Penalizing the Cops
 

Thank you for responding; my reply below yours was written without seeing yours.

Will the owners also pay a separate share of that corporation's liabilities, or will they expect them to be limited to the corporation's assets? If we are treating the corporation's taxes as those of the shareholder, why should we not do so across the board?

I know, I can be a bit of a throwback to 19th century ways of thinking, but it strikes me as important here to remember how much the government is giving them, and how artificial these privileges are.

Penalizing the Cops
 

If they don't want the double taxation, why don't the owners just set it up as a partnership? Pass-through taxation -- no dividends issue, I think (wanker could speak to this better).

Oh, because they want to be shielded from liability. Right. So they actually do really want the corporation to be viewed as separate and apart from them.

Cake, eating, having, like el capitan said.

Penalizing the Cops
 

You socialist taxers make me naseaus. Why don't you just move to France or Gaza already and leave America for the capitalists. Like Club and Spanky. And W.

Penalizing the Cops
 

It is my impression that "W" rather likes to spend taxpayers' money. I'm not saying that is a particularly bad thing given his position, I am simply noting that he does seem to spend a lot of money.

Penalizing the Cops
 

Yes, but he's taking less of mine (relatively). More money to invest in the armaments.

"I think it's very important that Americans understand... tax cuts are always popular, but about half of these tax cuts since 2001 have gone to people in my income group, the top 1 percent. I've gotten four tax cuts.

If really rich people, like Clinton (and Bill Gates and his dad, and Buffett, and Soros and Corzine et al) feel so opposed to the concept of tax cuts to the really really rich, can't they just give the money to the government as a non-deductible patriotic donation? Why is this so problematic. Pay what you think is equitable and SFTU! Commies!

Penalizing the Cops
 

Partnerships and llcs also shield owners from liability. Go back to the benefits world, you have no idea what you are talking about.

Penalizing the Cops
 

I'm not sure why you see a connection between liabilities and taxes.

And it's not as though a corporation is all take and no give. Quite the contrary. Corporations and the private sector in general provide a whole hosts of benefits of the world. Who do you work for?

Penalizing the Cops
 

"double" taxation is just a catch phrase. The better question is whether it makes sense to tax corporate income at two levels, the corporate level and the shareholder level. There are a host of policy reasons and efficiency reasons why not.

Wonk makes the traditional argument that it's to pay for the privilege of becoming a recognized entity. It's a fair argument, but a lousy implementation. If there's some value for which society should be compensated for granting the privilege of incorporation (e.g., limited liability), why base it on income? Why not on gross revenue, or on asset value, or something going to the size of the entity (and hence the value it gets from society), rather than something that fluctuates wildly and bears little resemblance most years to any value the corporation has gotten from society?

And, if we go that far, why not do the more sensible thing and simply tax the dividends (and k-gains, and presumed dividends, if they don't distribute, if you must)? Wonk, I'm sure, will say that it's not fair to have some people pay more of the corporation's value than others, depending on their income. well, easily solved. Tax dividends at whatever personal rate, and then add a 5% (or something) corporate surtax on the dividend. Everyone pays that 5% regardless of whether they paid on the dividends--no offsets, deductions, hiding, etc. Pay it there.

Penalizing the Cops
 

I work for my clients, of course, who include corporations, partnerships, charities, and probably every other form of business conceivable. The form of organization I do this in is a limited liability partnership, a wonderful form of organization that does indeed let me have my cake and eat it, too.

The answer as to what the connection is is quite simple: we rely for limited liability on an entity theory of corporations (or partnerships, or limited liability companies). Yet, to reduce the tax bill of those who participate in these entities, we throw out the entity theory and rely instead on an aggregate theory. I believe our theories should be consistent.

This does not mean I think artificial persons should be taxed to the same extent or in the same manner as natural persons simply because they are each "persons", and I'll leave to economists (who shall never agree) the task of figuring out the relative pros and cons of higher or less high tax rates and differences in individual and corporate rates. I also see plenty of positives to corporations, and hope you didn't read my post as suggesting there were not. All my point means is that I don't believe the argument of "double taxation" has merit as a matter of principal, unless we wish to consistent treat these entities under an aggregate theory.

Penalizing the Cops
 

2.

Penalizing the Cops
 

I don't understand what you mean by this.

I don't understand how you get here either.

Penalizing the Cops
 

Thank you. Good summary. I have no idea why we don't base it on some of those things, or some combination of them. Except that income seems to be a good stalking horse for "ability to pay"; if a company fails to make money, is it really getting much benefit from its incorporation? (I know, the limited liability may be more valuable when it is losing money, but levying a tax on bankrupts does not seem to be a recipe for great tax collections).

Penalizing the Cops
 

Income would be good if there were a life-cycle element to it. As it is, companies engage in all sorts of accounting shenanigans (or, to Wonk, GAAP-approved accounting procedures) to shift income from one year to another, or to make it disappear altogether). It's just not a very good proxy in the real world. For the typical wage earner, it's not bad, but as soon as you throw in any kind of "lumpiness" to the income streams its usefulnes goes out the window.

