Huge Corporate Profits- so Why do They Need a Tax Cut?

originally posted by: CranialSponge
a reply to: Edumakated

Not all corporations are publicly held and/or have outside shareholders/investors.

In fact, there is a far far higher percentage of incorporated businesses that are 100% privately owned, funded, and operated, than not.

True, but those usually are not the largest corporations. However, even privately held companies will still have shareholders. The point though is that often times people don't realize how they benefit from companies doing well and making a profit.

A lot of people who receive pensions are able to do so because those pension contributions are invested in these evil corporations. The higher return these pensions get, the more likely they can continue to payout retirement benefits to the pensioners which in most cases are far above what the retiree contributed.

People who rail against corporate profits do so because they naively believe the profits are going to some faceless entity, not understanding they themselves are part of that faceless entity in many cases either directly or indirectly. They also exhibit a lot of jealously towards executives and their compensation. Once again, not understanding the job and what it entails and how those executives are compensated (Mainly stock options).

Capital is fluid and if we want to continue to encourage companies to relocate overseas, etc then there is no better way to do it than to keep increasing taxes on them.

At the end of the day, the root of these threads is jealousy and envy imho.

Basically, it's all about voting yourself funds from the treasury. At a certain point, that's all tax cuts are. The amount of tax revenue we need doesn't change, it's just about exerting influence to keep more of your money at the expense of someone else.

originally posted by: Aazadan
Basically, it's all about voting yourself funds from the treasury. At a certain point, that's all tax cuts are. The amount of tax revenue we need doesn't change, it's just about exerting influence to keep more of your money at the expense of someone else.

That is hilarious... I'm keeping MORE OF MY MONEY at the expense of someone else.... as if that someone has a claim to my money.

This right here sums up the mentality of the left. No one is entitled to the money they earn. We only get to keep it at the benevolence of the government or if leftist feel we deserve it.

originally posted by: FyreByrd

originally posted by: Edumakated

originally posted by: CB328
I found this chart showing corporate profits for the last 70 years, and not surprisingly, corporate America has more money than at almost any point in HIstory. They are awash in money, so why would they possible need a tax cut at the cost of cutting government spending on public safety nets? The obvious reason is that Republicans wan't to destroy the middle and lower class. Normally the Republicans don't want to do anything to increase the deficit, but they are willing to make it shoot up by 1.5 trillion dollars so that millionaires can get much more money. If this tax cut is enacted America will become an Aristocracy and you can kiss your rights, freedoms, and standard of living goodbye because they will have all the money and power instead of just most of it.

fred.stlouisfed.org...

You do understand that those profits are for the shareholders who have invested in the company? I also presume you understand that the shareholders can be anyone from your next door neighbor with a few shares to someone with a 401k or institutional investors like pension funds?

I always find these threads funny when people don't realize they want to cut their nose off to spite their face. The very people complaining are probably benefiting from these obscene profits but to ignorant to even know it.

In MOST cases, increases in revenue do not equate to distributions to shareholders. Nor does it mean more funds are invested back into the company by R&D, employee wages and salaries, or capital expenditures. It goes to stock buybacks which does benefit the SMALL shareholder in the short term by increased stock price.

That artificial increase in stock value benefits primarily the C Suite (top executives) and large stock holders only. I'd say of all that value only about 5% builds wealth for small holders and that usually only in the short term.

That' funny... my 401k and other investments would disagree.

Dollar for dollar does not go back shareholders, however, companies are able to invest in R&D, expand, etc. This means jobs. Yes, upper level executives do benefit from increased share prices because that is what they are judged on. However, middle management does too as they see their 401k balances increase as well.

My wife worked for a f500. Her 401k balance swelled to like $500k in a few short years because the stock was at like $20 when she started and shot up to like $150. I don't think she gives a flip the CEO was making $10 million versus her $75k at the time as a lower middle manager as a result.

BECAUSE the Federal tax rate for corporations is among the HIGHEST of any country at 35%

No one pays 35%, most corporations pay less than 10% so this tax rate argument is a bunch of BS and getting very old.

And it doesn't answer my question of why they need a tax cut when they are already drowning in money.

That money needs to be spent on government programs where it actually helps people instead of being put into tax shelters.

originally posted by: Edumakated

originally posted by: CranialSponge
a reply to: Edumakated

Not all corporations are publicly held and/or have outside shareholders/investors.

In fact, there is a far far higher percentage of incorporated businesses that are 100% privately owned, funded, and operated, than not.

True, but those usually are not the largest corporations. However, even privately held companies will still have shareholders. The point though is that often times people don't realize how they benefit from companies doing well and making a profit.

But 'privately' held companies include two basic classes - small business owners and few of them offer any form of retirement funds or other benefits for employees - some do - the old fashion ones or the progressive thinking ones. I work for one - and even as a part-time person can put money into a 401K with the company matching it. But my other 'privately held' company jobs offer nothing of the sort.

True small business needs WISE incentives to fund investment back into the sector and perhaps tax credits would be a better incentive to small business investment. Better in the sense that tax cuts put money into the OWNER's hands rather then into the company and local economy.

The second class of privately held companies are those who are Owned by the Wealthy - it's a private club. Some offer a small percentage of stock - non-voting - to the public but it is rare. And the same dynamic as the small holder applies.

What the economy, especially local ones, needs is investment (including plant maintenance and improvement) in business not MORE CASH TO OWNERS.

To carry to the next step - this extra cash to OWNERS is not spent into the collective economy at the same rate, as a percentage of income, as the working class does.

