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  • #391
    Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

    Originally posted by joecct View Post
    What if you outlawed corporations?

    Every person in the board room has to buy into the business and share in the profits and losses. No longer would it be possible for an officer to collect millions in compensation while running a business into the ground.
    Board members do typically buy shares, although it's usually a small number for publicity's sake. What about this:

    Remove the tax levied directly on corporations. Each corporation releases tax information on revenues and expenses to its shareholders. Every shareholder becomes required to file regardless of income, and enters this information into his/her 1040 form based upon the number of shares held at a particular increment (whether monthly or quarterly), similar to how Schedule E works for royalty trusts. Fund owners with multiple investors (e.g. Hedge, Mutual, ET, etc.) release their own tax information to their investors, although may be simplified based upon the information an individual owner would enter. This is charged at the normal income rate. Remove separate reporting and taxation of dividends, as this would be double dipping from the aforementioned information.

    Comment

    • #392
      Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

      Originally posted by FlagDUDE08 View Post
      Board members do typically buy shares, although it's usually a small number for publicity's sake. What about this:

      Remove the tax levied directly on corporations. Each corporation releases tax information on revenues and expenses to its shareholders. Every shareholder becomes required to file regardless of income, and enters this information into his/her 1040 form based upon the number of shares held at a particular increment (whether monthly or quarterly), similar to how Schedule E works for royalty trusts. Fund owners with multiple investors (e.g. Hedge, Mutual, ET, etc.) release their own tax information to their investors, although may be simplified based upon the information an individual owner would enter. This is charged at the normal income rate. Remove separate reporting and taxation of dividends, as this would be double dipping from the aforementioned information.
      I am the farthest possible from an expert, but that actually seems like a good proposal.

      And I can't wait for corporations to start deflating their earnings statements to encourage more people to buy their stock as a tax dodge.
      Cornell University
      National Champion 1967, 1970
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      • #393
        Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

        Originally posted by Kepler View Post
        I am the farthest possible from an expert, but that actually seems like a good proposal.

        And I can't wait for corporations to start deflating their earnings statements to encourage more people to buy their stock as a tax dodge.
        Wait wait wait... Kepler actually AGREEING with an idea of mine?! Stop the presses!

        The only potential issue is that it may actually force distributions, because shareholders will insist they have the ability to pay taxes on earnings instead of seeing the money be placed directly back into the company. Of course, the funds will be a little tricky, because it's a question of who pays. I am making an assumption that, as the share ownership is "passed" to the investor, that the fund managers may "pass" the tax directly to the investors, unless the managers are the final holder of the shares due to their setup.

        Also, board members aren't as strong as one would think. Remember what happened to Darden's board (the corp that owns Olive Garden)? Shareholders cleaned them out.

        Comment

        • #394
          Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

          Originally posted by FlagDUDE08 View Post
          Wait wait wait... Kepler actually AGREEING with an idea of mine?! Stop the presses!
          I know. God is dead and I'm not feeling well myself.
          Cornell University
          National Champion 1967, 1970
          ECAC Champion 1967, 1968, 1969, 1970, 1973, 1980, 1986, 1996, 1997, 2003, 2005, 2010
          Ivy League Champion 1966, 1967, 1968, 1969, 1970, 1971, 1972, 1973, 1977, 1978, 1983, 1984, 1985, 1996, 1997, 2002, 2003, 2004, 2005, 2012, 2014, 2018, 2019, 2020

          Comment

          • #395
            Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

            Originally posted by FlagDUDE08 View Post
            Wait wait wait... Kepler actually AGREEING with an idea of mine?! Stop the presses!

            The only potential issue is that it may actually force distributions, because shareholders will insist they have the ability to pay taxes on earnings instead of seeing the money be placed directly back into the company. Of course, the funds will be a little tricky, because it's a question of who pays. I am making an assumption that, as the share ownership is "passed" to the investor, that the fund managers may "pass" the tax directly to the investors, unless the managers are the final holder of the shares due to their setup.

