2020 US Election (Part One)

[Estebonrober]

If you could set tax policy how much would you tax domestic businesses? Would you 'roughly' match that rate with import tariffs on foreign competitors? What would you do if foreign competition had the advantage of paying lower taxes in their homelands and were out competing the businesses in your country? Hit 'em with tariffs, lower your tax rates, or bleed jobs and industry?

I wouldn't mind a small tax to cover the costs of infrastructure enjoyed by those businesses, but generally there should be no business taxes - hit everyone with income and sales taxes. I dont even like how business got stuck paying for health care (wage and price controls), I'd rather free business of that burden with 'medicare for all' paid from general revenue (and cuts in the military/law enforcement/prison industries).

I pretty much agree with this, whats left to argue about is not worth the time honestly. Business taxes usually just get passed on to the consumer anyways and disproportionately hurt the poor.

 

[metalhead]

Other places with lower tax rates?

Dude you cut off what you were replying to mid-sentence. Come on now.

 

[Birdjaguar]

Did any businesses use the cuts to invest? Do you believe increasing tax rates will make businesses more competitive?

If foreign competition gets a tax cut in their country and our rates stay the same, does that make our businesses more or less competitive? The foreign tax cut has the effect of raising our rates wrt the ability to compete. Lowering our rates helps our businesses compete.

The choice isn't binary. Lowering rates can happen on a scale; as can higher rates; or rates can not be changed at all. Taxes are not related to business competition. US Taxes are tied to a net income number and its impact happens after everything else has taken place. One way to reduce taxes is to increase wage expense of your workers. Foreign taxes on foreign companies do not impact the competitiveness of US companies. If a French company pays 20% tax on its profits and a US company pays 30% that difference does not necessarily have any impact on how each company handles its customers and product/services. The French company could be more profitable, but that is a different issue.

 

[onejayhawk]

The choice isn't binary. Lowering rates can happen on a scale; as can higher rates; or rates can not be changed at all. Taxes are not related to business competition. US Taxes are tied to a net income number and its impact happens after everything else has taken place. One way to reduce taxes is to increase wage expense of your workers. Foreign taxes on foreign companies do not impact the competitiveness of US companies. If a French company pays 20% tax on its profits and a US company pays 30% that difference does not necessarily have any impact on how each company handles its customers and product/services. The French company could be more profitable, but that is a different issue.

That is exactly the issue.

The rest is

 

[Birdjaguar]

That is exactly the issue.

Are you saying that competitiveness is tied directly to profitability?

 

[JollyRoger]

He's saying we need to cut what we pay our CEOs so we can compete with countries that have lower CEO pay.

 

[onejayhawk]

He's saying we need to cut what we pay our CEOs so we can compete with countries that have lower CEO pay.

That would be good, too, once the necessary stuff is done.

Are you saying that competitiveness is tied directly to profitability?

Level is better than uphill, but you knew that.

J

 

[Berzerker]

Dude you cut off what you were replying to mid-sentence. Come on now.

The rest of your comment was irrelevant to my point. All those deductions to promote what you want dont mean much if the foreign competition hasn't been saddled with similar constraints, so where will corporations locate if they get to choose between you and other countries that dont share your ideology?

The choice isn't binary. Lowering rates can happen on a scale; as can higher rates; or rates can not be changed at all. Taxes are not related to business competition. US Taxes are tied to a net income number and its impact happens after everything else has taken place. One way to reduce taxes is to increase wage expense of your workers. Foreign taxes on foreign companies do not impact the competitiveness of US companies. If a French company pays 20% tax on its profits and a US company pays 30% that difference does not necessarily have any impact on how each company handles its customers and product/services. The French company could be more profitable, but that is a different issue.

If my hamburger stand pays a 30% tax rate and my competitor pays 10%, wouldn't I be at a competitive disadvantage?

 

[Birdjaguar]

That would be good, too, once the necessary stuff is done.


Level is better than uphill, but you knew that.

J

You certainly like being oblique rather than straight forward. I guess it allows you to be "misunderstood". Your "level is better than uphill" is cute, but it is wrong in this context. Can you please, actually explain to me how national corporate tax rates affect cross border competitiveness between companies?

A fine example of how profitability and competitiveness are not connected is Amazon. Scroll down on this link to the graph showing Amazon's revenue vs profit.

Amazon Profits

Amazon essentially made no profit from 1998 until 2015 and all the while they kicked ass. High US corporate tax rates had no impact on its competitiveness.

 

[Birdjaguar]

If my hamburger stand pays a 30% tax rate and my competitor pays 10%, wouldn't I be at a competitive disadvantage?

Why would you be? What is the competitive advantage that the 10% guys has? Would you buy cheaper meat? Charge a higher price? pay your employees less? Does it make sense to treat your customers worse or sell inferior food because you have a higher tax rate on your profits? Your customers don't now about or even care about your tax rate or the other guy's. They care about the food and how you serve it. If you let your tax rate drive purchasing decisions that affect customers, you won'y be in business long.

