Does Atlas misunderstand what corporate taxes are

[OSR stands with Israel]

I keep seeing many posters claim that Corporate Tax Cuts are tax cuts for the rich, but that is actually not true. Corporate Taxes are taxes on the amount of profits a company makes, not on how much their company is valued at, or how rich their owners are.  Also just because a company is more profitable than another does not mean they are valued more or they rank higher on the fortune 500(An example of this is Amazon).

https://www.investopedia.com/terms/c/corporatetax.asp
http://fortune.com/fortune500/list/
http://fortune.com/fortune500/list/filtered?sortBy=profits&first500

You want to know what Tax Cuts for the Rich are: Reducing the top income tax rate (while not closing deductions for them). Also Cutting the Capital Gains and Dividends tax also apply to that.

[Sprouts Farmers Market ✘]

I have seen particularly egregious memes on the web showing companies' gross profits instead of net incomes to campaign for a host of anti business causes, which are painful to look at, but for the most part:

Re:  Does Atlas misunderstand what corporate taxes are

No

[OSR stands with Israel]

I have seen particularly egregious memes on the web showing companies' gross profits instead of net incomes to campaign for a host of anti business causes, which are painful to look at, but for the most part:

Re:  Does Atlas misunderstand what corporate taxes are

No

than why do so many posters believe that the tax reform helps you more depending on how large your company is .(That is not True because if it was Amazon would benefit the most which they dont)

[Sprouts Farmers Market ✘]

By bigger companies, people mean higher profits. Just about everyone can comprehend that companies are taxed based on their income. There's no need to purposefully misconstrue what they are saying.

Further, just because Amazon did not have substantial profits last year, what do you think value is? Value is entirely defined by future profits. Profits that will be taxed at this rate. So on rate alone, ignoring time period, it kind of does affect them disproportionately.

The above is obviously an oversimplification even though nearly all do benefit. The tax law is intended to advantage corporations that don't outsource their services abroad, don't erode their US taxable base with loans out of favourable jurisdictions and don't redomicile their IP abroad. Not only is the rate cut to incentivize US-recognized income from those activities here, but stiff penalties (well officially, still taxes) are in place for failing to put those activities and assets here. There seems to be a particular benefit for manufacturing firms which comes as no surprise based on the last campaign. How much it helps tech companies is very debatable.

Those are the core purposes of the bill. Most of the rest of it was accompanying updates to force it into the revenue limits or to sell it to the public.

[OSR stands with Israel]

By bigger companies, people mean higher profits. There's an obvious exception for some of the companies still holding NOLs. Just about everyone can comprehend that companies are taxed based on their income.

Further, just because Amazon did not have substantial profits last year, what do you think value is? Value is entirely defined by future profits.

This is obviously an oversimplification even though nearly all do benefit. The tax law is intended to advantage corporations that don't outsource their services abroad, don't erode their US taxable base with loans out of favourable jurisdictions and don't redomicile their IP abroad. Not only is the rate cut to incentivize US-recognized income from those activities here, but stiff penalties are in place for failing to put those activities here. There seems to be a particular benefit for manufacturing firms which comes as no surprise based on the last campaign. How much it helps tech companies is very debatable.

Those are the core purposes of the bill. Most of the rest of it was accompanying updates to force it into the revenue limits or to sell it to the public.

I believe Apple is one of the biggest winners from the tax reform. According to this (http://fortune.com/fortune500/list/filtered?sortBy=profits&first500) Microsoft and Alphabet will be big winners as well.


Also while it may be true that the Tax Reform will help Amazon in the future, it may not if for some reason they're still not that profitable in the future.

[Sprouts Farmers Market ✘]

Apple will win because of the transition tax. The link you provided has nothing to do with taxable US profits. These are applicable to all different countries around the world. Further, the reason I say that about tech companies is because they will be subject to significantly more tax above the 21%. There is now a maximum on the amount of profit you can totally shelter abroad, and it's limited based on a generous profit assumption for depreciable assets by country. Tech companies are expected to be hurt by this more than others since depreciable assets will be lower. That obviously may not be the case for Apple as a consumer products company, but it very likely could be for Alphabet and others. Further, they are extremely likely to be subject to the alt min rate (again, perhaps Apple excepted)

[OSR stands with Israel]

Apple will win because of the transition tax. The link you provided has nothing to do with taxable US profits. These are applicable to all different countries around the world. Further, the reason I say that about tech companies is because they will be subject to significantly more tax above the 21%. There is now a maximum on the amount of profit you can totally shelter abroad, and it's limited based on a generous profit assumption for depreciable assets by country. Tech companies are expected to be hurt by this more than others since depreciable assets will be lower. That obviously may not be the case for Apple as a consumer products company, but it very likely could be for Alphabet and others. Further, they are extremely likely to be subject to the alt min rate (again, perhaps Apple excepted)

Apple is also the most profitable company right now, so their overall tax rate will drop from 35% to 20% and since they are the most profitable company they would benefit a lot from that tax cut.