            Also, board members aren't as strong as one would think. Remember what happened to Darden's board (the corp that owns Olive Garden)? Shareholders cleaned them out.
            Which would then stymy growth of publicly traded companies as corporations would no long have the ability to reinvest their retained earnings into the company - because there wouldn't be any due to paying them all out to shareholders.
            "The party told you to reject the evidence of your eyes and ears. It was their final, most essential command." George Orwell, 1984

            "One does not simply walk into Mordor. Its Black Gates are guarded by more than just Orcs. There is evil there that does not sleep, and the Great Eye is ever watchful. It is a barren wasteland, riddled with fire and ash and dust, the very air you breathe is a poisonous fume." Boromir

            "Good news! We have a delivery." Professor Farnsworth

            Comment

            • #396
              Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

              Really, what you would likely see is companies taking out loans in order to fund growth, and thus putting more money and power into the hands of those evil bankers. Oooooooohhhh.
              "The party told you to reject the evidence of your eyes and ears. It was their final, most essential command." George Orwell, 1984

              "One does not simply walk into Mordor. Its Black Gates are guarded by more than just Orcs. There is evil there that does not sleep, and the Great Eye is ever watchful. It is a barren wasteland, riddled with fire and ash and dust, the very air you breathe is a poisonous fume." Boromir

              "Good news! We have a delivery." Professor Farnsworth

              Comment

              • #397
                Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                Originally posted by Kepler View Post
                I am the farthest possible from an expert, but that actually seems like a good proposal.

                And I can't wait for corporations to start deflating their earnings statements to encourage more people to buy their stock as a tax dodge.
                Yeah, I can't see anything wrong with it on it's face either. This is weird.
                Code:
                As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                Originally posted by SanTropez
                May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                Originally posted by bigblue_dl
                I don't even know how to classify magic vagina smoke babies..
                Originally posted by Kepler
                When the giraffes start building radio telescopes they can join too.
                He's probably going to be a superstar but that man has more baggage than North West

                Comment

                • #398
                  Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                  Of course, the funds will be a little tricky, because it's a question of who pays. I am making an assumption that, as the share ownership is "passed" to the investor, that the fund managers may "pass" the tax directly to the investors, unless the managers are the final holder of the shares due to their setup.
                  They already do this. It was the same thing with funds that owned Medtronic when Medtronic inverted. That essentially gets absorbed by the fund and passed on as either fee increases or just a hit to the performance of the fund. (I'm not sure which, but it's one of them.) Take Vanguard. They aren't going to pay taxes directly (or maybe they would since Vanguard is an odd and very unique firm), the fund pays them as I understand it. I, as an investor in the VTSAX fund, didn't have to pay the taxes on Medtronic's transaction despite VTSAX owning Medtronic shares.
                  Code:
                  As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                  Originally posted by SanTropez
                  May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                  Originally posted by bigblue_dl
                  I don't even know how to classify magic vagina smoke babies..
                  Originally posted by Kepler
                  When the giraffes start building radio telescopes they can join too.
                  He's probably going to be a superstar but that man has more baggage than North West

                  Comment

                  • #399
                    Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                    Originally posted by St. Clown View Post
                    Which would then stymy growth of publicly traded companies as corporations would no long have the ability to reinvest their retained earnings into the company - because there wouldn't be any due to paying them all out to shareholders.
                    How so? Only a diseased company doesn't reinvest in itself. They aren't going to mortgage future growth (and potentially the viability of the company) for short-term taxes. At least not without being seen by the market as a diseased company. Keep in mind that most capital expenditures for production equipment are tax-free right now. That's a big incentive for corporations to spend money on themselves.
                    Code:
                    As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                    Originally posted by SanTropez
                    May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                    Originally posted by bigblue_dl
                    I don't even know how to classify magic vagina smoke babies..
                    Originally posted by Kepler
                    When the giraffes start building radio telescopes they can join too.
                    He's probably going to be a superstar but that man has more baggage than North West