Penalizing the Cops
 

Isn't the registration and yearly fees that all entities must pay to their state of incorporation/organization and any other state in which they do business a sufficient fee for having the privilege or incorporating/organizing?

Penalizing the Cops
 

The entity theory is that an entity like a partnership or corporation is a separate juridical person, and is to be analyzed as such. This is the basis for limited liability of different forms of entities, and the early days of corporate law are filled with discussion of the entity theory and its implications, which many people had real trouble fully comprehending.

The aggregate theory is the idea that an entity is simply an aggregate of its members, and is the basis for general partnerships and for organizations like Lloyds of London; under an aggregate theory, an entity is simply an extension of its participants.

Aggregations were considered the norm in business organization for centuries, until special purposes corporations were developed and became more and more popular. Since those corporations needed a special act to grant them, they were very limited to the privileged.

The Jacksonians were primarily responsible in the U.S. for the idea that there should be a corporate statute under which people could form corporations at will; they viewed this as a leveling exercise that would make available to ordinary people a privilege of the wealthy. However, in putting the first corporate statutes in place, there was much discussion of how to protect the public by ensuring adequate capital, by levying fees for the privilege, and by requiring corporations to submit themselves to public oversight.

What seems to have happened today is that we have lost sight of the fact that corporations are entities for virtually all purposes, and that this separate treatment is a privilege bestowed by the state. Now people are arguing "double taxation", in other words, aggregate treatment, without seeing that there is any other side to aggregate treatment.

Penalizing the Cops
 

OK, I see where you are coming from there. The problem with that view, regardless of the history, is that entity theory rests on the fiction that an entity is separate an apart from its members.

Penalizing the Cops
 

Exactly - it is a ficiton created by government! And that fiction is the primary benefit of being a corporation. It lets you dispose of interests as securities, it lets you have a corporation with limited liability, and it lets you have a decision making structure separate from your owners.

The federalists would have argued that corporations are horrific things that separate a business from those responsible for it. They would have argued that a corporate charter should only be granted for the public benefit for a project which some legislative body has vetted; they permitted, for example, the incorporation of the Erie Canal. A mere business would have an uphill battle. I always find it interesting how little many modern conservatives want to learn from the federalists. But, this was the time period when the principled federalists were giving way to the pragmatic and self-interested Whigs.

Penalizing the Cops
 

If you live in Delaware, perhaps. Not so much for me.

But what are these fees, how are they set, and why should they go only to the citizens of Delaware, as opposed to every state in which they do business?

Penalizing the Cops
 

To be fair, there are a whole hosts of policy reasons why entities are a good thing. Frankly, I think those severely outweigh the concerns of the federalists. The other thing to note is that, while it's true that a corporation has limited liability, it is not unlimited limited liability. See e.g., the piercing the corporate veil doctrine.

Penalizing the Cops
 

They do. Each entity has to pay a foreign qualification fee to do business in any state other than it's state of organization. It pays an organization/incorporation fee it's home state. These are yearly fees.

Penalizing the Cops
 

Though I note that what is probably the most trusted business in the world, Lloyds of London, has chosen not to avail itself of the protections of a corporation for reasons straight out of the federalist playbook. Now those are principaled conservatives!

Also, whatever the policy reasons for there being entities (and I'm sure we could spend days cataloguing them), the question is are there good policy reasons for treating these things called corporations as entities some of the time but not all of the time.

Penalizing the Cops
 

I'm not familiar with how Lloyds is structured. What's the scoop?

Penalizing the Cops
 

We do so for partnerships and llc's. What's the distinction?

Penalizing the Cops
 

Whenever you get a Lloyds of London policy, the policy is backed by a syndicate of "names", who are wealthy individuals who put their entire net worth at risk to support the insurance. There are then, in any large policy, syndicates to support the syndicates. It is rare to have a Lloyds of London policy that is not backed by the net worth of private individuals that is a significant multiple of the policies insured. I understand Lloyds now has policies other than names-backed policies, but I have met a couple of names who still live every day knowing that they have taken a gamble with their entire net worth. Because of the liability, the underwriting standards are very high.

Penalizing the Cops
 

For limited partnerships and llcs - general partnerships remain unlimited liability entities.

In LPs, the limitaiton on liability was invented by lawyers who used a corporation as the general partner. The form originally had at least one GP with real unlimited liability.

LLCs represent a policy decision to accept the lawyer's scam as a new hybrid form of organization.

Not Kangaroo
 

I had no idea your last name was "Obvious"

Not Taking Any Chances
 

It's probably wise to refrain from making too many assumptions about the audience around here.

Penalizing the Cops
 

This is not really correct. A GP of an LP does not have unlimited liability. It's liability is akin to the liability a director has in a corporation.

