frame

Higher Taxes on companies will lead to a more fair and balanced economy.

Opening Argument

I am uncertain about the facts of this issue and I could go either way with enough evidence to tilt me for or against this issue. Good luck to all posting.
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About Persuade Me

Persuaded Argument

  • MedicMedic 129 Pts
    Winning Argument ✓
    Let's quickly sum up what we've learned.

    1.) Taxes as a tool of redistribution are inherently ineffective
    2.) Corporation tax is poorly structured and leads to the incidence falling places you don't want it to fall
    3.) Corporation tax therefore should be as low as possible BUT nonzero
    4.) This is because this leads to silly things like self-incorporation to duck income tax. 
    5.) There's no agreement on the issue in academia, but most economist peg it about 15%

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

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Status: Open Debate


Arguments

  • NightwingNightwing 49 Pts
    edited November 2017
    Putting high taxes and regulations (another form of tax) on companies make them leave. If you can't make profit because the government takes all or most of it, there is no reason to stay in business in such an environment. Far from being a balanced economy, what you get instead is a reduced economy. I suppose no economy anywhere is 'balanced' in a way, if you ignore the pain people feel from it.

    WilliamSchulznorthsouthkoreaMedicBaconToes
  • Nightwing said:
    Putting high taxes and regulations (another form of tax) on companies make them leave. If you can't make profit because the government takes all or most of it, there is no reason to stay in business in such an environment. Far from being a balanced economy, what you get instead is a reduced economy. I suppose no economy anywhere is 'balanced' in a way, if you ignore the pain people feel from it.

    You have an interesting point, but if buisnesses want to make money, how do they (a) leave the market if they have really good profit, (b) what if the government applies a different tax to different sized buisnesses to make sure no one has a monopoly, and (c) what do you mean by the pain people feel from a balanced economy? 
  • @Nightwing That is why you tax the companies based on their profits. If they are making higher profits, then you tax them higher. You just have to make sure that they are still making a healthy profit even with the taxes. The newer companies on the other hand, don't have as high of taxes, so they still have incentive. 
    WilliamSchulzBaconToes
  • Taxing companies would not be good for the economy due to them possibly begins able to invest more in the US economy if they would have a tax cut or decrease their spending.
  • Taxing companies would not be good for the economy due to them possibly begins able to invest more in the US economy if they would have a tax cut or decrease their spending.
    That is the point. Small buisnesses will have a tax cut that way they can make their buisness grow and become more available to the people. As the buisness grows, the government taxes them more according to their profit intake until they reach the level of a company like Apple or Barnes N' Noble. A tax in general wouldn't decrease their spending because it is a tax on profit, so the company would still have leftover money to work with.
    Fascism
  • Consider that you cannot tax a company. There's nothing to tax. Every penny that comes out of corporation tax comes from wages of workers in the company or decreased shareholder value.

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

  • Medic said:
    Consider that you cannot tax a company. There's nothing to tax. Every penny that comes out of corporation tax comes from wages of workers in the company or decreased shareholder value.
    Um... the company would be bankrupt if there was nothing to tax, and the government can tax a corperation because that is the job of the government. It has not been legal for corperations to take taxes out of workers wages, and decreaced shareholder value would lessen the amount taxed, but not the overall taxing. Your hypothetical statement would assume that (a) every company is like this, or (b) the government can't tax corperations because taxing comes out of wages, both which are false. To persuade me, please provide a source along with your information, so as to reenforce what you are saying and so that it isn't solely opinion. 
  • @WilliamSchulz
    https://static1.squarespace.com/static/56eddde762cd9413e151ac92/t/56f7200545bf216ba3b89f69/1459036166023/CorpTax8.pdf

    Here's a policy paper from the Adam Smith institute on the topic. Let me clarify my point - one cannot tax a "corporation". It pays taxes, sure, but it's theoretically got no income whatever. One cannot directly tax the corporation. You can tax a human, because they pay tax under the law, and the incidence of tax fallse upon them. However, you cannot directly tax the corporation - consider if you were a CEO of a large firm, and corporation tax increased - in order to protect your own wage, you'd cut the wages of workers or slash dividends paid to stockholders to maintain your profit margin. In other words, the "burden" of the tax is falling upon the workers or the stockholders, not the company - it can't possibly, if it wants to maximise its profits (which it does).

