Should we make the corporate tax rate 0%?

[kaz]

Same logic

An owner takes profit out as a salary ....he pays taxes on it
Same as a salary paid his employees

No, it's not. Owners take profits in the form of dividends or capital gains.

Winner, winner....chicken dinner

There you have it

Owners take profit as capital gains or dividends rather than a salary. Because the system is set up so that they pay a lower tax rate that way

Wouldn't it be nice if employees could do the same?

There is so much ignorance in that statement, I can't possibly cover it all. I'll just give you a couple of basics.

1) Actually you'll be happy to know that government did think of that. If we work in the business, we are required to pay ourselves a reasonable salary. I pay myself 6% of my company's revenue as wages as President. Those are not double taxed at least, they are deductible expenses.

2) many small businesses are set up as "S" or "LLC" corporations. In those cases, all earnings flow through as income.

There are a lot of factors as to why all those combinations are done. You obviously don't care, you are just out to get as many hourly workers who live paycheck to paycheck fired as you can. Here's the reality. I care a lot more about my workers than you do.

 

[itfitzme]

I earn money

My corporation pays taxes on it

I pay personal taxes on it

Even you can handle this problem, big guy:

1 + 1 = ...

Money s taxed every time it changes hands.

1+ 1=.....

My hands were the only ones involved.

You took a job provided by someone else and paid taxes on it once.

I earned my money myself, and paid taxes on it twice.

What's ironic is that you claim to care about labor, and labor pays for this a lot more than I do. Here's the fact whether you like it or not. My taxes are taken out of what I have to put in my business. I do not take less money for myself. When my money is taxed twice, that means there are several more people I can't afford to hire this year. People like you who live off me are unemployed still. Several more next year, ... Either way, I'm rich. It doesn't affect my lifestyle.

That you don't grasp reality doesn't protect you from reality.

You really don't have a clue what you are talking about.

By no stretch of accounting do you pay taxes on any money twice. You may have a business, but you either don't do your own accounting and taxes or you simply are clueless as to what you are doing.

 

[kaz]

You are absolutely wrong here. The problem is your math.

The company pays employee wages as a costs.

Earnings = Revenues - Cost = Revenues - fixed costs - variable costs. Variable costs include wages.

The company pays taxes as a percentage of Earnings.

Tax = (t)(Earnings) = (t)(Revenues - fixed costs - variable costs)

Wages are subtracted before the tax rate is applied.

Then, income tax is on wages.

Thanks for the lecture on what I do for a living.

What you're missing is the final step. Profits are distributed to me (the owner) and I pay taxes on them again.

Also, most salaries are actually considered fixed costs. Only things such as commissions or if we hire temp employees or give hourly workers more hours might they be considered variable.

Fixed costs aren't generally truly fixed, they just are hard to change in the short run. In the long run, you can move into a smaller facility or lay off staff, but as a running cost they are fixed until you do something like that.

"Thanks for the lecture on what I do for a living. "

Well, be sure to let everyone know that you don't know what you are talking about.

"Profits are distributed to me (the owner) and I pay taxes on them again."

There is no double taxation. That was someones basic point. Yeah, you pay taxes on your income. So? What is your point?

Because the point of "double taxation" is simply incorrect. Just goes to show us that people often do things for a living without a clue what they are actually doing. We see that all the time.

I'm not the one showing they don't know what they are talking about. Ironically I'm in the office today closing the books on 2013 so we can get our taxes done.

I put each of the times taxes is paid on the same money in red for you.

 

[itfitzme]

Thanks for the lecture on what I do for a living.

What you're missing is the final step. Profits are distributed to me (the owner) and I pay taxes on them again.

Also, most salaries are actually considered fixed costs. Only things such as commissions or if we hire temp employees or give hourly workers more hours might they be considered variable.

Fixed costs aren't generally truly fixed, they just are hard to change in the short run. In the long run, you can move into a smaller facility or lay off staff, but as a running cost they are fixed until you do something like that.

"Thanks for the lecture on what I do for a living. "

Well, be sure to let everyone know that you don't know what you are talking about.

"Profits are distributed to me (the owner) and I pay taxes on them again."