Now many other tech companies may be hit, for the things you mentioned, and for the fact that they get most of their money because of speculation and not current profits so tax reform wont help them currently .

[Sprouts Farmers Market ✘]

Apple's current tax rate is 24%. We don't know the amount that is taxed in the US. I can't even engage further because you are not acknowledging what I am saying about anything other than a rate change nor do I understand your point in creating the thread. Apple's rate will drop. But not nearly as much as many others, even with major tax planning.

[OSR stands with Israel]

Apple's current tax rate is 24%. We don't know the amount that is taxed in the US. I can't even engage further because you are not acknowledging what I am saying about anything other than a rate change nor do I understand your point in creating the thread. Apple's rate will drop. But not nearly as much as many others, even with major tax planning.

Well I did acknowledge most tech companies would get hurt by the changes you just mentioned , and I was just mentioning why they don’t benefit from the tax cut in other ways you didn’t mention.



My point of creating this thread was that I was feeling many people on here were implying that they belevirf a tax cut for Apple is a personal tax cut for Tim Cook which of course isn’t true(well he still will get a tax cut because of the income tax cuts but not because of the corporate tax cut).

[parochial boy]

Smilo sort of already answered that - coporations aren't divorced fromw their ownership, and as their ownership largely consists of the rich, it is the rich who will disproportionately benefit.

To expand a bit further, the market capitalisation, or share price, of a company is generally supposed to be an approximation of the current value of future cash flows of the corporation. In other words, a company's share price is determined by the amount of money that it is expected to make in the future (discounted back to the present value, as money you have now is worth more than money you will have in the future).

By cutting corporate tax rates, the "present value of future cash flows" will have increased- since there will be a smaller cash outflow in the form of corporation taxes. The impact of this is, of course, share price inflation.

Now, as we already know, capital wealth, in particular as a result of asset price inflation, is one of the driving factors behind increasing inequality. A move to increase asset prices will therefore inevitably largely benefit the rich.

Got it?

[TPIG]

Another thing people don't understand is the profit margins for most large companies. Graph above shows what public opinion THINKS the average profit margin for a company is - 36%, with the mean across various industries actually being less than 10%. Raising taxes on these businesses makes their profit margins even slimmer, hurting the ability of these companies to expand and provide higher wages to their workers.

[OSR stands with Israel]

Smilo sort of already answered that - coporations aren't divorced fromw their ownership, and as their ownership largely consists of the rich, it is the rich who will disproportionately benefit.

To expand a bit further, the market capitalisation, or share price, of a company is generally supposed to be an approximation of the current value of future cash flows of the corporation. In other words, a company's share price is determined by the amount of money that it is expected to make in the future (discounted back to the present value, as money you have now is worth more than money you will have in the future).

By cutting corporate tax rates, the "present value of future cash flows" will have increased- since there will be a smaller cash outflow in the form of corporation taxes. The impact of this is, of course, share price inflation.

Now, as we already know, capital wealth, in particular as a result of asset price inflation, is one of the driving factors behind increasing inequality. A move to increase asset prices will therefore inevitably largely benefit the rich.

Got it?

Yes stock prices for a company will increase ,but once agaim unless you actually sell your stock it’s is very misleading to take that into account as part of income inequality (as the money from your shares aren’t really yours until you sell it).

[Sprouts Farmers Market ✘]

Income inequality is not really an issue. Wealth inequality is the ultimate travesty and why repealing the estate tax was so tragic.

[Ban my account ffs!]

Another thing people don't understand is the profit margins for most large companies. Graph above shows what public opinion THINKS the average profit margin for a company is - 36%, with the mean across various industries actually being less than 10%. Raising taxes on these businesses makes their profit margins even slimmer, hurting the ability of these companies to expand and provide higher wages to their workers.

