked for a HQ and had a subsidiary? Ever!?

HQ charges its subsidiaries and makes a profit, its how the HQ stays in operation. Why would HQ lend its subsidiaries anything? Its not a tax game its proper business accounting. Its how the real world works. In fact doing what you propose is illegal. Eg if HQ has a copyright over something that both a subsidiary and a competitor sells resale then on a wholesale basis a fair market rate needs to be charged to both. To not charge the subsidiary while charging the competitor is against the law, even if the subsidiary is wholly owned then a charge is needed for accounting purposes.

EG if Apple charges Amazon a fortune for its iPads, but gives the iPads for free to Apple Stores then that is anti-competitive and totally illegal.

[Veldan Rath]

So, you are willing to dismiss with a handwave, before you look at their data? I'm not sure by your response if you are planning to look this up or not.

[RandBlade]

I have looked at data on the FairTax website (where I got the fact they're not even talking 23% tax to start with even with their own assumptions) and didn't see anything to assuage the concerns I've listed.

The incentive to go cash-in-hand to avoid the tax will be absolutely massive too.

[Hazir]

Off the cuff I'd be in favour of a tax system with a semi-flat tax structure, two tax brackets max. Then I'd like to eliminate all deductions. I'd also be against a part of somebodies income being exempt from taxation; it just gives off a wrong message that lower incomes somehow are not co-responsable to the upkeep of public services. Taxation should cover expenses, I'd prefer a budget with no deficits. Also I would do away with subsidies.

This does not mean on the other hand I want to reduce government to its minimal size. I would like to see government at its optimal size, and I would see amongst of the tasks of that government fighting abject poverty, hunger and homelessness.