There is no double taxation. That was someones basic point. Yeah, you pay taxes on your income. So? What is your point?

Because the point of "double taxation" is simply incorrect. Just goes to show us that people often do things for a living without a clue what they are actually doing. We see that all the time.

I'm not the one showing they don't know what they are talking about. Ironically I'm in the office today closing the books on 2013 so we can get our taxes done.

I put each of the times taxes is paid on the same money in red for you.

Yet you still have no clue what you are talking about. The reality is that you don't know the math. If you did, you'd use it. Highlighting statements that you don't understand doesn't mean anything.

If you actually knew what you were doing, i.e. "closing the books on 2013", then you could actually show how you pay taxes twice on the same money by presenting the math. Obvisously you aren't "closing the books on 2013".

Because if you are actually paying taxes twice, you are an idiot at accounting and filing taxes.

I'll give you that.... YOU may be paying double taxation because you don't know what you are doing.... I can't argue with that. But no one that has a clue is paying taxes twice on the same money.

So, sure, if you are saying that you personally are screwing up your accounting and paying taxes twice..... I can't argue with you there.

 

[kaz]

Gross profit is after all expenses including owner's salaries. Net profit is after taxes are paid.

Wrong, that isn't what gross profit is. Actually, the main ones are

Gross profit = sales - COGS
Operating profit = sales - operating costs
Net profit = sales - all expenses (including taxes)

There's also EBIDTA, pro-forma and a hundred more, and every company tailors those to their own business and their own needs.

 

[kaz]

"Thanks for the lecture on what I do for a living. "

Well, be sure to let everyone know that you don't know what you are talking about.

"Profits are distributed to me (the owner) and I pay taxes on them again."

There is no double taxation. That was someones basic point. Yeah, you pay taxes on your income. So? What is your point?

Because the point of "double taxation" is simply incorrect. Just goes to show us that people often do things for a living without a clue what they are actually doing. We see that all the time.

I'm not the one showing they don't know what they are talking about. Ironically I'm in the office today closing the books on 2013 so we can get our taxes done.

I put each of the times taxes is paid on the same money in red for you.

Yet you still have no clue what you are talking about. The reality is that you don't know the math. If you did, you'd use it. Highlighting statements that you don't understand doesn't mean anything.

If you actually knew what you were doing, i.e. "closing the books on 2013", then you could actually show how you pay taxes twice on the same money by presenting the math. Obvisously you aren't "closing the books on 2013".

LOL, gotcha, Skippy...

 

[itfitzme]

Gross profit is after all expenses including owner's salaries. Net profit is after taxes are paid.

Wrong, that isn't what gross profit is. Actually, the main ones are

Gross profit = sales - COGS
Operating profit = sales - operating costs
Net profit = sales - all expenses (including taxes)

There's also EBIDTA, pro-forma and a hundred more, and every company tailors those to their own business and their own needs.

Yes, you are right. Operating profit is after all expences including owner's salaries. You are right, I skipped "operating profit."

So what is your point?

You still are an idiot if you are paying double taxes on your money.

 

[itfitzme]

I'm not the one showing they don't know what they are talking about. Ironically I'm in the office today closing the books on 2013 so we can get our taxes done.

I put each of the times taxes is paid on the same money in red for you.

Yet you still have no clue what you are talking about. The reality is that you don't know the math. If you did, you'd use it. Highlighting statements that you don't understand doesn't mean anything.

If you actually knew what you were doing, i.e. "closing the books on 2013", then you could actually show how you pay taxes twice on the same money by presenting the math. Obvisously you aren't "closing the books on 2013".

LOL, gotcha, Skippy...

Only in your own mind.

What you got is a need to higher yourself an accountant and a tax preparer because you are stupidly, and someone no one can possibly grasp, managing to pay double taxes.

I believe you. I believe you actually screwed up your books and taxes.

Because no one else does.

And I know because you still can't do the math that shows how you manage to fuck yourself into paying taxes twice.

I do believe it. I do believe that you actually don't know what you are doing and manage to pay double taxes by being stupid.

If you ever manage to do the math and get some good advise, you can fix that.

