"The Corporation"

[peter eldergill]

I have seen a couple of episodes of this documentary style show and found it pretty interesting although I am certainly more skeptical of these types of shows.

They try to show that corporations, if treated as a "person", would be considered a psychopath.

I really enjoyed it and they even had Michael Moore on it, so you know it must be 100% true and unbiased 8-[

Anyhow, it's a Canadian show but mostly deals with American corporations, as they are much larger and more prevalant than Canadian ones...

Pete

[The Supreme Canuck]

I watched this in my geopolitics class last year. It was alright. I found that some of the arguments made were rather poor.

For a very good documentary that is unbiased, look at Errol Morris' The Fog of War. The cinematography and music alone blow The Corporation and anything by Michael Moore out of the water. On top of that, it happens to be insightful and rather apolitical/non-partisan.

[montebianco]

Haven't seen it, and don't much care for political woo-woos like MM, regardless of their stripes. But people who study corporate governance mechanisms have pointed out, often quite explicitly, the problems with treating a corporation (or any other organization, for that matter) as if it were an individual.

[The Supreme Canuck]

...don't much care for political woo-woos like MM, regardless of their stripes. But people who study corporate governance mechanisms have pointed out, often quite explicitly, the problems with treating a corporation (or any other organization, for that matter) as if it were an individual.

Yep, you sound like me. I like my documentaries to be unbiased so that I can draw my own conclusions. I don't like people ramming disingenuous political arguments down my throat.

[TriangleMan]

They try to show that corporations, if treated as a "person", would be considered a psychopath.
Actually if one were to anthropomorphize pretty much anything it would be considered a psychopath, including most animals. It's not like people expect corporations to have as their main goals to get along well with competitors, share their toys, and raise their subsidiaries up right. :)

[sarongsong]

...They try to show that corporations, if treated as a "person", would be considered a psychopath...Now, if they'd only pay their taxes as a "person" is obligated to...

[farmerjumperdon]

Capitalism appears to be the best economic system going in that it creates such nice incentives; the downfall being that there is very little incentive for social responsibility. So we invented democracy, which pretty quickly got bought out by capital. In my eyes, the experiment is still underway.

[genebujold]

Large corporations never behave like people. Rather, they behave very defensively (lots to protect), paranoically (lots of threats), schizophrenically (unless under a very strong central leadership), moronically (when not under intelligent leadership), and agorophically (when under attack, even if it's from a dissatisfied customer).

Sadly, large churches and religious organizations often behave the same way.

[tracer]

Now, if they'd only pay their taxes as a "person" is obligated to...
I've found that most of the weeping and wailing about how low corporate income taxes are in the U.S. seems to carry with it the implication that having low taxes for corporations essentially means low taxes for rich people.

This is not really the case. In order for an individual to get rich from a corporation, he's got to either (A) sell the corporation's stock for more than he purchased it, or (B) get paid a large salary or other kickbacks by the corporation. In both cases, this money is considered the income of the rich person himself, not income of the corporation, and is taxed at the higher individual income tax rate.

[montebianco]

Now, if they'd only pay their taxes as a "person" is obligated to...
I've found that most of the weeping and wailing about how low corporate income taxes are in the U.S. seems to carry with it the implication that having low taxes for corporations essentially means low taxes for rich people.

This is not really the case. In order for an individual to get rich from a corporation, he's got to either (A) sell the corporation's stock for more than he purchased it, or (B) get paid a large salary or other kickbacks by the corporation. In both cases, this money is considered the income of the rich person himself, not income of the corporation, and is taxed at the higher individual income tax rate.

The corporate tax rate is not so low in the US (unless we're talking about S corporations). But if a standard-issue C corporation is able to pay little or no taxes, it is because it has little or no income by the definition enshrined in the tax code (of course, there is out-and-out fraud sometimes, but that's another issue), and the tax code does have scope for manipulation of income. The US is a little unusual among developed countries in the ratio between corporate and personal income tax rates...

[Taks]

curious where you all think corporate taxes actually come from? give you a little hint... who buys their goods?

simple math...

taks

[CharlesEGrant]

curious where you all think corporate taxes actually come from? give you a little hint... who buys their goods?

simple math...

taks

Is your implication that consumers will end up paying 100% of the corporate taxes?

That would only be true if demand were completely inelastic, and there darned few markets that are completely inelastic.

simple economics ...

[CharlesEGrant]

Now, if they'd only pay their taxes as a "person" is obligated to...
Back when the U.S. had a draft (and I was subject to it), a "modest proposal" occurred to me: if corporations had the status of a person before the law, then they should also have the obligations of person, and be subject to the draft. My idea was that for the term of service a "drafted" corporation would produce goods for the government at cost. A completely impractical notion I'm sure, but the idea of the Boeing board of directors getting a letter from the DoD that began "Greetings ..." tickled me at the time.

[sarongsong]

You can have your cake and eat it, too:
"...By what tortured reasoning did the Supreme Court decide that corporations were protected by the 14th Amendment, which everyone knows was enacted to protect the rights of real people?...Here's what happened. Santa Clara County in California [1886] was trying to levy a property tax against the Southern Pacific Railroad. The railroad gave numerous reasons why it shouldn't have to pay, one of which rested on the 14th Amendment's equal protection clause: the railroad was being held to a different standard than human taxpayers..."
http://www.straightdope.com/columns/030919.html
April 2004
"More than half of US corporations paid no federal income taxes during the boom years of the late 1990s...The corporate income tax rate is ostensibly 35 percent, but companies are able to reduce their effective burden by claiming various deductions and credits. US companies paid an average of $11.88 in corporate taxes for every $1,000 in gross receipts..." Los Angeles Times (http://www.boston.com/business/globe/articles/2004/04/11/most_us_firms_paid_no_income_taxes_in_90s/)

[montebianco]

Is your implication that consumers will end up paying 100% of the corporate taxes?

