True, but it must be emphasized that that tax is tax being paid _by individuals_. It is simply withheld by the corporation as a convenience. The monies are earned by the individual and paid by the individual.
Corporations have no moral right to claim that as 'tax paid' in these discussions.
A person earning $X for a company that pays corporate tax would have the same individual tax liability as an individual earning $X for a company that does not pay corporate tax.
Corporations are merely shared collectives owned by groups of individuals, who pay taxes on it's earnings when they receive dividends or sell their shares.
That's true in principle, but many of the shareholders of US corporations never pay those taxes in practice, either because they're not US residents or because they avoid capital gains taxes through tax-advantaged accounts, trusts, non-US shell corporations and SPVs, etc.
To preempt one likely response to this: no, it's not appropriate for a non-US-resident shareholder of Amazon to not pay any US tax on their share of Amazon's pre-tax profit. Amazon is leveraging US-taxpayer-funded resources, including roads, the electrical grid, the military (which protects Amazon's buildings and shipping routes), arguably the educational system, etc. to generate profit, and anyone with a claim to a portion of that profit should have to help pay for those resources.
First of all, if you want foreigners to pay U.S. income taxes when they invest capital in the U.S., I have to ask, why do we want to discourage foreign investment in the US? Amazon pays sales/gas taxes for much of what you mentioned, and it's U.S. investors, who also pay income and property taxes for the rest.
Second of all, U.S. citizens absolutely do pay taxes on investment earnings. If you hold stocks in a tax deferred IRA, you pay your taxes when you take distributions and at full income tax rates, no capital gains or dividend tax breaks. That's true of any tax deferred account.
Anyone "shielding" taxes in a "non-US shell corporation" is committing tax fraud.
The best solution to that is to eliminate the extra layers of taxes on investing in the U.S, in one way by eliminating corporate income taxes or allowing corporations to deduct dividends as expenses. Then the benefits of hiding your investment earnings become far less, and not proportionate to the risks.
This isn't entirely true. There are payroll taxes levied directly against the corporation, for example social security which is 6.2% by employee and 6.2% by employer
Theoretically, yes. But much like sales tax, employer payroll tax is passed on to the employee. Unlike sales tax however, this cut isn't as transparent due to the salary itself being preemptively calculated in such a way as to offset the cost to the employer. In other words, the "true" gross income could, all things being equal, be upto 6.2% greater then what one is getting.
Comments
True, but it must be emphasized that that tax is tax being paid _by individuals_. It is simply withheld by the corporation as a convenience. The monies are earned by the individual and paid by the individual.
Corporations have no moral right to claim that as 'tax paid' in these discussions.
A person earning $X for a company that pays corporate tax would have the same individual tax liability as an individual earning $X for a company that does not pay corporate tax.
Corporations are merely shared collectives owned by groups of individuals, who pay taxes on it's earnings when they receive dividends or sell their shares.
That's true in principle, but many of the shareholders of US corporations never pay those taxes in practice, either because they're not US residents or because they avoid capital gains taxes through tax-advantaged accounts, trusts, non-US shell corporations and SPVs, etc.
To preempt one likely response to this: no, it's not appropriate for a non-US-resident shareholder of Amazon to not pay any US tax on their share of Amazon's pre-tax profit. Amazon is leveraging US-taxpayer-funded resources, including roads, the electrical grid, the military (which protects Amazon's buildings and shipping routes), arguably the educational system, etc. to generate profit, and anyone with a claim to a portion of that profit should have to help pay for those resources.
First of all, if you want foreigners to pay U.S. income taxes when they invest capital in the U.S., I have to ask, why do we want to discourage foreign investment in the US? Amazon pays sales/gas taxes for much of what you mentioned, and it's U.S. investors, who also pay income and property taxes for the rest.
Second of all, U.S. citizens absolutely do pay taxes on investment earnings. If you hold stocks in a tax deferred IRA, you pay your taxes when you take distributions and at full income tax rates, no capital gains or dividend tax breaks. That's true of any tax deferred account.
Anyone "shielding" taxes in a "non-US shell corporation" is committing tax fraud.
The best solution to that is to eliminate the extra layers of taxes on investing in the U.S, in one way by eliminating corporate income taxes or allowing corporations to deduct dividends as expenses. Then the benefits of hiding your investment earnings become far less, and not proportionate to the risks.
This isn't entirely true. There are payroll taxes levied directly against the corporation, for example social security which is 6.2% by employee and 6.2% by employer
Theoretically, yes. But much like sales tax, employer payroll tax is passed on to the employee. Unlike sales tax however, this cut isn't as transparent due to the salary itself being preemptively calculated in such a way as to offset the cost to the employer. In other words, the "true" gross income could, all things being equal, be upto 6.2% greater then what one is getting.