I do believe that you stupidly take a salary then take the net profits as income as well, resulting in you being double taxed. But that is just dumb.

 

[rightwinger]

No, it's not. Owners take profits in the form of dividends or capital gains.

Winner, winner....chicken dinner

There you have it

Owners take profit as capital gains or dividends rather than a salary. Because the system is set up so that they pay a lower tax rate that way

Wouldn't it be nice if employees could do the same?

There is so much ignorance in that statement, I can't possibly cover it all. I'll just give you a couple of basics.

1) Actually you'll be happy to know that government did think of that. If we work in the business, we are required to pay ourselves a reasonable salary. I pay myself 6% of my company's revenue as wages as President. Those are not double taxed at least, they are deductible expenses.

2) many small businesses are set up as "S" or "LLC" corporations. In those cases, all earnings flow through as income.

There are a lot of factors as to why all those combinations are done. You obviously don't care, you are just out to get as many hourly workers who live paycheck to paycheck fired as you can. Here's the reality. I care a lot more about my workers than you do.

Thanks. That is very informative

So I guess it shows you lied when you said owners take profit as a dividend or capital gain

 

[rightwinger]

Money s taxed every time it changes hands.

1+ 1=.....

My hands were the only ones involved.

You took a job provided by someone else and paid taxes on it once.

I earned my money myself, and paid taxes on it twice.

What's ironic is that you claim to care about labor, and labor pays for this a lot more than I do. Here's the fact whether you like it or not. My taxes are taken out of what I have to put in my business. I do not take less money for myself. When my money is taxed twice, that means there are several more people I can't afford to hire this year. People like you who live off me are unemployed still. Several more next year, ... Either way, I'm rich. It doesn't affect my lifestyle.

That you don't grasp reality doesn't protect you from reality.

You really don't have a clue what you are talking about.

By no stretch of accounting do you pay taxes on any money twice. You may have a business, but you either don't do your own accounting and taxes or you simply are clueless as to what you are doing.

He is full of shit. He hides behind a "corporation" where it helps him. Then whines when he has to pay taxes on the money he takes out of that corporation

Breaks my heart really. Poor people should have as many options

 

[itfitzme]

My hands were the only ones involved.

You took a job provided by someone else and paid taxes on it once.

I earned my money myself, and paid taxes on it twice.

What's ironic is that you claim to care about labor, and labor pays for this a lot more than I do. Here's the fact whether you like it or not. My taxes are taken out of what I have to put in my business. I do not take less money for myself. When my money is taxed twice, that means there are several more people I can't afford to hire this year. People like you who live off me are unemployed still. Several more next year, ... Either way, I'm rich. It doesn't affect my lifestyle.

That you don't grasp reality doesn't protect you from reality.

You really don't have a clue what you are talking about.

By no stretch of accounting do you pay taxes on any money twice. You may have a business, but you either don't do your own accounting and taxes or you simply are clueless as to what you are doing.

He is full of shit. He hides behind a "corporation" where it helps him. Then whines when he has to pay taxes on the money he takes out of that corporation

Breaks my heart really. Poor people should have as many options

This appears to be so. It is why he never present the details. Doing that would make it obvious that he is either a) stupid or b) breaking the law. It is usually the latter. For him, he's convinced me it is the former.

 

[Toro]

I was referring to taxes, not GAAP. I don't have a problem with the idea of depreciation for financial statements. They are showing an asset on their books until it's written off anyway. I still don't get why you would compare manufacturing to services for this though. Services have generally very few assets to write off. My business is primarily services, but we do have in house production. Two companies I acquired had significant production assets, and I'm depreciating those. I bought another company that was all services and there were few assets, most of that I have to write off as goodwill.

I know you know this Toro, but for others reading, you can write off physical assets a lot faster than intangibles, like goodwill.

Re: "taxes, not GAAP." Fair enough. My bad. I should have made the distinction. However, the tax code generally follows the same principles of accrual accounting, with some variations, i.e. straight-line v. double-declining depreciation. Depreciation should be written off over the life of the asset based on the economic usefulness of the asset. So if an asset is written off in three years but is in use for 10, that's a subsidy because it allows the company to capture an economic benefit that runs counter to the principles of the tax code.