                    Comment

                    • #400
                      Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                      Originally posted by dxmnkd316 View Post
                      How so? Only a diseased company doesn't reinvest in itself. They aren't going to mortgage future growth (and potentially the viability of the company) for short-term taxes. At least not without being seen by the market as a diseased company. Keep in mind that most capital expenditures for production equipment are tax-free right now. That's a big incentive for corporations to spend money on themselves.
                      Reinvestments back into the company are made with retained earnings. We have tax deductions to doing that now, but what's being proposed would strip those deductions from companies going forward.
                      "The party told you to reject the evidence of your eyes and ears. It was their final, most essential command." George Orwell, 1984

                      "One does not simply walk into Mordor. Its Black Gates are guarded by more than just Orcs. There is evil there that does not sleep, and the Great Eye is ever watchful. It is a barren wasteland, riddled with fire and ash and dust, the very air you breathe is a poisonous fume." Boromir

                      "Good news! We have a delivery." Professor Farnsworth

                      Comment

                      • #401
                        Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                        Originally posted by St. Clown View Post
                        Reinvestments back into the company are made with retained earnings. We have tax deductions to doing that now, but what's being proposed would strip those deductions from companies going forward.
                        Yeah, but
                        Only a diseased company doesn't reinvest in itself. They aren't going to mortgage future growth (and potentially the viability of the company) for short-term taxes. At least not without being seen by the market as a diseased company.
                        Code:
                        As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                        Originally posted by SanTropez
                        May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                        Originally posted by bigblue_dl
                        I don't even know how to classify magic vagina smoke babies..
                        Originally posted by Kepler
                        When the giraffes start building radio telescopes they can join too.
                        He's probably going to be a superstar but that man has more baggage than North West

                        Comment

                        • #402
                          Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                          Originally posted by Kepler View Post
                          I am the farthest possible from an expert, but that actually seems like a good proposal.

                          And I can't wait for corporations to start deflating their earnings statements to encourage more people to buy their stock as a tax dodge.
                          It's a terrible proposal.

                          It would be like forcing someone to pay an annual tax just because the (paper value) of a piece of art they owned increased. Yes, the market value of their net worth increased, but they did not have any income. What are they supposed to do, sell the art to pay the tax? Same problem as when people are forced to sell their real property because the tax assessment went up.

                          I know that in your mind(s) the corporations are just supposed to pay out enough dividends to be sure that their shareholders can pay the tax, but that means they have to pay enough dividends to be sure that the stockholder paying the highest effective tax rate can cover his tax - every other shareholder will get paid more than they actually need, so you'll have an unnecessary outflow of cash from the company that now can't be used for additional capital to reinvest in the business, nor can it go to salaries - you'd have even more wealth going to shareholders and less to employees than we have today.
                          If you don't change the world today, how can it be any better tomorrow?

                          Comment

                          • #403
                            Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                            Originally posted by dxmnkd316 View Post
                            Yeah, but
                            How do they reinvest in themselves when what you're proposing will have investors requiring they pay out earnings in order to cover their tax bills from investing in the company in the first place? That's the point I'm making.
                            "The party told you to reject the evidence of your eyes and ears. It was their final, most essential command." George Orwell, 1984

                            "One does not simply walk into Mordor. Its Black Gates are guarded by more than just Orcs. There is evil there that does not sleep, and the Great Eye is ever watchful. It is a barren wasteland, riddled with fire and ash and dust, the very air you breathe is a poisonous fume." Boromir

                            "Good news! We have a delivery." Professor Farnsworth

                            Comment

                            • #404
                              Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                              Originally posted by St. Clown View Post
                              How do they reinvest in themselves when what you're proposing will have investors requiring they pay out earnings in order to cover their tax bills from investing in the company in the first place? That's the point I'm making.
                              Exactly!
                              If you don't change the world today, how can it be any better tomorrow?

                              Comment

                              • #405
                                Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

                                Originally posted by St. Clown View Post
                                Reinvestments back into the company are made with retained earnings. We have tax deductions to doing that now, but what's being proposed would strip those deductions from companies going forward.
                                Hence why I did a double take on that, and wondered if it was truly a good idea. It might actually be able to be compensated if the company is already buying stuff. The biggest issue with that is that most investors are concerned about a company's cash flow. Perhaps that is one of the risks that needs to be taken if you are going to invest.

                                Comment

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