Can Corporate Taxation Be Based on Charitable Giving?

[kmarinas86]

I propose that companies that provide employees with higher wages in their field should have lower corporate tax.

I propose that companies that provide employees with lower wages in their field should have ordinary corporate tax.

Any form of charity increase by a company, I think, should result in a reduction in corporate tax that goes BEYOND THE COSTS of that increase in charity.

This system will be based on a ranking of charity that compares companies within a given field.

Let's see how far they could take this. A new way of competition!

Conservatives will finally like increasing their charity to the poor because you could give yourself lower tax rate by doing so.

Democrats will finally like lowering their taxes because they do it in order to help increasing the wages of poor people.

Everybody wins!

Normally, you would have to increase taxes to help the poor people - NOT TRUE IN THIS CASE!

The power to lower your taxes by increasing your charity to others - and lowering them beyond the costs of the charity (that is the only thing I know that will solve the problem of the economic disequilibrium that currently exists).

 

[Skyhunter]

The problem is that in an election year the Republican Congress is only interested in issues that motivate their base or put Democrats in an awkward position. This Congress is all about maintaining their power, not serving their constituents. I have never seen it as blatant as it is now.

Corporations should pay taxes because their very existence is due to the the legal, governmental system. People are free and should be allowed to be independent of social and governmental institutions. Corporation are a product of such institutions.

People should pay for what they consume, not for what they produce. Personal income up to an arbitrary amount that one needs for a comfortable life should not be taxed at all. All income from investments, interest etc. should be taxed. Natural resources belong to everyone, Companies and individuals should be compensated for bringing them to market for consumption, but they should not own them.

To require that every individual citizen maintain a tax relationship with the government is both intrusive and unnecessary.

 

[Manchot]

I think that the only problem with this plan (and it's a big problem) is its effect on the overall economy. If you make it so that there's a financial incentive to increase wages past the average, every company will try to increase their wages past the average, just pushing the average up, forcing them to increase further, on and on and on. At the same time, the average consumer will have more disposable income, so companies can charge more for goods. End result: runaway inflation, and the economy weakens.

 

[kmarinas86]

I think that the only problem with this plan (and it's a big problem) is its effect on the overall economy. If you make it so that there's a financial incentive to increase wages past the average, every company will try to increase their wages past the average, just pushing the average up, forcing them to increase further, on and on and on. At the same time, the average consumer will have more disposable income, so companies can charge more for goods. End result: runaway inflation, and the economy weakens.

There is actually a limit to this. If you run of out taxes to save, any additional increase in employee's wages will do nothing save taxes, and in fact, it will result in loss. However, this loss is different that what it would otherwise be. Some companies have trouble making profit to begin with. By introducing this system, the companies can save more money than they spend on extra wages, that is until there is no more money to save. Companies that are still losing money big time, whether or not they have very good wages, will be hardest hit, but their non-existent corporate taxes will remain non-existent. Monopolies and Conglomerates with unique service-types will not be affected at all. I think Walmart with its combination of Wholesale Supercenter, regular Walmart, and neighborhood grocery sized stores is unique its own category, I could be wrong (I don't know) - but if it was the only company of its kind, it could not save taxes by increasing the wages. It would have to break up in order to do that. But then again, it benefits from the charity of automation and high-volume operations, so it may still continue to exist, but more people will want to sack for $20 than for $7 per hour. If a mom-and-pop stores have enough sales for that, surely the people who work there want to tell gazillions of people how much they make. Great for advertising new businesses for normally meager jobs .

 

[Rach3]

This is the nastier side of Socialism - subsidize the inefficient, punish the successful, and screw the consumers with high prices and runaway inflation.

 

[Gokul43201]

Have you (the OP) also considered that the country might benefit most if a company reinvested its profits into itself rather than giving it away to someone who might say, go buy himself a bottle of booze?

 

[Skyhunter]

Any formula for taxes that is not simple is being used to manipulate the economy. I would rather that the government not use the tax code to manipulate the economy. Keep it simple and let the market control the economy.

Corporations should pay to play.

People should not have to pay to live. What about the people who don't want to play?

What happens to their freedom?

Individual taxes are the problem. Not corporate taxes.