 

[Toro]

You really don't have a clue what you are talking about.

By no stretch of accounting do you pay taxes on any money twice.

So, if I own stock in a publicly-traded corporation that pays corporate income tax, then I pay tax on dividend income, that's not paying taxes on money twice?

 

[rightwinger]

You really don't have a clue what you are talking about.

By no stretch of accounting do you pay taxes on any money twice.

So, if I own stock in a publicly-traded corporation that pays corporate income tax, then I pay tax on dividend income, that's not paying taxes on money twice?

If I pay taxes on money I earn and then pay a sales tax when I spend it, aren't I paying taxes twice?

Money changes hands, you pay taxes on it

 

[Toro]

Money s taxed every time it changes hands.

1+ 1=.....

That's not true, actually.

Some partnerships are pass-throughs which are taxed at the individual, not the entity level.

 

[rightwinger]

Money s taxed every time it changes hands.

1+ 1=.....

That's not true, actually.

Some partnerships are pass-throughs which are taxed at the individual, not the entity level.

Isn't the tax code great?

I wonder who writes it?

 

[Toro]

You really don't have a clue what you are talking about.

By no stretch of accounting do you pay taxes on any money twice.

So, if I own stock in a publicly-traded corporation that pays corporate income tax, then I pay tax on dividend income, that's not paying taxes on money twice?

If I pay taxes on money I earn and then pay a sales tax when I spend it, aren't I paying taxes twice?

Money changes hands, you pay taxes on it

Those are two different actions. You earn the money, then you spend it.

When you own stock in a company, profits are earned then taxed twice, once at the corporate level then again when it is paid out. I am the owner of the company as a stockholder. As an owner, I'm taxed at the individual level on the income earned, then taxed on the same income when profits that are already earned are distributed.

 

[Toro]

Money s taxed every time it changes hands.

1+ 1=.....

That's not true, actually.

Some partnerships are pass-throughs which are taxed at the individual, not the entity level.

Isn't the tax code great?

I wonder who writes it?

I'm not a tax attorney, so I may be wrong on this, but I believe the concept behind partnerships as flow-through entities is that they do not have limited liability. Also, most partnerships are at levels of income where the business owner earns a living comparable to someone earning a salary. Thus, the business owner is thus likely to pay a higher rate of tax on income earned than someone being paid the same salary as the income of the business owner.

The limited liability argument is stronger than your "taxes are paid every time it changes hands" IMHO simply because it's not true. Rather, the law recognizes the entities and confers benefits to LTDs by shielding their owners from unlimited liability and financial ruin. Thus, as separate entities which accrue benefits through the law, they should pay taxes on the income they earn.

Corporations should pay tax even though the income is still taxed twice, but IMO that rate should be low because of the benefits they bring to the economy.

 

[dblack]

Same logic

An owner takes profit out as a salary ....he pays taxes on it
Same as a salary paid his employees

No, it's not. Owners take profits in the form of dividends or capital gains.

Winner, winner....chicken dinner

There you have it

Owners take profit as capital gains or dividends rather than a salary. Because the system is set up so that they pay a lower tax rate that way

Wouldnt it be nice if employees could do the same?

We discussed this already. Employees can do that. But in general they can't afford the risk, so they tend to prefer a fixed wage or salary that doesn't vary with the profits and losses of the company as a whole.

 

[Toro]

Yeah, there is a big problem in this thread with knowing how business accouting works.

There is no technical term of "profit". There are "gross profit", "net profit after taxes", and "economic profit", to list a few.

By all definitions, both "gross profit" and "net profit" is after costs of goods, as well as wages and salaries (including the owner's and CEO's salaries).

Owner's don't "takes profit out as a salary ". This is a complete mistatement that is caused by a lack of accurate and precise understanding of the business accounting.

Gross profit is after all expenses including owner's salaries. Net profit is after taxes are paid.

That's not correct.

Gross profit = Sales - cost of goods sold

Operating profit = Gross profit - SG&A - R&D

Net profit = Operating profit - Interest costs - Taxes paid

Gross profit - Wikipedia, the free encyclopedia