That would only be true if demand were completely inelastic, and there darned few markets that are completely inelastic.

simple economics ...

I don't know what the original poster's implication was, but 100% of corporate taxes are paid by individuals, which would include, among others, consumers and investors.

[TriangleMan]

If corporations wind up with no tax bill because of deductions and credits it is not their fault, it is the fault of the tax legislation that allows those deductions. Your beef should be primarily with the Government sarongsong, the corporations are a far 'second-place' for blame.

[montebianco]

If corporations wind up with no tax bill because of deductions and credits it is not their fault, it is the fault of the tax legislation that allows those deductions. Your beef should be primarily with the Government sarongsong, the corporations are a far 'second-place' for blame.

I would agree with that sentiment, and would add that, in the US and many other countries, directors of a corporation have a fiduciary duty to represent the interests of their shareholders. If, for example, they pay more taxes than they are legally obligated to do, they could (theoretically at least) be sued by their shareholders. I'd also guess that not too many people on this board knowingly and willingly pay more taxes than they are required...

[farmerjumperdon]

I have to agree that consumers pay all taxes, at least in everything other than the very short term. Any company selling goods and services must pass along ALL of it's costs, plus charge a little margin for profit. If they did not pass along all of their costs, they would go broke. You can play games with the terminology, and certainly the accountants play games with the money, but at the end of the day you: sell your product, pay your bills, pay taxes on the profits, and put the balance in your pocket. The money to pay those taxes comes from consumers. In a bit of the kind of foolishness only legislators get to dabble in, the Minnesota House of Reps proposed caps on fees health care companies could charge, while also proposing new taxes those companies would not be allowed to pass on to consumers. DOH! It's tempting to say they are either incompetent or crooked; but they actually do this stuff all the time just to make a point, and to insult people on the other side of an issue.

My only problem with the tax code is that it is so convoluted. I always liked the idea of the only tax being on natural resources at the point of first sale following extraction. So the only things taxed would be stuff like forestry, fishing, mining, agriculture, slaughterhouse output, pumping crude, etc. These are the bottom line resources that sustain society. A nice simple one-time sales tax to the buyers of natural resources, which would of course be passed along the chain of refinement and consumption without all the loopholes, special interests, subsidies, etc.

We would not need half the lawyers and three-quarters of the accountants; who could all be loaded up on the B Ark and sent away.

[Taks]

Is your implication that consumers will end up paying 100% of the corporate taxes?
exactly where do you think corporate income comes from? consumers. granted, with international corporations, some of their income comes from consumers in other countries, but in the end, they're still consumers.

That would only be true if demand were completely inelastic, and there darned few markets that are completely inelastic.

simple economics ...
it has nothing to do with demand. all income from any coporation is derived from the consumers of its products. period. can't get much simpler than that. the consumers are tax payers.

taks

edit: investment income (among others) is a different story, but taxes on such income still comes out of the corporate bottom line, which is paid by the consumers.

[montebianco]

That would only be true if demand were completely inelastic, and there darned few markets that are completely inelastic.

simple economics ...
it has nothing to do with demand. all income from any coporation is derived from the consumers of its products. period. can't get much simpler than that. the consumers are tax payers.

taks

edit: investment income (among others) is a different story, but taxes on such income still comes out of the corporate bottom line, which is paid by the consumers.

If the corporate income tax were eliminated, it is doubtful in the extreme that all corporations would lower the prices of their products by the amount of the tax, thereby passing 100% of the reduction on to consumers. The properties of demand in markets for products, labor, capital, etc., will determine how the benefit is split up. But it won't be 100% to consumers. And then, one must also consider what else is done here - does the government now cut spending by the same amount? Raise other taxes? Run a deficit? All of which also have effects.

[Taks]

If the corporate income tax were eliminated, it is doubtful in the extreme that all corporations would lower the prices of their products by the amount of the tax, thereby passing 100% of the reduction on to consumers.
two things...
one: that's not the point. the point is quite simply that consumers pay the tax. now, certainly, coporate income tax is actually a usage tax, which makes it much more fair than anything individuals pay directly.

two: yes, actually, since margins would increase, competition will force prices down. as soon as any coporate bottom line shoots up 11.8% (based on numbers posted earlier), an opening in the market for a leaner operation appears. the total difference may not be passed on, but a significant portion would be.

The properties of demand in markets for products, labor, capital, etc., will determine how the benefit is split up. But it won't be 100% to consumers.
i agree, and stated as much just above.

And then, one must also consider what else is done here - does the government now cut spending by the same amount? Raise other taxes? Run a deficit? All of which also have effects.
i agree here as well. this is why i think less convoluted corporate taxes are actually a better idea. i'm still not fully on board with a national sales tax, but that's the right direction (personally, i think the gov't should get out of the social services business, but that's another topic).

taks

[montebianco]

If the corporate income tax were eliminated, it is doubtful in the extreme that all corporations would lower the prices of their products by the amount of the tax, thereby passing 100% of the reduction on to consumers.
two things...
one: that's not the point.