Think about it; taxes are what happens at the very end after done everything you can to attract and keep customers. They affect the owners or shareholders only.

 

[Berzerker]

You certainly like being oblique rather than straight forward. I guess it allows you to be "misunderstood". Your "level is better than uphill" is cute, but it is wrong in this context. Can you please, actually explain to me how national corporate tax rates affect cross border competitiveness between companies?

A fine example of how profitability and competitiveness are not connected is Amazon. Scroll down on this link to the graph showing Amazon's revenue vs profit.

Amazon Profits

Amazon essentially made no profit from 1998 until 2015 and all the while they kicked ass. High US corporate tax rates had no impact on its competitiveness.

Level is better than uphill... Seems straightforward, what's unclear (or oblique) about it? How do tax rates affect competitiveness? If your business pays 50% and mine pays 1%, I will have a competitive edge (cliff). Who was competing with Amazon?

Why would you be? What is the competitive advantage that the 10% guys has? Would you buy cheaper meat? Charge a higher price? pay your employees less? Does it make sense to treat your customers worse or sell inferior food because you have a higher tax rate on your profits? Your customers don't now about or even care about your tax rate or the other guy's. They care about the food and how you serve it. If you let your tax rate drive purchasing decisions that affect customers, you won'y be in business long.

Think about it; taxes are what happens at the very end after done everything you can to attract and keep customers. They affect the owners or shareholders only.

My competitor will have more money to expand, to improve the business, to attract more customers.

 

[Timsup2nothin]

My competitor will have more money to expand, to improve the business, to attract more customers.

Or to put in his pocket, which is far more inviting.

 

[Birdjaguar]

Level is better than uphill... Seems straightforward, what's unclear (or oblique) about it? How do tax rates affect competitiveness? If your business pays 50% and mine pays 1%, I will have a competitive edge (cliff). Who was competing with Amazon?

My competitor will have more money to expand, to improve the business, to attract more customers.

It's clear to you? Fine then please explain it to me. Naturally, you choose an extreme example; how about you use something like 15% versus 30% or 35%. then tell me how those different rates affect competitiveness. Companies can use pretax dollars to expand and grow their business and spending those dollars will lower profits and reduce taxes. The amount of money a company has to reinvest in itself is directly related to its revenue and expenses. Low margins make it hard to build up working capital; high margins make it easier.

In the beginning, Amazon was competing with every books store in America, and then every retailer,

 

[Birdjaguar]

Work on your answer. I've got to go to bed.

 

[Cloud_Strife]

The history of capitalism has shown that it's actors and advocates are far more interested in immediate gratification through short term benefits that cause serious issues later on rather than long term investment.

 

[Berzerker]

Or to put in his pocket, which is far more inviting.

Then the business wont expand

It's clear to you? Fine then please explain it to me.

Its easier to compete on a level playing field than one tilted against you

Naturally, you choose an extreme example; how about you use something like 15% versus 30% or 35%. then tell me how those different rates affect competitiveness. Companies can use pretax dollars to expand and grow their business and spending those dollars will lower profits and reduce taxes. The amount of money a company has to reinvest in itself is directly related to its revenue and expenses. Low margins make it hard to build up working capital; high margins make it easier.

In the beginning, Amazon was competing with every books store in America, and then every retailer,

Naturally, I'm making a point, contrast helps... and it looks like you just conceded it but still want to disagree. Okay, you prefer 15% to 35%. If my hamburger stand pays 35% and my competitor pays 15%, I'll be less competitive because I wont have the same ability to fund my business. If neither of us actually pay the tax because of write offs then my higher rate doesn't exist and the field is level. If a company pays no tax because it sank the profits back into the business, do they have a competitive edge over the business that pays expenses like taxes on profits? Rather than paying Uncle Sam the business can buy newer equipment, etc.

As for Amazon, they facilitate exchanges between suppliers/retailers and customers and they grew largely because state sales taxes were being avoided by customers, sales taxes people had to pay at brick and mortar stores in their own towns. So, you were telling me how tax rates have nothing to do with competitiveness? You raised a good example, Amazon's customers could avoid a tax they'd have to pay locally and Amazon became a giant because of an advantage created by a tax on their competition.

 

[onejayhawk]

You certainly like being oblique rather than straight forward. I guess it allows you to be "misunderstood". Your "level is better than uphill" is cute, but it is wrong in this context. Can you please, actually explain to me how national corporate tax rates affect cross border competitiveness between companies? A fine example of how profitability and competitiveness are not connected is Amazon. Scroll down on this link to the graph showing Amazon's revenue vs profit. Amazon Profits Amazon essentially made no profit from 1998 until 2015 and all the while they kicked ass. High US corporate tax rates had no impact on its competitiveness.

