Free-market or subsidised economy?

Skinnywater · Oct 10, 2005

I didn't want to hyjack the other thread. Boomyal and I have some ideas to kick around. Feel free to help with any opinions or facts. We both would benefit from them.

Original statement from Skinnywater;

1. "None of the above" on election ballots. If "None of the above" wins it disqualifies those on that ballot from running again that season. A new campaign and election process is completed in 45 days. 2a. End all forms of corporate welfare. Taxpayer subsidies and corporate tax shelters. No special interest/protectionist legislation. 2b. No Corporate lobbying or campaign money. Close any and all loop-holes in 2a,b.

Response from Boomyal;

1a) Corporate income tax is a joke. Who in heIIs name do you think pays it? Japan has no corporate income tax. How do you think corporate income tax helps American exports. Wake up people and quit trying to play the He/It is richer than me game so he must pay his/its 'fair share'.

Response from Skinnywater;

Who in he11s name do you think pays what they don't? At least level the playing field. If you spout that "America is based on a free market society", then at least get honest with it. There isn't a private business in a "free market" that needs or deserves tax payer handouts. As sure as a free market is allowed to work profitable exports will go to the company that works for it. If they can't compete there will be one made that can.

Response from Boomyal,

Skinnywater, you too must have fallen asleep during Econ 101. Corporations do not pay taxes, their customers do. In fact we pay them twice if we are stockholders and consumers. Once when we buy their products and contribute to their bottom line and once when the corporation pays out it's profit to the share holders in the form of stock dividends.

Skinnywater · Oct 10, 2005

Re: Free-market or subsidised economy?

Boomyal, youve made two references to sleep and wakeup. I just need you to clarify your position. Im talking about responsibility and accountability. Im not sure what your argument is yet so again lets get honest and real. Fact, corporations do pay taxes. If your argument is about individual income tax, Im with you. "Individual Income" tax is immoral to me regardless of the individual that pays. Income tax as it applys to corporations should be just a fair and basic cost of doing business. However, if your argument is one of semantics that is another matter. I get two vague impressions from you. One, is that youre basically saying corporations just pass on the costs of doing business, including taxes onto the consumer. Is it your position corporations shouldnt have any tax liability? The second is, that you dont have a problem with taxpayers subsidizing corporations. This implies you only paid attention in economics 101 where it applied to your own personal principals.

62_Kiwi · Oct 10, 2005

Re: Free-market or subsidised economy?

My 2 cents worth... A corporation is just a group of people (stockholders) who have pooled some money in order to run a business. When profits are made, they can either be paid back to the stockholders (who would then pay income tax on what they receive) or it can be retained by the business to grow the enterprise (usually the best place to leave it in my opinion). Unfortunately, in most countries (including NZ) the tax man forces the company to hand over part of it's profit as tax. Bad move in my opinion. Why not let the corporation keep the cash to expand, create new jobs, build up the economy etc ? The only other thing it can do is give it back to the investors - then it gets taxed. At the end of the day, it's always people that they are taxing. So why tax the money that has been invested? Boomyal makes a good point about consumers paying the taxes indirectly too. Sorry Skinnywater, I'm with Boomyal on this one.

Kiwi Phil · Oct 10, 2005

Re: Free-market or subsidised economy?

You are dead right Kiwi 62. This taxing of undistributed profits is wrong. Especially when Company tax rates exceed 30c in the $1 from $ no 1. It makes it very difficult to invest in or expand your business. As a partnership, we pay tax on all profit, and then if we re-invest via expansion with what is left after tax is paid, we can only claim it as an expence via annual depreciation rate. I have had major expansions in past few months. The $20K that went in concrete can be depreciated at 2.5%. That is utter B/S. I had to make a profit of around $28K to have $20K left after tax, then they allow me 2.5% = $500 per year depreciation = about $150 in the 1st yr, and deminishing thereafter. Personally I believe there should be NO income tax on individuals or Company's. In it's place there should be a consumption tax of around 20-25% on EVERYTHING you purchase. If you don't want to pay tax, then don't spend. There would be no need to do tax returns, no need for accountants, no need for the thousands of Tax Dept employees. Business would collect the Consumption Tax and return it to the Tax Dept. The Tax Dept would allow business to keep 1% of the Tax to cover their expenses. The person that dosn't or can't pass on this Tax to the next person, pays it. No one can avoid paying the same rate as anyone else. Cheers Phillip

Skinnywater · Oct 10, 2005

Re: Free-market or subsidised economy?

Why not let the corporation keep the cash to expand, create new jobs, build up the economy etc ?

Alright, so you're for not taxing them. Are you for going a step further by actually paying them up-front in taxpayer subsidys for what they would do anyhow? How about a tax credit where they not only <don't> pay any tax but they actually get paid lump-sum cash from the treasury? Why allow a corporation freedom from taxes, when a level playing field may allow an individual or a small company to become the next mega corporation? Wouldn't it be more honest and surely promote accountability if we knew just exactly what the consumer pays for a product? Not only at the time of purchase but even include upfront what was paid in subsidys/tax credits before the product was made? If the playing field were that honest the consumer just may make a conscientious shift to a cheaper/better product or service. Again, the result of a free-market. Imagine the consumer opting to do business with a corporation that has a policy of not taking subsidys.

Skinnywater · Oct 10, 2005

Re: Free-market or subsidised economy?

