Since January 1, 2018, the nominal federal corporate tax rate in the United States of America is a flat 21% following the passage of the Tax Cuts and Jobs Act of 2017. State and local taxes and rules vary by jurisdiction, though many are based on federal concepts and definitions.
Profitable American corporations in 2018 collectively paid an average effective federal income tax rate of 11.3 percent on their 2018 income, barely more than half the 21 percent statutory tax rate.
The corporate tax in the US was cut from 35% to 21% in 2018, which is a huge cut, but what kind of difference has it made in the amount of tax gathered?
Average tax isn't the whole picture, because some companies that earn more will pay a higher tax, but it is still quite telling:
2010: 12.6%
2011: 12.1%
2012: 11.2%
2013: 11.4%
2014: 10.9%
2015: 10.8%
2016: 10.4%
2017: 8.7%
2018: 8.8%
2019: 7.8%
2020: 7.8%
I wish I could reduce my tax percentage by 60%.
And herein lays the question,
Would you if you could?
There are a lot of loopholes in taxation for corporations and this increases with the globalization of the economy and the corporations, as they are able to use complex accounting processes to effectively "hide" income and reduce their liabilities. This profit then gets distributed to shareholders and also used to invest into more generative activities. Yet, the average person doesn't have access to any of these loopholes and mor than that, they have to pay their tax monthly, automatically taken out of the salary by their employers. What this means is that while the corporations and subsequently the shareholders have more capital to invest, the average person has less, fueling the widening of the wealth gap.
But, what it also means is that the individual country governments have less available tax income and the way the accounting practices work, means that a lot of it is out of reach. A company is able to earn a billion dollars in one country and pay almost zero tax on it in the country it was earned. This results in an extraction process, bleeding wealth from one country into the hands of others, lowering the value of that country, making it a better buy opportunity for the investors who have been involved in the extraction.
Make sense?
With governments funded by tax income, they have to increasingly tax the population, not the corporations. If however, that lost tax corporate income could not only be captured, but gathered at the point it was made, a lot of the extraction would stop, leaving more income available to offer tax breaks to the citizens, rather than for the corporations and shareholders. This doesn't mean that the shareholders miss out altogether though, because when people have more money in their pocket, they will spend more, as we have seen over the last few years with all the handouts.
The difference would be that the "handouts" are made through tax breaks for individuals, incentivizing not only working, but also encouraging spending. And instead of funding them through debt (which effectively is future tax of citizens), the breaks are funded through corporations paying their full liability, rather than reducing it by 50%. The extra money in the pocket will still flow through to the corporations through consumer demand, but more of it will be returned back into the system and, there is far more opportunity for individuals to also be investors.
This last point is very important, because currently many people don't have the "luxury" to invest into generative activities. Given additional tax rebates, it would be possible for many more to start investing into the companies they are demanding from, further closing extractive circuit and feeding more back into the pockets of people. This starts to balance the distribution of wealth across an increasingly large portion of the global population.
Not only that, the distribution isn't just of wealth, because when the tax money is collected locally and the people are spending locally, there is far more value being circulated at the local level. This results in a spread of benefits to larger groups of the community, incentivizing and empowering local activity and communities to act locally themselves and improve the local situation.
Currently, this doesn't happen, because the vast majority of wealth is going into a narrow set of pockets, which makes it very much like a monopolized system, which fails because the centralized core cannot adequately take into consideration and cater for the many needs of the broad community. Instead, they make the decisions that improve their position first and foremost. Like any dictatorship, they look to shore up their powerbase.
While taxes aren't going anywhere soon, there has to be massive reform to the system in order to reverse the consolidation of wealth into fewer hands. This doesn't happen through handouts based on debt, it has to come through a restructuring of the tax system so that the wealth from corporations and investment is being used to fund economic capabilities in the entire population. Essentially, there needs to be a decentralization of wealth mechanisms so that more people are benefiting from the system, rather than more people falling into a debt trap cycle, as it is now.
Centralization versus decentralization is the biggest war being fought and will be for the foreseeable future, though many people are yet to realize what is going on or how they are going to be affected by it. What is goo to remember is that we have been conditioned into believing that the current economic system is the way it has to be, making change seem far more difficult than it might actually be. As the consumers at all levels, it really is up to us to demand a better system, which will ultimately mean changing the way governments operate, corporations operate, and we operate. It is a paradigm shift of monumental proportions, but we don't seem to have the appetite to take responsibility and start the reversal.