The point I was making is that we allow LPs and LLCs to shield themselves from unlimited liability, but we retain only 1 level of taxation (i.e., at the ownership level). So if we are willing to do this for these entities, I don't see a rational purposes for not extending that to corporate entities.

The way I look at tax policy is that the rich enjoy proportionally more from government than do the poor. A rich person has much more to lose if there is lawlessness. When the law breaks down (as in NO) it is not the poor people's homes and the stores that get looted. A poor person did not own the WTC center when it got hit. The rich have more to lose when their is mass destruction. The rich also get more benefit out of our legal system. Rich peoples divorces, murder trials (look at OJ) use up the resources of our legal system. Poor people do not go to trial. They go to small claims court.

In addition, a dollar is worth much more to a poor person (it has more utilitiy or utils) than to a rich person. So you destroy less utils when you tax the rich.

So I am all for the rich paying a disproportionate share of the taxes. However, the problem is the rich help drive the economy. They invest their money more so when you tax them too much the economy suffers and the poor guy gets hurt. You want the rich to invest their money.

So the key is to tax the rich in such a way that you do not damage the economy. That is why I like excise taxes on luxury items etc.

Although the flat tax may be good for the economy I don't like it because the super rich benefit so much. There has got to be a way to soak the rich (as GHWB said it) but not hurt the ecconomy.

But what is rich? Asset rich or income rich? there is a huge difference.

There is a difference, but either way I don't care. They both are the biggest beneficiaries of government services. However, I would prefer to somehow tax the asset rich instead of the income rich because the income rich are actually helping the economy grow and are creating jobs etc.

I think the best way to tax the rich without hurting the poor is to have a graduated residential property tax. You can have a big estate but you will have to pay for it. A big mansion is going to cost you. Investing money in Real Estate does not help the economy. You want the rich to put their money into investments. So if they want to show off and have a big house that is where you can get them.

I don't even know where to start with this one.

Cite please? The rich do not send their kids to public schools, they do not take public transportation, and they are not on welfare. They don't need food stamps, perscription drug benefits, or social security. Yes, they have more assets to protect than the poor, but I think it's at least an even use of resources.

Hence, the need for a liberal interpretation of the 2nd amendment (Hi Penske!)

I would bet by any empiracle study, the overwhelming majority of legal resources are used by the poor in this country. The rich, for example, don't need (or want) a PD.

This is true only if that 1 util remains stagnant. In the real world, a rich person turns 1 util into 1 million utils.

Good luck trying to balance that equation.

Penalizing the Cops
 

This started out as a discussion of a flat tax, with no deductions, no credits, no brackets, etc.

In that context, a tax on dividends is no more a double tax than a tax on wages. In either case, the corporation takes in revenue on which it is taxed, it then pays a portion of that revenue out, either as wages or as dividends. If the corporation gets no deduction for paying wages, then why should the tax payer receive a tax break for dividends?

If we are to look at things in the context of the curent tax regime, then I agree that dividends are a form of double taxation.
I would favor a more integrated approach, eliminating the tax on corporate earnings at both the entity and the shareholder level. However, I would personally lean more toward a system that promotes horizontal parity.

Grant the corporation a dividends-paid deduction. In that regard, cash the corporation pays out as compensation to its stakeholders is deductible, and the cash transferred to the stakeholders, whether in the form of dividends or as wages, is taxable on an equal basis.

They could, but they have no incentive to do so. That's why the government imposes taxes. On the other hand, if you feel so strongly that government provides too much, why don't you offer to take on some of the burden yourself? Pay for the paving and maintenance of your street and relieve the city of Seattle of the burden, allowing them to reduce their overall need to soak the taxpayers?

Penalizing the Cops
 

I've never suggested anything of the sort. My main issue w/r/t dividends has always been that it is inherently unfair to give tax breaks on dividends or capital gains relative to wages.

Osama Six-Pack
 

The House yesterday passed an anodyne resolution commemorating the fourth anniversary of the Sept. 11 attacks. It extended sympathy to the victims and survivors; honored the military, first responders, and others who helped; thanked foreign leaders for their support; declared that America is not waging war "on any people or any faith"; reaffirmed a commitment to the global war on terrorism; and vowed "never [to] forget the sacrifices made" on 9/11 or to "bow to terrorist demands." No one could disagree with that, right? Not quite. The House vote for the resolution was 402-6; here are the six far-left Democrats who voted "no":

John Conyers (Mich.) Barbara Lee (Calif.) Jim McDermott (Wash.) Cynthia McKinney (Ga.) Pete Stark (Calif.) Lynn Woolsey (Calif.)

Penalizing the Cops
 

I have no idea where you got the idea that I supported, approvied of, or engaged in any of this. whatever the source, you were misinformed.

Penalizing the Cops
 

I was speaking of the current regime as well.

Leno on the French
 

One nice thing is a lot of foreign countries are helping us out. Like today, France sent a donation. They sent a truckload of white flags for people to wave when they're waiting to be rescued.