It may not be your point, or the original poster's point. I believe it was CharlesEGrant's point, which was subsequently criticized. Although I suspect he may have misinterpreted sarongsong's remarks (who has been back but did not clarify), I do agree with the second part of his post, that the properties of demand determine who effectively pays the tax.

the point is quite simply that consumers pay the tax.

That strikes me as a totally arbitrary definition. [begin devil's advocacy]I could just as easily argue that corporations pay much of the individual income tax, because many individuals derive much or all of their income from their employers, who are the customers for their labor. I could even argue that the government pays the corporate income tax, because some consumers receive pension, disability, or other forms of income from the government.[end devil's advocacy] Now, if we replace "consumers" with "consumers, workers, and investors," then I like the statement a lot better. Individuals pay the tax. Some of the those individuals are consumers.

two: yes, actually, since margins would increase, competition will force prices down. as soon as any coporate bottom line shoots up 11.8% (based on numbers posted earlier), an opening in the market for a leaner operation appears. the total difference may not be passed on, but a significant portion would be.

It would probably be almost the entire amount in some industries. It may be hardly anything in others. The point that was made earlier, and which was subsequently criticized, was that the properties of demand in the different markets are what will determine how much is passed on to consumers, how much to investors, how much to other parties. And in a discussion of the merits of various forms of taxation, I think that is a highly relevant point...

[CharlesEGrant]

Any company selling goods and services must pass along ALL of it's costs, plus charge a little margin for profit.
That may be how some small businesses work, but I think corporations work very differently. To 0th order, coprorations do a lot of reserach to figure out how much of their product they can sell at a given price. They then choose chose the price point that they think maximizes revenue. That price point is determined by the market, not by the corporation's costs. Because demand is usually elastic corporations are not free to simply pass along all their costs. They don't charge 'a little margin' for profit, they charge as much margin as the market will support, be that 100% or be that 5%. If the margin sinks below the rate of return from other investments they get out of that business.

Think about selling a house. A purely rational economic actor would try to figure out the hightest price the house would sell for, and they put it on the market at that price. They can't pick that highest price and then add 6% to cover the real estate comission, because the market wouldn't support that price.

[Taks]

Individuals pay the tax. Some of the those individuals are consumers.
individuals is a better term, agreed.

The point that was made earlier, and which was subsequently criticized, was that the properties of demand in the different markets are what will determine how much is passed on to consumers, how much to investors, how much to other parties.
using the term individuals relieves that burden. this is where i was coming from, though i should not have used the term "consumers." however, i was using it in a broad sense, implying all sources of income.

taks

[montebianco]

Taks, if your perspective on this is that many people seem to think that corporations are space aliens with boatloads of money which can be confiscated for the benefit of humanity, then I am in full agreement with you, yes, many people have this rather bizarre spin on it :D

[boppa]

i agree here as well. this is why i think less convoluted corporate taxes are actually a better idea. i'm still not fully on board with a national sales tax, but that's the right direction (personally, i think the gov't should get out of the social services business, but that's another topic).

quote by Taks

im almost 100% opposite
:-O
personally i feel that a flat taxationrate across board would be fairer
every`body' would pay a single flat 10%(or whatever)
if ya made a buck-you pay 10 %
if ya made 100billion bucks-ya pay 10%

(and im 180 deg on social services too.that will not ever be a profitmaking service-so unprofitable services sould be the only business a govn should be involved in)
thats the purpose of paying taxes
i NEVER(lol) drive on 99% of roads or personally `fight of' an invading force
so why should i pay for them???
because its `the govn' job to provide safe roads and a safe country for all its citizens
so they should only be involved in social services-the ones im not likely to ever use-but
also the ones that protect that countries citizens health and wellbeing..

my 2c(adjusted for inflation $5.00minus tax relief -$28.98)

[Taks]

because its `the govn' job to provide safe roads and a safe country for all its citizens
safe country, yes... safe roads, i'm not so sure. well, not fully. this is a murky area suited for another message board entirely.

i'm the ultimate capitalist... i don't want anything even remotely socialist driving my life. :)

taks

[Taks]

Taks, if your perspective on this is that many people seem to think that corporations are space aliens with boatloads of money which can be confiscated for the benefit of humanity, then I am in full agreement with you, yes, many people have this rather bizarre spin on it :D
yes, actually, i think most people see it that way. well, if you look back at my original post, i responded to someone complaining (kinda) about corporate taxes being low in the US. there's a fundamental issue in the world driving people away from capitalist ideas. for some reason, people choose to see corporations as living entities (the basis of this whole thread) with evil intent. they are not. they are nothing more than the money (generalization) we, the people, pour into them. people don't see individuals behind corporations, they see the corporation. a flawed view, IMO. in the end, the individuals are the corporation, taxes, products, workers, investors and all...

taks

[TriangleMan]

every`body' would pay a single flat 10%(or whatever)
if ya made a buck-you pay 10 %
if ya made 100billion bucks-ya pay 10%

And if you were a British mining company that mined gold in the US, then shipped to the UK and sold it there you'd pay the IRS -- zero? 10%? What about the British taxes on the income earned?

How about if US company XYZ opened a subsidiary in Hong Kong and transferred their investment portfolio there. How much tax would they pay in the US on their investment earnings?

What about taxes at the state and municipal levels?

What about import and customs taxes?

What about non-cash payments for services rendered?

What about the money charities receive and shouldn't there be incentives to encourage people to make charitiable donations?