At the current rate of change,
We are screwed.
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Alpha
Perhaps it's just the company I keep but I often feel like the problem is less people not knowing that stuff like this is happening but knowing that stuff like this is happening and either not having a clue about what can be done or deciding that nothing can possibly be done at all ever because the current system is the best that can possibly be and nothing could possibly work out or be better and any problems that any new system could have is infinitely worse than the massive problems that exist now so everyone will just have to put up with it.
You are right. Maybe it is that people choose to ignore, because they feel that they can't do anything about it.
Wealthy people get wealthier not only because they have the money to invest, they also have the means to lobby and donate to policy makers to keep the gravy train going forever.
How does the disadvantaged group flip the status quo?
To flip it, it takes either a bit at a time process or, a revolution. In terms of the economy, we have the potential to redefine how we calculate value and as the largest base of consumers, we actually have the power - if we demand differently.
No matter what the tax rate is, businesses and corporations will always look for ways to pay less tax. On the other hand, most people who get a salary can't use similar tactics to lower their tax payments. I don't think that changing the tax system alone is the best way to deal with the difference in wealth. Rich people have a lot of social ties, so any policy changes are likely to only work for a short time before they find ways to get around them. Also, the biggest cause of the wealth gap is making money, which tends to help the rich first and the poor only after inflation has lowered the value of the currency.
And this is what changing the tax system can do. When the corporations are paying their full share, the shareholders earn less. When the additional income gives tax breaks to individuals, they can invest more. In time, it starts to balance.
Restructuring the tax system isn't that easy, I think that panel and Govt. body have to do a lot of work to keep in track of normal people to the whale from where there are getting taxes. Is That how it works in India, changing any kind of such monetary policy for tax evasion will create a lot of problems for the government in my opinion.
Yes, it creates a massive problem, because the largest tax evaders are the corporations who donate to their charities and put them on their boards after they retire from politics.
While we all might be under the same umbrella following some common rules, I believe that beneath that decentralization is the way to go in order to create competition between financial systems. And from that for sure the best one will thrive, but that means that someone needs to let the power out of his/her/their hands. We are fighting something much bigger than we can see or imagine.
I think it doesn't necessarily have to be released, it can be commandeered through redefining value. Essentially, if we can start making value in areas that they can't commandeer through centralization, eventually what they hold loses value too.
The irony of this complete tax system. We pay taxes with money made from the printing press and backed by faith. Crypto is like the tokens massively available in the 19th century!!! People always complain instead of learning to do the same as corporations.
No corporations = no jobs = misery...
Change the reporting mechanisms for corporations and governments, and suddenly things look much healthier.
Taxes are something centralized but I would not be completely contrary towards them if that money is used really for people.
In Italy, there is a huge fiscal evasion and taxes are used to support the huge government machine that we have.
People evade taxes so the government increase taxes. In this way there is the excuse to bring all the invoicing method online, and in the next future switching the money to digital as well. Leaving people with no power of some kind of intimacy and healthy privacy on their transactions and so on.
Taxes are good, but the people getting income from taxes should be clean and ethical in how to use them.
For people, but not for companies. Funny, eh?
Reagan and trickle down economics are just the fckn worst. It has all been downhill since that scumbag took office with his corporate tax cuts. Bring back the New Deal for a new generation. I hope there is still time but I fear the only option left is radical revolution and the wrong side has all the guns in this country.
I think radical revolution can be done at the economics level - if we support it.
What the "defund" movement failed to do is realize that they were asking the people who benefit from the funds, do defund themselves. We can defund anything through our economic behavior, including something like the US dollar.
Hahaha Whoops - I replied to my comment instead of yours. I truly believe Celsius would have succeeded in moving people away from the dollar standard had it been allowed to continue existing.
That's what I thought I was doing with Celsius - defund the banks Mashinsky said. We were fighting over all of the money supply in the entire world. And then Celsius became enemy number 1 and FTX + cronies attacked it mercilessly for months.
