Why...

w8t4u
w8t4u

Why do we have a corporate income tax?

Why don't we just get rid of favorable capital gains rates and just tax it as ordinary income?

That way we can get rid of the ridiculous double-taxation issue. And most business entities don't even structure as corporations anyways.

PurpleCharger
PurpleCharger

@w8t4u

Come on Veeky Forums

BunnyJinx
BunnyJinx

we have it because how else are we gonna fund our insanely high military budget?

Fried_Sushi
Fried_Sushi

@BunnyJinx
You mean our welfare budget.

Lunatick
Lunatick

@BunnyJinx
@Fried_Sushi

Social Security and Medicare/Medicaid have surpassed our military budget since the 90s.

However, that's not the point. Why do we have a corporate tax rate when S-Corps, LLCs, partnerships, and sole proprietorships exist with flow-through taxation?

Why even have capital gain rates? Just tax it as normal income. The idea of taxing the corporations profit before distributing it to the owners seems silly. Especially if you let the owners pay a lower tax rate on the profits.

It just doesn't make sense to me.

Boy_vs_Girl
Boy_vs_Girl

He doesn't know that capital gains+corporate tax is equal to self employment tax at the top levels
He doesn't realize that it's structured this way to incentivize the nuveau riche to sell their assets in order to diversify while letting old money invest

You have neither studied the tax structure nor its implications.

girlDog
girlDog

@Boy_vs_Girl

Neither of those is true.

Especially your first point. Depending on capital gain rates and the corporate tax rate, it actually deprives you of more money than a flat income tax rate.

That's the first thing you learn in taxation of business entities. What you don't learn in taxation of business entities is why it even fucking exists.

cum2soon
cum2soon

@w8t4u

I guess it is to spread the tax burden over multiple instances.

As.for why corporate tax is so high in the US, its because your income tax Rates are rather low and you.habe no VAT, but lots of expenses to cover.

w8t4u
w8t4u

@Fried_Sushi

corporate tax is mostly earmarked for military and defense expenditures

Sir_Gallonhead
Sir_Gallonhead

Corporations are taxed because it the price of receiving the benefits afforded to them in a capitalist economy. Corporations are not natural citizens, and therefore have no natural entitlement to legal rights or protections. And yet society gives them massive benefits, such as limited liability, efficient, regulated markets, free interstate trade, the ability to raise and borrow capital, and ownership of assets. Hell, society even gives them the right to sue for injuries, even though they're fictional creations.

Without all these benefits, our economy would be a pale fraction of its current splendor. There is no business formation more conducive to large-scale operations, national and international trade, multi-tier organization, and public ownership than the venerable C Corp. S Corps, LLCs, partnerships, and sole proprietorships (along with LLPs, PCs, and any of the others) are fine for small-scale businesses, startups, and lemonaide stands. But they all have fatal shortcomings when trying to compete against a fully-matured C Corp in the global trade and capital markets.

If a C Corp is going to get all these financial and legal benefits in their individual capacity -- many of them rights only afforded to citizens of the nation -- they have to pay for it. Its simply the same bargain that the government demands of of its natural born citizens.

cum2soon
cum2soon

@Sir_Gallonhead

As an attorney, it's malpractice if I don't suggest a business become an LLC.

It's superior to a C-Corp in every way. The only reason to become a C-Corp is if you want to take your company public eventually.

Your lemonade stand statement was retarded (actually your whole post was prolix and retarded). The Koch Brothers have a multi-billion dollar business that is privately held.

C Corp doesn't mean big; LLC/Partnership and other state entities other than a C Corp doesn't mean small.

You didn't give a good answer for why a corporate tax rate exists.

lostmypassword
lostmypassword

@cum2soon

70% of the Federal income is from income taxes on the people. Corporate tax on profits is not as material in the bigger picture

WebTool
WebTool

@cum2soon
Name one multi-national or even national business enterprise that's a LLC.

I'll be waiting faggot.

As an attorney, it's malpractice if I don't suggest a business become an LLC.
As an attorney, I'm not impressed by your hyperbole. And since your clients are most likely glorified lemonaide stands, LLCs are fine.

Call me when you work on your first public offering or registration statement.

I'll be waiting faggot.

TechHater
TechHater

@WebTool

This is nonsense lol. Many international law firms and venture capital firms are limited partnerships. They have offices overseas.

BunnyJinx
BunnyJinx

@TechHater
gets asked to name one
doesn't name one
Just concede the point next time, faggot. Or abandon the thread. But continuing to shitpost just drags down the quality of the board.

Also, stop roleplaying internet lawyer. It's pathetic, and actually illegal under most country's laws.

Stark_Naked
Stark_Naked

@WebTool
Name one multi-national or even national business enterprise that's a LLC.

Basically every single private capital fund is structured this way you fucking idiot.

Lord_Tryzalot
Lord_Tryzalot

@Stark_Naked
private capital fund
Protip: private capital funds aren't multi-national enterprises. They're actually relatively small outfits, with limited locations and employees.