A lot of people who receive pensions are able to do so because those pension contributions are invested in these evil corporations. The higher return these pensions get, the more likely they can continue to payout retirement benefits to the pensioners which in most cases are far above what the retiree contributed.

Only 15%, at best, employees in the US have pension plans of any sort available to them.

www.mybudget360.com...

People who rail against corporate profits do so because they naively believe the profits are going to some faceless entity, not understanding they themselves are part of that faceless entity in many cases either directly or indirectly. They also exhibit a lot of jealously towards executives and their compensation. Once again, not understanding the job and what it entails and how those executives are compensated (Mainly stock options).

You have no idea what other people are thinking - you are merely justifying your position.

Capital is fluid and if we want to continue to encourage companies to relocate overseas, etc then there is no better way to do it than to keep increasing taxes on them.

At the end of the day, the root of these threads is jealousy and envy imho.

I agree that capital is fluid and needs to circulate within the local economy(ies). Capital doesn't circulate when it is extracted by the wealthy, removed from the site of production and stockpiled in Stock Markets where it becomes stagnant eventually leading to the the demise of said company - killing the goose that lays the golden egg and all that rot.

As to - small business owners that rail on behalf of Corporate America - and hear I'm doing the mind reading thingy - I believe that mostly they are small business owner's that want to pretend they are Titans of Industry by personally buying more s**t to show off. I think they'd get more consistent 'raises in personal standard of living' by investing in corporate assets (including personnel).

originally posted by: CB328

BECAUSE the Federal tax rate for corporations is among the HIGHEST of any country at 35%

No one pays 35%, most corporations pay less than 10% so this tax rate argument is a bunch of BS and getting very old.

And it doesn't answer my question of why they need a tax cut when they are already drowning in money.

That money needs to be spent on government programs where it actually helps people instead of being put into tax shelters.

So if they don't pay taxes now, why are you bothered by a tax cut?
We already spend more tax money than any other country.
We have a spending problem.

a reply to: CB328

Hugh corporations really don't pay any taxes because of all the tax breaks, deductions and all tax codes that they lobbied for, by eliminating all those deductions that you and I can't have stops those company from not paying any taxes and setting the tax rate on corporates at 20% makes more sense this way they pay their fair share. besides why do corporations under the current tax code get to deduct that stadium box suit off on their taxes as business entertainment, when I go to a game I pay for it and can't deduct crap.

Corporate tax cuts means higher profits. With higher profits comes more corporate stock buybacks meaning the stock market will rise making those invested, wealthier. This will alleviate pressure on the Federal Reserve bank from having to get involved.

With a GDP average 1.49 over the last 10 years and a soaring stock market shows that production in the US is not much of a contributing factor.

The US economy is so dependent on free money from the government that it will never recover. A big war may solve alot of problems, who knows.

NVM

a reply to: Edumakated

You're not entitled to keep the taxes necessary for society to function if you want to reap the benefits of living in society.

originally posted by: Bluntone22
So if they don't pay taxes now, why are you bothered by a tax cut?
We already spend more tax money than any other country.
We have a spending problem.

The main issue isn't with the corporate rate, we could bring the corporate rate to 0%. It's a totally meaningless number. All taxes are eventually collected as payroll taxes.

What does matter is that for the wealthy, or just anyone in the right position in a corporation really, they can pay themselves a low income and dodge taxes while still living an opulent lifestyle by having the lower corporate rate own and fund their purchases for them. If one owns a corporation which can devote $750k to payroll (with themselves as the only employee), rather than pay themselves $750k and pay all those taxes, they can pay themselves $100k, make about $50k of that taxable, and have the other $650k covered by the corporation with a corporate care, corporate housing, etc... coming out of the payroll budget, never pay employment taxes on it, and even use their living expenses as a corporate writeoff.

That is the corporate tax abuse. Trumps tax plan does nothing to solve it, and in fact makes it worse.

Don't forget people that make their money off capital gains, so skate by on lower tax rates than they should.

a reply to: CB328

Because their greedy...

originally posted by: seasonal
BS, there is no environmental rules in Malaysia, little worker protections and of course when you pay your valued employees pennies on the dollar in wages compared to the US, there is no way we will see a reversal of manufacturing leaving the us.

Then why do companies corporate invert to places like Ireland?

originally posted by: schuyler
BECAUSE the Federal tax rate for corporations is among the HIGHEST of any country at 35%. If you want productivity to rise, you cut taxes. Who do you think actually pays "corporate taxes"????? We do. Raise corporate taxes and the price of the product goes up a like amount. Pretty simple, really. When you raise taxes the government gets bigger. The government has never met a tax it doesn't like.

When you raise taxes prices of goods go up, do they go down if you reduce taxes???

a reply to: AugustusMasonicus

They don't, since that little game was raided.

But the fun of that one was that it didn't matter where the manufacturing was done.

a reply to: AugustusMasonicus

Corporations are obligated to increase/maximize profits. Period.

Given human nature, that should explain everything to everyone.

originally posted by: seasonal
Corporations are obligated to increase/maximize profits. Period.

Given human nature, that should explain everything to everyone.

Then using your logic they would not invert to Ireland (or elsewhere) but remain here with a lower tax rate.

originally posted by: Phage
They don't, since that little game was raided.

But the fun of that one was that it didn't matter where the manufacturing was done.

Are you refering to Apple? Companies are still there, they moved for the lower effective rates.