FTX allowed for open perpetual shorts against the CEL token, FTX shorted Celsius large position in stETH to the tune of $1.5B USD to destabilize its largest ETH holding - all while running a dedicated FUD campaign led by FTX hit man Sam Trabucco to successfully incite a bankrun and eventual filing for bankruptcy. Celsius could have survived the bear if it wasn't attacked by the order of the cabal that allowed FTX to exist and spoof money through Alameda Reaearch for so long.
Sickens me how many innocent people got caught up in these whale games where they are truly fighting over the future of the world's money supply. With its large stake in bitcoin mining and a healthy balance sheet, Celsius was a tremendous threat to TradFi, and they just could not be allowed to make it to the next bull market. Savagery to allow the CEL token to be perpetually shorted in the manner it was - the FTX exchange went down with millions of open positions on its books. I hope it comes out in Chapter 11 that this was orchestrated by FTX, but I fear the examiner's report will be accepted as the only facts even though it is clearly biased against the business interests.
Pay more to a decentralized distribution system, yes. To a government? It is throwing money into the hands of entities who are consistent at proving their inability to allocate for the common good. Government budgets are for buying votes, it looks like. While not 100 % that and while some services do need to be funded... since decentralized populations would consist of a number of individuals, each of them passing the responsibility to the virtual next... it is still a huge part of somebody's (workers') hard earned but never owned money.
The problem is, govs want to mess with more and more aspects of social life. Pure capitalism stated it was their only job to provide security - internal and external. Keeping the borders safe and the settlements in order. But security crept to other areas. Obviously health services. Retirement funds...
We keep on delegating responsibility. That is...giving in to centralization. Willingly.
Imagine a tax system where there is a 50/50 split of the tax.
For example, a flat rate tax of 20% on everyone and corporations.
A person pays 10,000 in tax.
5000 is allocated to essential services and infra by a government.
5000 is allocated by the person who has to spend it, but can choose from a range of areas, like education, environment, military etc.
What happens to the funds for waging war?
Where there are public funds, there's corruption and allocating to insiders. What part of it depends on what can bad actors get away with. Currently, almost anything.
Local initiatives that I like would be my targets of choice.
Where there's profit to be made... That would still actually drive both gov and personal spending.
Corporations are ready to vote with their feet, though. Go invest where you're treated best. Meaning, where there's no 20 % flat robbery of income.
Speaking of income tax? That's still huge. But workers and companies combined pay about 33 % of the salary, anyway, if you count retirement and social.
Close to 50-60 % in some states, I hear. I wouldn't call it a Ponzi scheme because Ponzi might have been an angel in comparison.
And what about that VAT BS? That's another 20 % of every transaction. Should have been more than enough on its own.
A lot of deadweight. Unevenly distributed, true.
I think that taxation is only for workers as it is cut before paying. However, at a company, tax evasion is possible. What also against for workers is that paying more tax in an inflationary economy if the tax brackets are not revised. This all causes unfair distribution of wealth.
Yes. A corporation is able to immediately account for rising prices and use it to offset their tax. An individual has to wait for a government to offer a rebate or return.
The entire system is imbalanced and will get increasingly worse.
Unfair distribution of wealth is a biggest problem, currently taxation system in most countries are applicable on average peoples or middle class, wealthy or ultra rich people have so many tactics to avoid it that's a biggest problem, another thing is if government able to charge taxes equally they don't have a fair system to spend that money on welfare of the society
Middle class doesn't have much potential to write down, the very wealthy do.
Put it all on decentralised blockchains. All corporate transactions. All government transactions.
Estonia is interesting as a country because they have a very different system to many countries. Last year we attended a speech by the former CTO of Estonia, yes that’s right! The country is almost run like a company!
https://medium.com/fwd50/estonias-cto-kristo-vaher-on-building-digital-nations-one-small-agile-project-at-a-time-1e4f768cb2f2
There was a Q&A session and blockchain was one of the questions, they didn’t say whether they do or not. It would be an ideal tech for their case.
The scandic and Baltic countries are well positioned to be front runners. I am in Finland, just across the water and I think low corruption could be a key point for decision making.
In terms of running as a company, I think this is what a government should do. No party system, key roles elected on merit, civil servants considered employees. Instead of the goal to make money though, it's charter should be to create wellbeing for citizens.
Precisely and blockchain would help facilitate that.
I was on the phone and there were lots of typos! :D
I vote for tarazkp as next president.
:D