    >. It has not been legal for corperations to take taxes out of workers wages,

    Doesn't happen in quite that way - simply that the corporation must maintain and maximise its profit margin and as such the "cuts" have to come from somewhere.

    > every company is like this

    for the purposes of macro and micro they pretty much are

    >the government can't tax corperations because taxing comes out of wages

    It's not quite that taxation of corporations comes out of wages - it's more that in order to maintain the profit margin companies must lower wages or good/service quality or raise prices or cut dividends.
    Let me provide you with a few papers that prove my claims.

    http://www.nber.org/papers/w0616.pdf
    >[corporation tax] is likely to be borne primarily by residents of the taxing state, as consumers, immobile workers, and owners of land and immobile capital.

    http://www.nber.org/papers/w8280.pdf
    >The incidence is typically borne by domestic capital, as in the original Harberger (1962) closed-economy model. Second, for those parameter values in which the incidence is not borne mostly by domestic capital, interestingly, most of the incidence is exported.

    http://www.nber.org/papers/w11686.pdf
    >1. For a variety of reasons, shareholders may bear a certain portion of the corporate tax burden. In the short run, they may be unable to shift taxes on corporate capital.
    WilliamSchulzFascism

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

  • Medic said:
    @WilliamSchulz
    https://static1.squarespace.com/static/56eddde762cd9413e151ac92/t/56f7200545bf216ba3b89f69/1459036166023/CorpTax8.pdf

    Here's a policy paper from the Adam Smith institute on the topic. Let me clarify my point - one cannot tax a "corporation". It pays taxes, sure, but it's theoretically got no income whatever. One cannot directly tax the corporation. You can tax a human, because they pay tax under the law, and the incidence of tax fallse upon them. However, you cannot directly tax the corporation - consider if you were a CEO of a large firm, and corporation tax increased - in order to protect your own wage, you'd cut the wages of workers or slash dividends paid to stockholders to maintain your profit margin. In other words, the "burden" of the tax is falling upon the workers or the stockholders, not the company - it can't possibly, if it wants to maximise its profits (which it does).

    >. It has not been legal for corperations to take taxes out of workers wages,

    Doesn't happen in quite that way - simply that the corporation must maintain and maximise its profit margin and as such the "cuts" have to come from somewhere.

    > every company is like this

    for the purposes of macro and micro they pretty much are

    >the government can't tax corperations because taxing comes out of wages

    It's not quite that taxation of corporations comes out of wages - it's more that in order to maintain the profit margin companies must lower wages or good/service quality or raise prices or cut dividends.
    Let me provide you with a few papers that prove my claims.

    http://www.nber.org/papers/w0616.pdf
    >[corporation tax] is likely to be borne primarily by residents of the taxing state, as consumers, immobile workers, and owners of land and immobile capital.

    http://www.nber.org/papers/w8280.pdf
    >The incidence is typically borne by domestic capital, as in the original Harberger (1962) closed-economy model. Second, for those parameter values in which the incidence is not borne mostly by domestic capital, interestingly, most of the incidence is exported.

    http://www.nber.org/papers/w11686.pdf
    >1. For a variety of reasons, shareholders may bear a certain portion of the corporate tax burden. In the short run, they may be unable to shift taxes on corporate capital.
    You have a great source and a great argument, and you about persuaded me! I just have a couple questions just to clarify a few terms before accepting your argument.

    1. I understand now that corperations might slash wages or consumers have to pay more, but could one person simply not buy from the company or leave the company for a better paying job?

    2. If shareholder value comes from stocks and other legal matters, how come their value could be decreased legally? Wouldn't it come from a drop in stock value instead?

    3. If a corperation started slashing wages and workers got upset as a result, wouldn't smaller buisnesses become more popular to support local communities while staying low on the taxing bracket?

    If you could answer these questions for me, that would be awesome. Thanks for your argument!
  • >or leave the company for a better paying job?

    Wages are sticky. This means that it's hard for companies to cut wages, cause workers complain. This means essentially that the way for companies to decrease paychecks is simply to keep them the same - inflation will increase the prices of everything else incrementally .

    >If shareholder value comes from stocks and other legal matters, how come their value could be decreased legally? 

