Originally Posted by marubeni
If there were no corporate taxes, the money would flow freely into the pockets of shareholders and employees, and then would get taxed.
Over what period of time though? Corporation tax is only charged if this event doesn't take place within a financial year. If they did freely put all their yearly profits into the pockets of shareholders and employees, they wouldn't have to pay any corporation tax. The shareholders and employees would then be taxed on earnings in their financial year so single taxation.
Corporation tax exists because incorporated companies are considered separate entities ( http://en.wikipedia.org/wiki/Incorporation_(business)
). If they hold onto their profits and don't spend them, they are taxed once in that fiscal year just like a person would be. If they pay the money out later on, it does get taxed again in the form of income tax but that's because it's a different fiscal year. Some dividends have a 0% tax rate because of this:
Corporation tax is easier on corporations than income tax is on people. People get taxed before they receive their salary and then use the remainder to buy goods that have sales tax on top. Corporation tax is considered after a company buys products (as long as they are for business use) and after any sales taxes are paid. Salaried employees should be able to claim back the amount of income tax paid in sales tax.
This doesn't happen though because it is easier for tax authorities to collect money from individuals that don't have the resources to avoid paying tax and this keeps the poor poorer and reduces upward mobility.
This is why corporation tax can't be eliminated because business owners would simply pay for items they use personally and it would reduce their taxable income.
Originally Posted by asdasd
My position is the US is owed most of these taxes, morally. Not Ireland.
I wouldn't necessarily agree that the bulk should go to the US but certainly not to Ireland where they don't even have a store apparently. Why pay tax on the bulk of European profits to a country that has little to no part in generating them?
I think morally, the tax on such a large amount of profit should be paid to the country it is generated in because the corporation has a presence in the country in much the same way an employee does.
Apple says they want to be able to bring the taxes to the US. They say they are currently paying 26% on US profits:
"The Company’s effective tax rates for all periods differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S."
The subcommittee noted that this 26% tax allowance Apple put in the filings was also not what they actually paid.
This tax setup with Apple in Ireland has been setup since the 80s and they've been paying significant US corporation taxes. As their international operations have expanded over the years, especially with the iOS products, it has created a situation where they've tried to avoid taxes in non-US countries and avoid repatriation tax so profits get left overseas, even though the actual cash (digital money) is held in US financial institutions so only overseas legally.
Tax laws need to be rewritten to work better for international business and I feel that sales tax should not exist but only tax on profits or income and this tax should be paid where it is generated.