. . . and so on. Tax is a complicated business, especially once you get into corporate and income taxes and the various scenarios that occur in everyday lives. Historically tax legislation was fairly simple when it was first introduced but as various scenarios and loopholes came to the attention of the tax authorities more rules were needed to clarify the issues. End result - complex tax codes. The only personal income and corporate flat tax % that will ever work, without adjusting it for scenarios, is 0%.

[montebianco]

i agree here as well. this is why i think less convoluted corporate taxes are actually a better idea. i'm still not fully on board with a national sales tax, but that's the right direction (personally, i think the gov't should get out of the social services business, but that's another topic).

quote by Taks

im almost 100% opposite
:-O
personally i feel that a flat taxationrate across board would be fairer
every`body' would pay a single flat 10%(or whatever)
if ya made a buck-you pay 10 %
if ya made 100billion bucks-ya pay 10%

In almost any industrial country, the rate will be a lot more than 10%, unless spending is cut a lot...

(and im 180 deg on social services too.that will not ever be a profitmaking service-so unprofitable services sould be the only business a govn should be involved in)
thats the purpose of paying taxes
i NEVER(lol) drive on 99% of roads or personally `fight of' an invading force
so why should i pay for them???

Well, do you? Maybe you only pay for the 1% of the roads you use (and you probably use those 1% much more than the average member of the public uses those particular roads!), and you don't fight off invaders personally because you pay an army to do that for you should the need arise.

But to the first point, no, they will always be unprofitable, as long as the government provides them free of (direct) charge. But both of these activities have been highly profitable at various places and times...

[montebianco]

And if you were a British mining company that mined gold in the US, then shipped to the UK and sold it there you'd pay the IRS -- zero? 10%? What about the British taxes on the income earned?

How about if US company XYZ opened a subsidiary in Hong Kong and transferred their investment portfolio there. How much tax would they pay in the US on their investment earnings?

Hee hee, highly appropriate points for a person from Bermuda :D

But seriously, you are right, tax codes are not complicated because they have different rates. They are complicated largely because they have to define income. Going to a flat rate doesn't solve that problem...

[boppa]

im no economist(sp?)

but here companies that make multibillion dollar profits to their shareholders end up with the govn owing them tax due to loopholes

we have what is known as the gst

unfortunately it also has holes that seem to end up with someone earning 10g a year owes 1/3 to the govn
when people makeing more than our entire states yearly income owe 10 bucks... ;-(

if they make 10 billion-10%
if i make 10g -10%
when i make 10 billion ill happily pay 10% too

as long as it is equal for everyone

[montebianco]

but here companies that make multibillion dollar profits to their shareholders end up with the govn owing them tax due to loopholes

I don't doubt that some corporations make a lot of money and pay little or nothing in taxes, but do keep in mind that the shareholders pay personal income tax on the profits they receive...

we have what is known as the gst

unfortunately it also has holes that seem to end up with someone earning 10g a year owes 1/3 to the govn
when people makeing more than our entire states yearly income owe 10 bucks... ;-(

if they make 10 billion-10%
if i make 10g -10%
when i make 10 billion ill happily pay 10% too

as long as it is equal for everyone

You are from Australia? Unless spending is cut dramatically, if it is equal, you'll pay a lot more than 10%.

[boppa]

Quote:

(and im 180 deg on social services too.that will not ever be a profitmaking service-so unprofitable services sould be the only business a govn should be involved in)
thats the purpose of paying taxes
i NEVER(lol) drive on 99% of roads or personally `fight of' an invading force
so why should i pay for them???



Well, do you? Maybe you only pay for the 1% of the roads you use (and you probably use those 1% much more than the average member of the public uses those particular roads!), and you don't fight off invaders personally because you pay an army to do that for you should the need arise.

um i think you are reading it opposite to what im intending it to read ???

im quite happy to pay taxes to provide safe roads everywhere-and to have an army too

that is the govn job-i dont drive on every road so my taxes pay for all roads in .au-even tho i dont drive on them

that is what i meant by it the govn's job to provide social services
services i may or may never need-but benifit the entire country

services that in a $$$ benefit to me may not ever be used by me at all
but maybe i `may' need them one day
or maybe not..
but they benifit my country
hence the name socal services
they benefit society

[TriangleMan]

if they make 10 billion-10%
if i make 10g -10%
when i make 10 billion ill happily pay 10% too

as long as it is equal for everyone
I pointed out in my previous point boppa some scenarios that suddenly cause problems for 'flat tax' strategies. With a bit of time I could come up with dozens more.

Hee hee, highly appropriate points for a person from Bermuda
That's why I made my point about 0% flat income tax rates - that is the income tax rate in Bermuda. :)

[boppa]

You are from Australia? Unless spending is cut dramatically, if it is equal, you'll pay a lot more than 10%.


thats the problem

it isnt equal
not one of our top 10 richest %##@ paid more tax than me in the last year
or anyone else thats an average wage earner

10% across the board
end of story
no more i own 16 houses and spend more every minute than you make in a year-but legal shenanigans mean i get owed tax-while you poor suckers pay 1/3(ADD- of your yearly wage) to support me in the custom in which i think i should be
im going to leave off here-i just got my tax bill and im getting a bit `annoyed' about the whole deal-before i say something that gets me in trouble..
house spin wins yet again
:-(

[TriangleMan]

it isnt equal
not one of our top 10 richest %##@ paid more tax than me in the last year
Are these individual people or corporations? If they are corporations would you mind posting the names of one or two of them? I'll take a look at their financials and see what happened that caused them to report losses during the prior taxation year.