There is nothing oblique about it. Compared to a foreign competitor, higher taxes are a burden the competitor does not have. Hence, the analogy of a slope versus a level field. Amazon is red herring because there is always a 1%.

What is more important is the middle range of companies. Failing companies lay off workers. Expanding companies hire them. Any economic system strives to get as many people into productivity as possible. A level field, or equivalent tax treatment, aids in that. An unequal treatment is a hindrance.

J

 

[Birdjaguar]

Its easier to compete on a level playing field than one tilted against you

Corporate taxes in different countries aren't even on the same playing field with one another and are not remotely connected to competitiveness with customers. If France charges a corporate rate of 15% and the US 30% it doesn't affect the customer experience when they choose between a Renault or a Chevy.

Naturally, I'm making a point, contrast helps... and it looks like you just conceded it but still want to disagree. [ ]Okay, you prefer 15% to 35%. If my hamburger stand pays 35% and my competitor pays 15%, I'll be less competitive because I wont have the same ability to fund my business. If neither of us actually pay the tax because of write offs then my higher rate doesn't exist and the field is level. If a company pays no tax because it sank the profits back into the business, do they have a competitive edge over the business that pays expenses like taxes on profits? Rather than paying Uncle Sam the business can buy newer equipment, etc.

So you are saying that avoiding paying taxes by spending pre tax profits levels the playing field? If that is the case, then why do we need similar rates at all. Your argument seems to be that corporate tax rates affect the ability of a business to expand and different rates in different countries will make a difference. I will say this again, expansion and growth are paid for with pretax dollars not after tax dollars. The tax rate does not impact how much money you have to spend on growing the business. Your argument seems to be that corporate tax rates affect the ability of a business to expand

• Growing a business happens before taxes are paid
• Spending money to grow a business does not necessarily make one more competitive
• Being competitive and spending money to expand a business are not necessarily connected
• For most companies EBIDTA is key to its financial health: earnings before interest, depreciation, taxes and amortization
• After tax profits are used by companies to reward owners and shareholders (study an income statement and you will see how this works)

As for Amazon, they facilitate exchanges between suppliers/retailers and customers and they grew largely because state sales taxes were being avoided by customers, sales taxes people had to pay at brick and mortar stores in their own towns. So, you were telling me how tax rates have nothing to do with competitiveness? You raised a good example, Amazon's customers could avoid a tax they'd have to pay locally and Amazon became a giant because of an advantage created by a tax on their competition.

You are confusing local sales tax and corporate income tax. They are not the same at all and function differently in how companies account for revenue and profits. The ability to avoid collecting and paying sales tax can have an impact on revenue, by attracting customers. By not collecting sales tax, Amazon could offer lower prices and avoid the administrative problems of dealing with many local state jurisdictions. That did give them an advantage, but it is unrelated to corporate taxes. All taxes are not the same. You need to be clear about which ones you are talking about. Here we have been talking about Corporate income tax rates.

It is easy to wave the flag of "we need a level playing field" but unless you actually understand how the game is played you cannot defend the position. What corporate taxes do affect is where companies locate their businesses and where they keep their cash. that has nothing to do with being competitive. It happens both at the state level in the US and at the international level.

 

[metalhead]

The rest of your comment was irrelevant to my point. All those deductions to promote what you want dont mean much if the foreign competition hasn't been saddled with similar constraints, so where will corporations locate if they get to choose between you and other countries that dont share your ideology?

There is already ample reason to leave. This is garbage corporatist nonsense that says companies will simply decide to leave because of "uncompetitive taxes" or whatever. That is a lie. It isn't true.

Give corporations the ability to reduce their taxes $2 for every $ they pay in salaries and benefits up to a certain amount, they will spend more money paying employees. They won't leave the country because that is cost prohibitive for all but the largest companies, and you won't attract top talent from American universities by living overseas.

 

[Birdjaguar]

There is nothing oblique about it. Compared to a foreign competitor, higher taxes are a burden the competitor does not have. Hence, the analogy of a slope versus a level field. Amazon is red herring because there is always a 1%.

What is more important is the middle range of companies. Failing companies lay off workers. Expanding companies hire them. Any economic system strives to get as many people into productivity as possible. A level field, or equivalent tax treatment, aids in that. An unequal treatment is a hindrance.

J

Higher tax rates can be a burden, but that burden is not related to competitiveness. How about GM? they just laid off 15,000 and closed plants right after a huge tax cut. Why? They haven't been competitive. The tax cut apparently didn't keep them from screwing their employees. Companies fail because they aren't competitive and other reasons, but tax rates aren't one of them. Can you point out an example of a company that failed/closed in the past decade or so because US corporate tax rates were higher than some other country's?

Read my post above. Corporate tax rates are a burden to the owners/stockholders/share price not to operations. Operations is where competitiveness happens.