Protip #2: don't jump into conversations when you have no fucking clue what you're talking about.

viagrandad
viagrandad

@Lord_Tryzalot
Really, I used to work as an analyst at Burgiss, going over financial statements for private capital funds every single day. You have no clue what you're talking about. These are huge international firms with billions of dollars under management.

massdebater
massdebater

LLCs and partnerships have an extremely difficult time getting funding (loans) without the owner of the LLC co-signing or personally guaranteeing the debt.

Corporations are much easier to acquire funding without a personal guarantee (assuming the business is in good financial standing, of course). Corporations are also the only entity with SHAREHOLDERS - LLC/LP/LLP/LC all have owners who receive income as an owner's draw or salary. You can not take one public and most venture capital or private equity firms will make it a priority to restructure your business as a corporation.

Keep in mind, taxes are paid on total profits. As a corporation, you can issue excess profits as dividends or spend it so that your company breaks even or loses money.

You'll still need to file a corporate tax return, but you won't pay anything.

Playboyize
Playboyize

@viagrandad
I mean come on, there are plenty of LLCs out there. Literally just google "Large LLCs".

Koch Industries
Cargill
Mars
Kaiser Permanente
Chrysler

SniperWish
SniperWish

@Lunatick

Not even american here but it's worth noting you literally get nothing in return for your social security. It minaswell be additional income tax since the system will break long before any anon's retirement

LuckyDusty
LuckyDusty

@BunnyJinx

Steptoe & Johnson LLP right off the top of my head.

Now run away. And yes, I'm a lawyer. Learn something from this.

ZeroReborn
ZeroReborn

@SniperWish
Though I am not a fan of Social Security it is not even close to going broke. Please do your research.

Stark_Naked
Stark_Naked

@Boy_vs_Girl
it's structured this way to incentivize the nuveau riche to sell their assets in order to diversify while letting old money invest
What do you mean by this?

BinaryMan
BinaryMan

@girlDog

Corporate tax tops out at 40%. Capital gains is 18% of the remaining 60% of profits which is your dividend. That totals 50.8%

Self employment tax is an additional 17%, while the highest tax bracket pays 34% when you include medicare. That totals 51%.

Sorry to fuck up your circlejerk.

@Stark_Naked

What do you think I mean?

eGremlin
eGremlin

@BinaryMan
What do you think I mean?
I have no idea. How would a tax, applied to everyone all the same, encourage people with newfound wealth to sell assets while encouraging people with existing wealth to invest?

Fuzzy_Logic
Fuzzy_Logic

@eGremlin

Sigh.

Suppose that your goal is to build a fortune. You try to do this working for yourself, but salaries only go so high. You try to do this working for yourself, but you get hit with an extra 17% in taxes for self employment. So you hire others and build a business, eventually incorporating to protect yourself from liability. Corporate tax is just as high as self-employment tax when coupled with capital gains tax, so while your income has grown massively, you don't have liquid assets on tap, and in the event that the sector of the economy your business is in flounders you are screwed.

Then, you realize that if you take the company public and sell, say, 20% of it in the IPO, that you stand to have 3-4 times even after capital gains tax what you'd have in annual profits, and you'd be able to invest that across a wide portfolio, theoretically preserving your wealth against localized economic turbulence.

Simultaneously, old money with their trust funds, hedge funds etc can buy in on the assumption that diversifying into your company keeps them up with the times as the economy changes.

SomethingNew
SomethingNew

@LuckyDusty
A law firm? I ask for large scale national or multi-national business enterprises, and you cite a law firm?

Ever heard of a law firm in the Fortune 500? No? Then fuck off, kid. Law firms are fucking small time compared to the nation's major corporations.

Jesus, what a retard. No more (You)s for you unless you step up your game, roleplayer.

@Playboyize
Koch Industries
aka Koch Industries Inc.
Cargill
aka Cargill, Inc.
Mars
aka Mars Incorporated
Kaiser Permanente
a holding company
Chrysler
I assume you mean Fiat Chrysler LLC the private wholly-owned subsidiary of Fiat Chrysler Automobiles N.V., a Dutch corporation listed on the NYSE?

Congrats, you listed 5 examples and were 100% wrong on 3. One of the remaining two is a no-name holding company for some insurance subsidiaries, and the other is a cherry-picked subsidiary of a multi-national corporation.

You fail at life, kid.

Methnerd
Methnerd

@BunnyJinx
@Fried_Sushi
literally welfare for warmongering industry

Flameblow
Flameblow

I wish every fucking retard who complains about the military spending would take one look at the world, see NATO, see how half the earth relies on us to defend them, and quit fucking acting like we could just lower the mil spending at the drop of a hat and only don't because every single person in the gov't must be retarded. Stop it.

Stark_Naked
Stark_Naked

@w8t4u
I would imagine that corporation tax helps retain money in the national economy. A personal income tax on shareholders wouldn't work if the company had foreign domiciled investors.

As it is, company profits are already transferred to low tax jurisdictions, this would just make the problem worse.

Lunatick
Lunatick

@Flameblow
Defend the Earth from who?