    Companies are by law required to pay out value to shareholders, the loss in value comes from the following.

    1.) decreased company value, so each "bit" of the company is worth less
    2.)dividends aren't paid because the company has less "surplus" profit

    on your last q, wages are sticky so cutting doesn't usually result in outrage immediately. corp tax also isn't banded to the extent where this would become a factor.

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

  • @Medic
    Medic said:
    @WilliamSchulz
    https://static1.squarespace.com/static/56eddde762cd9413e151ac92/t/56f7200545bf216ba3b89f69/1459036166023/CorpTax8.pdf

    Here's a policy paper from the Adam Smith institute on the topic. Let me clarify my point - one cannot tax a "corporation". It pays taxes, sure, but it's theoretically got no income whatever. One cannot directly tax the corporation. You can tax a human, because they pay tax under the law, and the incidence of tax fallse upon them. However, you cannot directly tax the corporation - consider if you were a CEO of a large firm, and corporation tax increased - in order to protect your own wage, you'd cut the wages of workers or slash dividends paid to stockholders to maintain your profit margin. In other words, the "burden" of the tax is falling upon the workers or the stockholders, not the company - it can't possibly, if it wants to maximise its profits (which it does).

    >. It has not been legal for corperations to take taxes out of workers wages,

    Doesn't happen in quite that way - simply that the corporation must maintain and maximise its profit margin and as such the "cuts" have to come from somewhere.

    > every company is like this

    for the purposes of macro and micro they pretty much are

    >the government can't tax corperations because taxing comes out of wages

    It's not quite that taxation of corporations comes out of wages - it's more that in order to maintain the profit margin companies must lower wages or good/service quality or raise prices or cut dividends.
    Let me provide you with a few papers that prove my claims.

    http://www.nber.org/papers/w0616.pdf
    >[corporation tax] is likely to be borne primarily by residents of the taxing state, as consumers, immobile workers, and owners of land and immobile capital.

    http://www.nber.org/papers/w8280.pdf
    >The incidence is typically borne by domestic capital, as in the original Harberger (1962) closed-economy model. Second, for those parameter values in which the incidence is not borne mostly by domestic capital, interestingly, most of the incidence is exported.

    http://www.nber.org/papers/w11686.pdf
    >1. For a variety of reasons, shareholders may bear a certain portion of the corporate tax burden. In the short run, they may be unable to shift taxes on corporate capital.

    Great argument

    Wouldn't mandatory national labor unions be able to solve this? 
  • @Fascism
    Labour unions tend to be extractive - they tend to not be representative, essentially of the workers in them. This means they "rent-seek" - they try and maximise their efficiency at the cost of social goods.Even so, in places in time such as Britain pre-Thatcher or France pre-Macron where unions were very strong wages were still sticky. In short, no.

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

  • @Medic
    Medic said:
    @Fascism
    Even so, in places in time such as Britain pre-Thatcher or France pre-Macron where unions were very strong wages were still sticky. In short, no.
    Yes, but they accomplished many things such as making companies give them better work conditions. If they were able to force the company to give them rights in the factory which decreased efficiency, then it would be possible for them to fight for higher wages. Wouldn't it? 

    Medic said:
    @Fascism
    Labour unions tend to be extractive - they tend to not be representative, essentially of the workers in them. This means they "rent-seek" - they try and maximise their efficiency at the cost of social goods.
    This isn't always the case. There are different variations of labor unions. 
  • >Yes, but they accomplished many things such as making companies give them better work conditions. 

    Only for those who were members of it. This was the issue here. Mandatory membership wouldn't remedy it.

    >then it would be possible for them to fight for higher wages. Wouldn't it? 

    Unions have pretty minimal effects on wages in reality. Source: http://www.nber.org/papers/w4195

    >This isn't always the case. 

    Usually is the case, especially when the unions are larger.

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

  • @Medic Mostly persuaded, but can you explain this statement further?

    "Only for those who were members of it. This was the issue here. Mandatory membership wouldn't remedy it."
  • The union tends to only increase quality of working for workers at the expense of the workers who aren't in the unions. Making membership mandatory would remove the people who the burdens can be passed on to and would likely pass on the costs to the consumer.

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

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