[montebianco]

You are from Australia? Unless spending is cut dramatically, if it is equal, you'll pay a lot more than 10%.


thats the problem

it isnt equal

I don't think you caught my point there :)

not one of our top 10 richest %##@ paid more tax than me in the last year
or anyone else thats an average wage earner

Can you provide a reference on that? I'm not familiar with tax law in Australia.

10% across the board
end of story
no more i own 16 houses and spend more every minute than you make in a year-but legal shenanigans mean i get owed tax-while you poor suckers pay 1/3(ADD- of your yearly wage) to support me in the custom in which i think i should be
im going to leave off here-i just got my tax bill and im getting a bit `annoyed' about the whole deal-before i say something that gets me in trouble..

My point is, you're going to have to cut government spending dramatically if you want your tax bill to be 10%. By the numbers I have on hand, Australian government expenditures are about 37% of national income. So if you are paying 33% of your income in taxes, that's not too far from an equal share. If it is made equal, your taxes would probably go up, not down.

[Taks]

it isnt equal
not one of our top 10 richest %##@ paid more tax than me in the last year
or anyone else thats an average wage earner
the top couple % in the US pay about half of all income taxes... the bottom 20% (roughly) don't really pay anything other than the so-called "payroll tax" (social security).

taks

[TriangleMan]

I did a quick Google and found a large Australian corporation (not sure if it's the biggest), Telstra. It's recent annual report showed pre-tax net income of $6.27b and income tax expense of $1.82b. The Cash Flow Statement indicates that during the year $1.72b of taxes were paid. So about 27% of pre-tax net income was paid in taxes.

[genebujold]

A couple of people have mentioned a flat rate tax.

I'm all for that too, but not like what most people construe as a flat rate tax.

To most, a "flat rate" means a percentage of the gross.

The problem with this is that many industries have very high profit margins, while others have very slim profit margins. Those with high profit margins would hardly feel the tax at all, while those with slim profit margins could very well be wiped out.

That's why we tax on a net income basis, subtracting operating expenses from gross income.

If you take a certain rate (ie, percentage rate) such as 10%, and applied it to the net income, you'd be fine - there's your flat rate tax.

The problem with corporate America today is that they stop with a basic net income, as they also expend just about everything else, including dividends, stock repurches, future investments, etc.

Furthermore, the accelerated cost recovery programs, while spurring capital outlays, does little for the company long-term, and often forces the company to continue to refinance or divest itself of good equipment. A compromise should be reached with respect to cost recovery programs.

While the best way to do this would be to use cost-based accounting, the problem with income and expenses is that they're not consistant. Therefore, the company would loose money as compared to using an accrual-based accounting, which I support.

What we need to do in this country, however, is to stick with a simple tax model like so:

Gross Income
- Expenses
= Net Income
* Flat Tax Rate (x%)
= Tax

And cut the fluff out of expenses.

If the government wants to create incentives, then they should fund the concept of percentage rebates rather than messing with the tax structure.

This would also save corporate America billions of dollars in lost revenue for parasitic functions of tax accountants and lawyers, money which would serve our country better if invested directly into productive functions such as R&D and capital outlays for new equipment and building.

[genebujold]

My point is, you're going to have to cut government spending dramatically if you want your tax bill to be 10%. By the numbers I have on hand, Australian government expenditures are about 37% of national income. So if you are paying 33% of your income in taxes, that's not too far from an equal share. If it is made equal, your taxes would probably go up, not down.

Well, there you go. And it's probably a great motivator as to why we should have a flat rate tax like 10%. Countless studies have shown that the overwhelming majority of a government's income is spent on programs that sound good but contribute very little to the overall health of a nation in financial, political, helth, and military terms.

Then again, if my nation were under threat of attack, I wouldn't say, "nope! Can't have a penny more than 10%..." I'd given 'em half, if necessary, for a short period of time.

The problem is, of course, that once you grow the tree, it takes more just to keep it alive!

[Taks]

The problem is, of course, that once you grow the tree, it takes more just to keep it alive!
further: rarely does an increase go down. the government is not typically in the habit of giving some of itself back.

taks

[Melusine]

I watched this in my geopolitics class last year. It was alright. I found that some of the arguments made were rather poor.

For a very good documentary that is unbiased, look at Errol Morris' The Fog of War. The cinematography and music alone blow The Corporation and anything by Michael Moore out of the water. On top of that, it happens to be insightful and rather apolitical/non-partisan.
The Fog of War is very good (I bought that one), but it's just as biased as The Corporation; all documentaries have an inherent bias in them, there's no getting around that--some are just worse than others. In fact, The Fog of War is probably more biased since it's focus is mainly on McNamara's interviews, and time does have a way of affecting one's views. But I saw The Corporation over a year ago in the theater and highly recommend it. I regretted at the time that Michael Moore was in it, because it would turn off people who don't like him, but his part in it is small indeed. His interview is simply to make the point that it's all about the bottom line, and that corporations pay him to slay them. They don't care--whatever makes money.

It focuses on the evolution of the corporation and its distancing from the public commons into privatization to the degree where corporations claim intellectual prperty rights to life forms; they mention water in South America owned by a corporation. Ray Anderson from Interface has an epiphany after realizing the damage his carpet business is doing to the environment; he realizes the Industrial Revolution was a failure. The film has many humorous moments, thankfully, or it would be so depressing. It's pretty difficult to change legislation when so many legislators are on boards of major coporations and they (the legislators) are so beholden to them.