The public also vastly, and I mean VASTLY, underestimates inequality in the U.S.  On top of that, the vast majority think what /they/ think the level of inequality is, is already far too high.

So... sure... let's educate the public and tell them the truth.  We will win.

[OSR stands with Israel]

Another thing people don't understand is the profit margins for most large companies. Graph above shows what public opinion THINKS the average profit margin for a company is - 36%, with the mean across various industries actually being less than 10%. Raising taxes on these businesses makes their profit margins even slimmer, hurting the ability of these companies to expand and provide higher wages to their workers.

They actually think the average profit margin for a company is 36% . LMAO

[All Along The Watchtower]

Income inequality is not really an issue. Wealth inequality is the ultimate travesty and why repealing the estate tax was so tragic.

They're both big issues but I agree in the sense that the latter is seriously underrated by comparison to the problem of income inequality. You can have a well-above average income while still having little or no net worth, or even negative net worth; indeed, this has been the case for many middle-class and upper-middle class blacks and Latinos in the aftermath of the Great Recession, since they didn't have the decades if not centuries of even modest family wealth and upward mobility that white middle-class households and families have benefited from. Consequently, middle-class black and Latino households and families built most of their pre-Great Recession wealth via recent home ownership, and we know how that story turned out...

(Another great example of this is young adults of all ages - but again, particularly "people of color", and particularly women - who have advanced university degrees and highly-paid professional jobs but are in debt up to their eyeballs because of student loans, in addition to spending most of their post-tax income on rent and other "cost of living" expenses, since if they have a high-paying professional or professional-track job, they're almost certainly living in an expensive major city. Not a good situation, needless to say.)

[Devout Centrist]

Income inequality is not really an issue. Wealth inequality is the ultimate travesty and why repealing the estate tax was so tragic.

Yes, exactly. In addition, capital is taxed at a far lower rate than income, and this has created massive wealth inequality.

[Since I'm the mad scientist proclaimed by myself]

Another thing people don't understand is the profit margins for most large companies. Graph above shows what public opinion THINKS the average profit margin for a company is - 36%, with the mean across various industries actually being less than 10%. Raising taxes on these businesses makes their profit margins even slimmer, hurting the ability of these companies to expand and provide higher wages to their workers.

Implying that 7.5 percent is at all slim. Corporate taxes are only on profits, btw. And I doubt the obscene wages of executives among other things were included.

[Sprouts Farmers Market ✘]

What does that statement even mean. Taxes are only on profits. Obscene wages not included. Please tell me what that proves.

A) Taxes are not actually just on profits in your rather explicit scenario. Any pay over an aggregate of $1 million for the top four salaried employees is not deductible and thus taxed above true profits. Yes, options excluded, but hundreds of corporations still do this because ultimately little impact and they pay for talent.
B) what does it mean wages not included? Personal income tax is paid. At higher rates than corporate tax. Why would that be included anywhere here.

[OSR stands with Israel]

Another thing people don't understand is the profit margins for most large companies. Graph above shows what public opinion THINKS the average profit margin for a company is - 36%, with the mean across various industries actually being less than 10%. Raising taxes on these businesses makes their profit margins even slimmer, hurting the ability of these companies to expand and provide higher wages to their workers.

Implying that 7.5 percent is at all slim. Corporate taxes are only on profits, btw. And I doubt the obscene wages of executives among other things were included.

Those wages are taxed at the individual level

[Since I'm the mad scientist proclaimed by myself]

Another thing people don't understand is the profit margins for most large companies. Graph above shows what public opinion THINKS the average profit margin for a company is - 36%, with the mean across various industries actually being less than 10%. Raising taxes on these businesses makes their profit margins even slimmer, hurting the ability of these companies to expand and provide higher wages to their workers.

Implying that 7.5 percent is at all slim. Corporate taxes are only on profits, btw. And I doubt the obscene wages of executives among other things were included.

Those wages are taxed at the individual level

That doesn't affect my point, which is that executive pay is a huge part of corporate budget.

[Sprouts Farmers Market ✘]

And that is taxed at 37% (plus Medicare tax!) instead of 21% plus 15% of the remainder when paid out as a qualifying dividend (i.e., 33%). But as I just pointed out, more often it is taxed as both because it is such a small part of the budget that large companies that want to be known as good compensators / talent retainers don't mind getting an extra tax on it.