Taxes on consumption should reflect the true cost of consumption. Stop all the subsidies. Instead of subsidies, tax waste and pollution. If an items packaging is non recyclable plastic, charge an excessive package tax, etc.

If we paid taxes on what we consume, all of what we consume, and that includes the environmental cost of waste and pollution to produce, and deliver what we consume, people would be more motivated to conserve and steward resources. Instead we have a system that promotes consumption of new and disposable products, in fact the entire economy is dependent on us consuming more and more. It has to peak and level off sometime, and that time is coming soon.

What will happen when the world can no longer support our consumption?
The best way I know to curb consumption is to one,stop subsidizing it, and two, add a tax to reflect the true cost of the luxuries we consume.

Add a consumption tax to gasoline and put it into free mass transit instead of more highways and people will drive less. Build pedestrian/transit oriented development in the cities, infill instead of outgrowth.

There is such a smarter way to go, why are we not doing it?

Oh I remember, because we are all living the "American Dream", we are all going to be millionaires someday.

 

[kmarinas86]

Have you (the OP) also considered that the country might benefit most if a company reinvested its profits into itself rather than giving it away to someone who might say, go buy himself a bottle of booze?

The company has the right to reinvest those profits in captial. It's their choice. They chose the strategy, but this hard earned capital ought to be better than the wage increase that other companies would give to their employees. Walmart is highly automated and its league is of a different kind. In fact, Walmart would not benefit from this plan at all, however it would truly benefit if it became even more efficent, but they can't really do this by lowering wages, so they should enact policies to make their products and service more competitive. The competition doesn't end when machines displace people's jobs.

Taxes on consumption should reflect the true cost of consumption. Stop all the subsidies. Instead of subsidies, tax waste and pollution. If an items packaging is non recyclable plastic, charge an excessive package tax, etc.

Perhaps, but rather, instead of sending that money to the government, corporations who mishandle with nature should pay researchers developing enviromental improvement strategies if they step over beyond what is acceptable environment policies. Giving that money to the employees or politicians does not do tangible good in the case of environment protection.

If we paid taxes on what we consume, all of what we consume, and that includes the environmental cost of waste and pollution to produce, and deliver what we consume, people would be more motivated to conserve and steward resources. Instead we have a system that promotes consumption of new and disposable products, in fact the entire economy is dependent on us consuming more and more. It has to peak and level off sometime, and that time is coming soon.

I'm not against this idea. In fact, I support the idea of increasing the sales tax percentage and the installation of a national sales tax.

What will happen when the world can no longer support our consumption? The best way I know to curb consumption is to one,stop subsidizing it, and two, add a tax to reflect the true cost of the luxuries we consume.

That extra money should be directly sent to the companies which design environmental solutions, not whipped and flipped through the maze of governmental bureaucracy.

Add a consumption tax to gasoline and put it into free mass transit instead of more highways and people will drive less. Build pedestrian/transit oriented development in the cities, infill instead of outgrowth.

There is such a smarter way to go, why are we not doing it?

People have habits which are hard to break. For everyone to use public transportation would affect the automobile industry and not only that, people wouldn't have personal cargo containers, seat belts. The psychological cost will impound severe economic costs of some amount. Someone would have to discover a revolutionary way to get energy.

Gasoline the United States is hitching up to a Gasoline+Ethanol blend. A gas station at my local Kroger which I work in serves a 85% Ethanol + 15% Gasoline blend called E85. The Ethanol Kingdom is beefing up in Texas. Still not good enough, but it's the present.

 

[kmarinas86]

This is the nastier side of Socialism - subsidize the inefficient, punish the successful, and screw the consumers with high prices and runaway inflation.

Do you have evidence that decreasing corporate tax rate as a function of increasing wages - with a net profit a result of increasing wages preceding lower corporate taxes - will result in an increase in prices? Hardly the case. The companies even having corporate tax at all would have greater sales for their expenses, hence profit. This profit increases even more if wages are increased - that is not how it is currently, but as I said, if companies with higher wages as a result pay fewer corporate taxes, if the savings in taxes exceeds the relative superiority of the wages and salaries, then by all means, companies with competition may try to increase their employees salaries and wages relative to the regional competition to obtain - yes - a PROFIT.