It's definitely a worthwhile film to see.

Nobody has given a decent proposal of how to go to a flat tax plan, so it's a pipe dream that keeps disappearing. You can't just go to a flat tax just like that without people financially suffering. We, in the US, have so many loopholes and tax credits (mortgages, child credits, itemizing, losses, etc, living wills, etc, etc, etc) that there is no effective plan to eliminate these and just go flat tax. The idea floats around, then goes away as usual. For a flat tax to be fair, every loophole would have to go away--it just won't happen. This isn't the place to link the pros and cons, but there is plenty out there on the topic.

[montebianco]

um i think you are reading it opposite to what im intending it to read ???

Perhaps, but you asked the rhetorical question of why you should pay for the army when you don't fight invaders personally. Are you sure you meant to word it this way?

[montebianco]

My point is, you're going to have to cut government spending dramatically if you want your tax bill to be 10%. By the numbers I have on hand, Australian government expenditures are about 37% of national income. So if you are paying 33% of your income in taxes, that's not too far from an equal share. If it is made equal, your taxes would probably go up, not down.

Well, there you go. And it's probably a great motivator as to why we should have a flat rate tax like 10%. Countless studies have shown that the overwhelming majority of a government's income is spent on programs that sound good but contribute very little to the overall health of a nation in financial, political, helth, and military terms.

I'm not sure if you are disagreeing with something I said, or just taking it in a different direction. I would point out that "flat" is different from "low" - there can be high and flat, low and flat, high and graduated, or low and graduated.

But boppa earlier was arguing that s/he thinks the government should provide a lot of services (perhaps comparable to current level? If so, in Australia, that's pushing 40% of national income), and would also like to have a flat tax rate of 10%. I'm pointing out that these are rather inconsistent objectives...

[genebujold]

Nobody has given a decent proposal of how to go to a flat tax plan, so it's a pipe dream that keeps disappearing. You can't just go to a flat tax just like that without people financially suffering. We, in the US, have so many loopholes and tax credits (mortgages, child credits, itemizing, losses, etc, living wills, etc, etc, etc) that there is no effective plan to eliminate these and just go flat tax. The idea floats around, then goes away as usual. For a flat tax to be fair, every loophole would have to go away--it just won't happen. This isn't the place to link the pros and cons, but there is plenty out there on the topic.

Not all loopholes would have to go away. You wouldn't want people to be able to personally expense things, but you would also want to ensure they receive a reasonable cut (say half of what it costs) for normal expenses, and to adjust for varieties in their family situations.

For personal taxes, a good flat tax plan would involve a simple, one-page table of standard deductions with the marital status along one side (single, married, separated, divorced, etc.) and the number of kids along the top. That standard deduction should be large enough to ensure that those at or below the poverty line aren't paying taxes.

The flat tax would only apply to net income after std deduction was subtracted from gross.

Obviously some people do have unusual circumstances, such as horrendous medical bills. However, I again believe that this is no more a tax issue than subsidies are for corporations. Instead of subsidizing health care through tax breaks, the government should simply offer percentage rebates using simple tables based upon the medical need and ability to pay over the long term.

We're the ones (or the feds) who make it far more complicated than it needs to be.

Would there be an adjustment/transition period? Yes. Would it be catestrophic? No.

[The Supreme Canuck]

I watched this in my geopolitics class last year. It was alright. I found that some of the arguments made were rather poor.

For a very good documentary that is unbiased, look at Errol Morris' The Fog of War. The cinematography and music alone blow The Corporation and anything by Michael Moore out of the water. On top of that, it happens to be insightful and rather apolitical/non-partisan.
The Fog of War is very good (I bought that one), but it's just as biased as The Corporation; all documentaries have an inherent bias in them, there's no getting around that--some are just worse than others. In fact, The Fog of War is probably more biased since it's focus is mainly on McNamara's interviews, and time does have a way of affecting one's views.

<Snip>



You're probably right that The Fog of War is very biased, now that I think about it. The thing is, though, that its bias is more toward the political centre than the left or right. Instead of providing a warmonger's or a peace-lover's view of the world, it presents a pragmatist's view: war is terrible. It is made even more terrible by the fact that it is sometimes needed. McNamara himself, for example, presents the view that the bombings of Hiroshima and Nagasaki were necessary, but also recognizes that they were evil acts. The biggest message that I get from the film is that there are no absolutes; everything is a grey area.

The film's centre-bias fooled me into thinking that there was no bias, as I was thinking of bias in strictly liberal/conservative terms. So, yes, it is biased, but I would still argue that the film is fairly non-partisan as is espouses a roughly centrist view.

Any way that you cut it, though, it is still a deeply moving and profoundly disturbing thing to watch.

[Melusine]

You're probably right that The Fog of War is very biased, now that I think about it. The thing is, though, that its bias is more toward the political centre than the left or right. Instead of providing a warmonger's or a peace-lover's view of the world, it presents a pragmatist's view: war is terrible. It is made even more terrible by the fact that it is sometimes needed. McNamara himself, for example, presents the view that the bombings of Hiroshima and Nagasaki were necessary, but also recognizes that they were evil acts. The biggest message that I get from the film is that there are no absolutes; everything is a grey area.

The film's centre-bias fooled me into thinking that there was no bias, as I was thinking of bias in strictly liberal/conservative terms. So, yes, it is biased, but I would still argue that the film is fairly non-partisan as is espouses a roughly centrist view.