Personally I believe there should be NO income tax on individuals or Company's. In it's place there should be a consumption tax of around 20-25% on EVERYTHING you purchase. If you don't want to pay tax, then don't spend. There would be no need to do tax returns, no need for accountants, no need for the thousands of Tax Dept employees.

Now what you're talking about is something different than what kiwi62 is saying. And you're now in line with what I'm saying. A level playing field with the consumer/taxpayer actually in control of the tax he pays. Yep, that will make not only an honest economy, but a very strong one too.

Kiwi Phil · Oct 11, 2005

Re: Free-market or subsidised economy?

I realise I got away from what Kiwi 62 was getting at. I often feel that to be critical of something, I should endeavour to have a constructive alternative. Hence the 2nd part of my post. Now back to the 1st part. When you talk of tax payer subsidies or the like to Corporations or Company's: well that is something that does not exist here, so I am not in a position to understand that. What I do believe (when no subsidies etc exist) that Companies and Corporations should not pay tax on their profits, because these profits are either passed to the shareholders as dividends, and the recipients pay the tax, or the money is held in reserve for future development and expansion. As this does not happen in our Society, it is very difficult for any businessman to survive and expand as the Taxman not only takes a cut from the income the businessman recieves as income, but from the profit he uses to expand. To survive and expand a business in this type of system is very difficult. If I was not hampered like this, I would be a lot bigger, have more staff, produce more profit and the Taxman would recieve a lot more revenue from my operation. That's just how I feel about it. I know it is not going to change. Cheers Phillip

kenimpzoom · Oct 11, 2005

Re: Free-market or subsidised economy?

Everybody always argues over who should pay the tax. Guess what, it doesnt solve the underlining problem. Either Peter will pay, or Paul will pay, but one way or another, the goverment will get their money. Arguing flat taxes, corporate taxes, etc, etc is just a diversionary tactic used by our government to make us forget the real problem...SPENDING. Ken

Haut Medoc · Oct 11, 2005

Re: Free-market or subsidised economy?

Tell that to Dubya!....JK

txswinner · Oct 11, 2005

Re: Free-market or subsidised economy?

Begin with the understanding that we do not have free enterprize. We have corporate monopolistic enterprize at best. Without a government to break up the monopolistic industries a capitalistic economy can not flow and therefore supply and demand are not defensible.

Skinnywater · Oct 11, 2005

Re: Free-market or subsidised economy?

When you talk of tax payer subsidies or the like to Corporations or Company's: well that is something that does not exist here, so I am not in a position to understand that. What I do believe (when no subsidies etc exist) that Companies and Corporations should not pay tax on their profits

Very good Phil, you're making my argument very easy. I often debate an argument against a popular view. Very common the one that argues their popular position won't take into account "causes and effects". They look at the statis-quo and won't ask the question "If this were to happen, what would be the effect?" More often than not there is the real possibility that the effect could be very positive. And lets apply it here;

Begin with the understanding that we do not have free enterprize. We have corporate monopolistic enterprize at best. Without a government to break up the monopolistic industries a capitalistic economy can not flow and therefore supply and demand are not defensible.

Statis-quo manipulates the economy and the effect is the tail wagging the dog. Many beleive that a monopoly is one business in control. But in this country we have a handful that are in control. The effect is the same. They control the market, prices and even legislation as it applys to their own protection. While many who claim to be all that in economics101 and staunchly defend the statis-quo fail to understand that this policy completely limits honest growth and leaves the consumer completely at their mercy. Yes the consumer does pay the costs of doing business, including tax liabilitys. However, if the consumer/taxpayer is paying for the up-front costs and assumes all the liabilitys than that now translates to the consumer/taxpayer having bought and paid for the company. We're talking huge numbers and elaborate policy here. We should mull them over a bit. http://www.ctj.org/corpfed04an.pdf An important note; I honestly beleive that the statis-quo is the result of both political partys and in no way am I placing the current administration at any greater fault than any prior for the last 80 years.

Kiwi Phil · Oct 11, 2005

Re: Free-market or subsidised economy?

Here is another view a bit outside the circle. If I could expand out of profit (that profit not being taxed) then me an probably millions of other small business's would be able to easily compete with the monopolies. Monopolies are very easy to 'knock off' in the market place. Surprisingly buyers like dealing with real people. The way sales reps see themselves is often different to the way buyers see them. If a monopoly is a Public Compamy, then to raise funds for expansion, it issues shares to be taken up by private individuals, who have themselves paid tax on the money before they had it available to invest. For me to expand, it is very different. The easiest way to break up Monopolies, is to introduce competition. Monopolies are very fragile outfits, inveriably top heavy, and in an economic sence, very inefficient. Small business can be efficient in product and service, and generally better to deal with. I always go to 'small business' for my purchases. I had to buy 3 Stock Picker Ladders the other day ($1,700). I went to a small operator, told him the make and Ref No. and told him what the big Hardware superstore quoted me. "Not a problem Phillip, I'll meet that price and deliver them when in". BANG!! deal done. Do it where-ever possible. It is a nice circle. I assume the 'status-quo' you talk of are the mice that spend their lives running around the inside of a circular ladder. If they could ever realise the power they would have if they all joined together, is massive. If they all decided to destroy the current Oil Monopolies, they could probably do it inside 14 days. It won't happen: That's why they are called the 'status-quo'. Cheers Phillip

Free-market or subsidised economy?

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