This is putting the power in the company to decide how they should be taxed. The act of being taxed more is replaced by the act of giving more money to employees to obtain higher profits for the company as a whole. Socialism is reversed. Power in the form of corporate taxes is taken from the government, power which is often wasted on arguments about minimum wages, and transferred to the companies, which are utimately controlled by the people since companies rely on sales and employees. The people in charge may decide in a democratic way whether they want to enact such a system.

 

[kmarinas86]

Discussions on this idea:

The first and rowdiest. This was my practice:
http://uplink.space.com/showflat.ph...page=0&view=collapsed&sb=5&o=0&fpart=all&vc=1

Better discussions:
https://www.physicsforums.com/showthread.php?t=124940
http://www.bautforum.com/showthread.php?t=43615

 

[Manchot]

However, this loss is different that what it would otherwise be. Some companies have trouble making profit to begin with. By introducing this system, the companies can save more money than they spend on extra wages, that is until there is no more money to save.

Again, this will still cause the national wage average to increase, resulting in individual companies increasing wages, ending in inflation. Any incentive to increase wages past the average will result in inflation, regardless of how it's implemented.

In economics, just as in life, there is no such thing as a free lunch. If it seems too good to be true: it is. Sure, the U.S. government could also print out a billion dollars for each citizen, but would that really help anyone? No.

 

[kmarinas86]

Again, this will still cause the national wage average to increase, resulting in individual companies increasing wages, ending in inflation. Any incentive to increase wages past the average will result in inflation, regardless of how it's implemented.

But what if the companies use that money saved from lower corporate taxes to justify having lower prices than their competitors?

Remember, in this system:
Money saved from corporate taxes > Dollar increase in total of wages and salaries.

 

[kmarinas86]

But what if the companies use that money saved from lower corporate taxes to justify having lower prices than their competitors?

Remember, in this system:
Money saved from corporate taxes > Dollar increase in total of wages and salaries.

In addition, this would apply to manufacturers of goods which are then sent to places such as Walmart, Kroger, and HEB. As a result, they may all (manufacturers+stores) decide to lower their prices as a result of the PROFIT they get by paying their employees more and having a lower corporate tax for paying them better than the competition pays their workers. In effect, the plan, when applied in America, would support American workers in profiting companies.

Higher wages doesn't mean that cheap products become more expensive. Higher wages means that people can buy things that cost more money, whether that's BMW's, Hybrid Technology, larger investments in the stock market, more vacations and air travel, etc. This is especially true in the case above where the company actually profits from paying their people more, and by doing so has the leverage to lower their prices, in effect, do what they would do if they had little or no corporate tax at all, other than putting more priority on how much their employees are paid.

This isn't free. None of this is possible unless the companies concerned are making a profit to begin with. Therefore, this applies only to companies which have a growing monetary base. The company which takes this privilege to the max (without incurring a loss for that year) will have a near constant monetary base. Such companies would be "as if" they had little or no profit, with the exception of somehow, someway, they were able to pay their employees more through "extra sales".

 

[Evo]

In addition, this would apply to manufacturers of goods which are then sent to places such as Walmart, Kroger, and HEB. As a result, they may all (manufacturers+stores) decide to lower their prices as a result of the PROFIT they get by paying their employees more and having a lower corporate tax for paying them better than the competition pays their workers. In effect, the plan, when applied in America, would support American workers in profiting companies.

Higher wages doesn't mean that cheap products become more expensive. Higher wages means that people can buy things that cost more money, whether that's BMW's, Hybrid Technology, larger investments in the stock market, more vacations and air travel, etc. This is especially true in the case above where the company actually profits from paying their people more, and by doing so has the leverage to lower their prices, in effect, do what they would do if they had little or no corporate tax at all, other than putting more priority on how much their employees are paid.

This isn't free. None of this is possible unless the companies concerned are making a profit to begin with. Therefore, this applies only to companies which have a growing monetary base. The company which takes this privilege to the max (without incurring a loss for that year) will have a near constant monetary base. Such companies would be "as if" they had little or no profit, with the exception of somehow, someway, they were able to pay their employees more through "extra sales".

I hate to burst your bubble, but you seem to have no understanding of business. Businesses do not want to do wholesale, long term price cuts. They do not want price wars.

I've been waiting for this thread to start making sense, but it's time to say goodnight Gracie.