Any way that you cut it, though, it is still a deeply moving and profoundly disturbing thing to watch.
My, we've gotten to the point where the word 'bias' is so loaded! All this left/right business...arghh, I'm finding it frustrating, and often clarification needs to be given before a discussion (my frustration is not directed towards you, SC).

Every documentary is biased in some way--the director has a message, a story to tell, and that's what I meant by inherent bias; it's always a director's/writer's particular bent on a subject. You're right about The Fog of War being more from a pragmatic view. And McNamara said if we hadn't won, we would have been tried as war criminals (I might watch that again tonight).

The Corporation didn't take the view that all corporations are bad, or "down with capitalism." Ray Anderson was an example of a corporation doing the right thing. The film gave the impression that corporations have strayed too far...that they have claimed too much, and that people can reign them in, since, after all, they are constructs of people. I guess since I recently saw the documentary Enron: The Smartest Guys in the Room, I realize how The Corporation just affirms all the Enron business. The Enron film is depressing; unlike The Corporation, there is nothing hopeful about it...you walk away angry and disgusted, and rightfully so. There's your psychopathic behavior.

[The Supreme Canuck]

Well, Melusine, we're in perfect agreement. Even about the frustration. Things are never straightforward, are they?

My, we've gotten to the point where the word 'bias' is so loaded!

I know, terrible, isn't it? It's getting harder and harder to express anything cogently and understandably these days. People can see the same word, but two different concepts. This one was my fault, sorry about that.

But now I want to go and watch the film myself... again. :)

[CharlesEGrant]

for some reason, people choose to see corporations as living entities (the basis of this whole thread) with evil intent. they are not. they are nothing more than the money (generalization) we, the people, pour into them. people don't see individuals behind corporations, they see the corporation. a flawed view, IMO. in the end, the individuals are the corporation, taxes, products, workers, investors and all...
taks
I don't view corporations as inherently evil, but yet I disagree that they are simply the expression of the individuals constituting them. At a superficial level there is the eternal problem that "a committee is a device for getting 10 people, all of whom deeply believe in Plan A or Plan B, to adopt Plan Z". On a deeper level, the essential purpose of the corporation is to place a firewall between the actions of the corporation and the personal liability of the investors. I think this fulfilled the desired goal of raising the capital needed to build the modern world (which I very much like), but I think a side effect was a loss of constraint (which I don't like very much). It is this loss of constraint is the subject of The Corporation. I think even Adam Smith recognized this danger in The Wealth of Nations. He hoped that the "urge to dominate" would be tempered by the fact that merchants would have to live in the communities they made their profits in. I've been reading a lot of corporate scandal books lately (Enron, and the insider trading scandals of the 80s), and I've been amazed by the number of people who said things to the effect of "Well, yes it did seem unethical and maybe illegal, but I was told that the board had OK'd it, and management thought it was good for the bottom line , so I went along with it."

Have you ever considered that large corporations may even be inimical to capitalism? While the CEOs of Enron and Archer-Daniel were crisscrossing the country giving speeches about the wisdom and efficiency of free markets, their management teams back at the store were busy trying to figure out how to rig and subvert those markets.

[Edited to correct spelling]

[peter eldergill]

I am really irritated by the phrase "responsibility to our shareholders" as an excuse to break any inconvenient law or layoff 4000 people anytime that a corporation wants to.

L8R

Pete

[montebianco]

I am really irritated by the phrase "responsibility to our shareholders" as an excuse to break any inconvenient law

I don't think that's an excuse that will get you far in a court of law.

or layoff 4000 people anytime that a corporation wants to.

And in a jurisdiction where a corporation has a right to fire at will (and this right is not surrendered by contract), then they don't need an excuse.

[montebianco]

I don't view corporations as inherently evil, but yet I disagree that they are simply the expression of the individuals constituting them. Well, At a superficial level there is the eternal problem that "a committee is a device for getting 10 people, all of whom deeply believe in Plan A or Plan B, to adopt Plan Z". On a deeper level, the essential purpose of the corporation is to place a firewall between the actions of the corporation and the personal liability of the investors. I think this fulfilled the desired goal of raising the capital needed to build the modern world (which I very much like), but I think a side effect was a loss of constraint (which I don't like very much). It is this loss of constraint is the subject of The Corporation. I think even Adam Smith recognized this danger in The Wealth of Nations. He hoped that the "urge to dominate" would be tempered by the fact that merchants would have to live in the communities they made their profits in. I've been reading a lot of corporate scandal books lately (Enron, and the insider trading scandals of the 80s), and I've been amazed by the number of people who said things to the effect of "Well, yes it did seem unethical and maybe illegal, but I was told that the board had OK'd it, and management thought it was good for the bottom line , so I went along with it."

I don't know if anyone has this intention, but the strange notion that taxes on corporations somehow don't come out of the pockets of individuals seems very prevelant. I believe this is what Taks is arguing against.

Have you ever considered that large corporations may even be inimical to capitalism? While the CEOs of Enron and Archer-Daniel were crisscrossing the country giving speeches about the wisdom and efficiency of free markets, their management teams back at the store were busy trying to figure out how to rig and subvert those markets.

[Edited to correct spelling]

This is discussed in some detail in Adam Smith (obviously not these cases, but this idea).