Are Afghanistan, Iraq, Libya, Syria, Iran really existential threats to the rest of the world? Can they project military power beyond their neighbours?

Or is the US MIC simply creating fictional enemies and starting wars to justify their existence and budgets?

Booteefool
Booteefool

@Flameblow
Scaredy cat detected.

Scared the big bad ISIS is gonna get you? Maybe if we stopped slaughtering innocent goat farmers with drones (paid for by your taxes) they wouldn't want to kill us so much.

MPmaster
MPmaster

@SomethingNew
These companies run subsidiaries which are LLCs.

Literally a list copied and pasted from the first Google result of Koch companies: Koch Ag & Energy Solutions, LLC and its subsidiaries, including Koch Fertilizer, LLC, Koch Agronomic Services, LLC, Koch Energy Services, LLC and Koch Methanol, LLC

Again, you have no idea what you're talking about, so I'm just not going to respond to your dumb ass after this post.

Gigastrength
Gigastrength

@MPmaster
These companies run subsidiaries which are LLCs.
Congrats again: you missed the point completely. Here's a refresher, fag.

1. user claims LLC are superior to C Corps in all respects. @cum2soon

2. I point out that user is retarded, and that most major global business enterprises are C Corps. @WebTool

3. user is invited to prove me wrong by naming one major national or international business enterprise organized as a LLC. @WebTool

4. user splurges and names some shitty law firm. @LuckyDusty

5. You bumble into the thread and start talking about private capital funds, for some unknown fucking reason. @Stark_Naked

6. Called out for your faggotry, you start naming subsidiaries of major CORPORATIONS, essentially proving my point. @Playboyize

7. You get rekt. @SomethingNew

8. Proving that you're retarded, you double-down on the same answers that prove me correct. Then you stick your fingers in your ears like a 4 year old. @MPmaster

Son, a beat down like this should be criminal. You can't even keep up with the language, let alone participate or contribute in the conversation. You can head back to /b/ now; this place isn't for you.

RumChicken
RumChicken

@Gigastrength
I just bumbled into the thread myself, but I do believe you've torn them both a new asshole. Well done!

StrangeWizard
StrangeWizard

@Flameblow
see how half the earth relies on us to defend them

And yet they all hate our guts. Look, I'm well aware that the Soviets were the ones to really fuck the Nazis shit up, but there was a Western Front too, and Britain was getting slowly beaten into the ground, while France has already fallen. We stepped in and helped the Brits push the Nazis back to Berlin, liberating France in the process. We spilled our blood in that fight, and yet the Brits will always try to downplay just how vital our entry into the war was for them. The French act like we are complete and total subhuman scum. That's what defending our so-called allies gets us.

Fuck them. Let the world defend itself. I'm tired of American blood being spilled for ungrateful assholes, who hate us. Let them do their own bleeding. We'd sure the fuck have to if anyone invaded us.

New_Cliche
New_Cliche

@Gigastrength
So what's the difference between a c-corp and an llc? Australian here, I'm assuming it's the same as between public and proprietary companies

Booteefool
Booteefool

@New_Cliche
So what's the difference between a c-corp and an llc?
A C Corp is what you think of when you consider a traditional corporation. Ownership is represented by shares, owners are shareholders, corporate governance is controlled by the board of directors, which is elected by shareholders. Shareholders are not liable for the debts of the corporation.

A LLC is a combination of a corporation and a partnership. Like a partnership, it has owners or members, not shareholders. An LLC can in theory be publicly tradeable, but in practice its almost never done because a widely-held LLC is much more complex and unwieldy than a C Corp. An LLC doesn't have a board, a charter, or, or bylaws. Instead it has a membership agreement, like a partnership. Members are not liable for debts of the LLC, if the state provides that protection. LLCs can be taxed like corporations (entity-level tax), partnerships (pass-through) or even sole proprietorships.

There's at least two big reasons why no major national or multi-national business enterprise is a LLC:

1. Because a LLC is a partnership hybrid, underwriting is not as straightforward as for a C Corp. This makes it harder, less favorable, and more expensive for a LLC to raise money through traditional lending, venture capital, IPOs or rights offerings, or issuing bonds.

2. The legal rules and protections for C Corps are well established in historical American jurisprudence. Everyone knows what rights, obligations, rules and limitations apply to a corporation. LLCs are still new creations, and the law is still being developed. That creates uncertainty, and people don't like uncertainty on a large scale.

Evil_kitten
Evil_kitten

@Booteefool
It seems as if the law is written to discourage LLCs from being made in the first place.

idontknow
idontknow

@w8t4u
citation needed

SniperWish
SniperWish

@Evil_kitten
It seems as if the law is written to discourage LLCs from being made in the first place.
Actually, they often fit very well with smaller enterprises, startups, home businesses, and similar. They're much more flexible and much simpler to maintain than a C Corp.

It's just that very large businesses (the kind you see listed on stock exchanges) will eventually outgrow it.

That's why @cum2soon
and @viagrandad
sound like retards and are getting abused. LLCs are not the best option in all cases. You have to choose the right tool for the job.

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