TheArmoTrader

RSS

Why I Don’t Support a Flat Tax for Corporations

I have heard this argument over and over. Simplify the tax code to ~20% and not only will it create jobs but it also will boost the economy and boost revenue.

Well, I dont support this view. Here is why.

OK, lets say we get a flat tax system @ ~20% with no exemptions/write-offs/loopholes (for corporations of course). You dont think Corporations will do EVERYTHING in their power to get all those exemptions/loopholes/write-offs back in eventually? YES THEY WILL. They are corporations, not humans (oh wait, they are humans I forgot). They want to keep every single dime they could. They (most,generalizing here) dont care about the US revenue or economy. As long as their stock goes up and they are making record profits (which both happened last quarter), they could care less about what happens to America. But I digress.

My point here is, dont make a flat tax system. It WILL, I guarantee it, get perverted. A nip here, a tuck there and wallah, next thing you see most corporations are paying 7%. Its already at the lowest levels it has been since the 1940s (http://visualecon.wpengine.netdna-cdn.com/wp-content/uploads/Income_Corp_CapitalGains_Rates-650x603.png). 

Oh BTW, a lot of companies already pay NO or little taxes already below 20%. Why would they agree to boost it? —>

1) http://www.businessinsider.com/companies-pay-lowest-tax-loopholes-2011-2#16-red-hat-inc-rht-1

2) http://www.businesspundit.com/25-corporations-that-pay-less-taxes-than-you-do/

OK, now onto the “repatriation issue”. You know, that plan that the GOP wants to pass to allow overseas money (probably $ bypassed through loopholes) to be brought back in at a low 5.5% rate? Well, this is a major failure. Last time we had one, 92% of the $312 billion brought back in went to SHAREHOLDERS. Meaning stock buybacks (which stats prove are a horrible use of corporate cash) and dividends. And GUESS who owns majority of stocks. Yes, you guessed it right! The rich! Nothing wrong with that. But you can’t sit there and argue me with a straight face that the money went to hiring people, expanding projects,etc. Oh btw, there was actually layoffs the following 2 years by the major companies who repatriated cash. 

Check this video out, explains it CLEARLY. Main points start around 1:00

And check these stats out before you argue that less taxes=more revenue. It doesnt. Proven by my post a few weeks back.

http://thearmotrader.tumblr.com/post/6431522019/tax-revenue-stats

—————————————————————————————————-

So whats my solution? Leave the rate as is (or ill be fine with ~30%), and CUT loopholes. Leave the non-corrupt exemptions and write-offs in (like when they lose $ or like when they hire somebody). This encourages companies to do everything in their power to NOT pay the taxes. So whats their best alternative? Hiring. Expanding. R&D. Stuff that ill be MORE than fine with them using a write-off for. Because THAT is what creates jobs,economic activity, and progress. Not letting them have more of their profits for nothing in return for. And btw, they are not going to “leave” America. I’d like to see them try. Where are they going to go? Swaziland? Go ahead. And if they do leave, you TAX the living shit out of them for doing business in America. Your’e not going to help America by paying your fair share? Well then I couldnt care LESS about your company. F off. The Free market will sprout new companies/leaders in their place.

As for the repatriation of overseas money, Im fine with 20% rate it if they bring it back in with the promise that the $ will go towards hiring, R&D, expanding,etc. You write that into the BILL, do not take their word for it.

———————————————————————————————-

If you DISAGREE or have any differing thoughts, I would LOVE to hear it. But please, give me facts, reasons, stats. Dont bring a theory up or just tell me im wrong. That doesnt prove anything.  I would love to hear why im “wrong”.

BTW, this is ONLY for the corporate tax rate/system. The personal/income tax is a whole ‘nother argument

UPDATE (July 8)

————-

Here’s my thoughts on Small Businesses. Not sure what qualifies a company as such, but lets lower their rates to 25 ish %. The ones that are fully domestic and do not outsource jobs entirely. Why is this so? Because these are not corporations that can do major write-offs or find loopholes that can get themselves out of paying taxes. These are HARD-working americans (albeit some rich, but thats ok as long as they pay their fair share of taxes) that create jobs here in America.

Ive seen stats like 50-80% of jobs are created by Small Businesses. This Is HUGE. 

Giving them more money to expand/hire will be good for the economy. Especially since small business lending has surged 26%, which is VERY bullish.