[Taks]

I don't know if anyone has this intention, but the strange notion that taxes on corporations somehow don't come out of the pockets of individuals seems very prevelant. I believe this is what Taks is arguing against.
it is... somehow this has turned into some sort of capitalism debate! :)

Have you ever considered that large corporations may even be inimical to capitalism? While the CEOs of Enron and Archer-Daniel were crisscrossing the country giving speeches about the wisdom and efficiency of free markets, their management teams back at the store were busy trying to figure out how to rig and subvert those markets.

and now they're being prosecuted for such illegal actions... in some cases, convicted.

but none of this is really on topic... oops.

taks

[genebujold]

I am really irritated by the phrase "responsibility to our shareholders" as an excuse to break any inconvenient law

I don't think that's an excuse that will get you far in a court of law.

or layoff 4000 people anytime that a corporation wants to.

And in a jurisdiction where a corporation has a right to fire at will (and this right is not surrendered by contract), then they don't need an excuse.

What? This is not true. No corporation has a right to "fire at will." While they may very well have a responsibility to their shareholders, their shareholders are but one legal entity that has title to the corporation's assets and conduct. Employees under contract are another, as are creditors, and other entities with whom the corporation has contractual obligations. The corporation may "fire at will" anyway, but any breach of contract is subject to lawsuit, and they're not very difficult to win, particularly class-action lawsuits such as resulting from mass layoffs. Of course, the contract must specify a longer term of employment with severence pay if the longer term isn't met. No contract, no recourse.

Legally speaking, the shareholders aren't necessarily the first in line for the corporation's assets, either. They own stock, a percentage of the corporation, not $x or $y dollars, like creditors, or contracts woth $z as do suppliers and subcontractors.

[Heid the Ba']

Tax legislation is complex, not because governments want it that way, but because taxpayers make it so. The legislation reflects case law and appeals in relation to unfair, or perceived as unfair, circumstances.

Once an exception is made for one category, there are further appeals and exceptions for similar categories.

For example: A caravan site owner runs a profitable business and is taxed accordingly. The farmer next door sees this and uses one of his fields to operate a small site; is this taxed as a business or as part of his farm (and consequently at a more favourable tax rate)? If the latter this gives him an unfair advantage in relation to his neighbour. He also begins selling at a farmers market, ok that is ancillary to his farm so taxed as agriculture. If his son, who is a carpenter, takes over at the weekend; is that the son running a business or part of the father's farm? If they operate a bed and breakfast for part of the year how is that taxed?

These are all things that crop up in appeals and tribunals in the UK on a regular basis. In the UK agriculture can't be taxed as business or the farms go bust, if allowed to spread into the business sphere while keeping the tax benefits, businesses go bust.

The other aspect is international, if as Farmerjumperdon suggests timber and agriculture are taxed at source in the US, but not in Canada or China, who will buy their raw materials from the US?

[montebianco]

What? This is not true. No corporation has a right to "fire at will." While they may very well have a responsibility to their shareholders, their shareholders are but one legal entity that has title to the corporation's assets and conduct. Employees under contract are another, as are creditors, and other entities with whom the corporation has contractual obligations. The corporation may "fire at will" anyway, but any breach of contract is subject to lawsuit, and they're not very difficult to win, particularly class-action lawsuits such as resulting from mass layoffs. Of course, the contract must specify a longer term of employment with severence pay if the longer term isn't met. No contract, no recourse.

Maybe you missed the part that said and this right is not surrendered by contract.

[farmerjumperdon]

Any company selling goods and services must pass along ALL of it's costs, plus charge a little margin for profit.
That may be how some small businesses work, but I think corporations work very differently. To 0th order, coprorations do a lot of reserach to figure out how much of their product they can sell at a given price. They then choose chose the price point that they think maximizes revenue. That price point is determined by the market, not by the corporation's costs. Because demand is usually elastic corporations are not free to simply pass along all their costs. They don't charge 'a little margin' for profit, they charge as much margin as the market will support, be that 100% or be that 5%. If the margin sinks below the rate of return from other investments they get out of that business.

Think about selling a house. A purely rational economic actor would try to figure out the hightest price the house would sell for, and they put it on the market at that price. They can't pick that highest price and then add 6% to cover the real estate comission, because the market wouldn't support that price.

OK, so my storyline was a bit flawed on the detail of how much they charge, but the thrust of my statement had to do with the fact that the money to pay taxes comes from the consumer. The detail of how they set price was glossed over.

[montebianco]

OK, so my storyline was a bit flawed on the detail of how much they charge, but the thrust of my statement had to do with the fact that the money to pay taxes comes from the consumer. The detail of how they set price was glossed over.

There has been discussion of this already. If consumer is meant in a narrow sense, I think it is quite arbitrary to say that, because corporate money ultimately come from consumers of their products, that consumers effectively pay the corporate tax. As I stated in an earlier post, since many people work at corporations and derive most or all of their income from salary, we could apply similar reasoning and claim that corporations effectively pay much of the personal income tax. The argument offered here is that the burden of a corporate income tax (relative to raising the same amount of money from some other form of taxation) will not fall entirely on consumers, and may not even fall in large part on them, depending on the nature of the markets for products, labor, etc. The imposition of a corporate income tax could, for example, result in reduced profits for investors, with little direct effect on consumers. It all depends on the elasticities, as someone said earlier...

But if "consumer" is just meant to mean "everyone" here, then, yes, I would agree, corporate taxes are effectively borne by individuals. The only question is, which individuals.

[genebujold]

Maybe you missed the part that said and this right is not surrendered by contract.

Ah! So I did.