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The Basement
Gibson raided
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<blockquote data-quote="John Roberts" data-source="post: 38954" data-attributes="member: 126"><p>Re: Gibson raided</p><p></p><p></p><p>Yup now i feel guilty... but only a little. I don't have a pool. </p><p></p><p>Corporations pay taxes on their profit at the corporate rate (<strong>first time</strong>) before they distribute some of those earnings to stock holders as dividends. The stockholders are then taxed on that dividend income on their personal returns (<strong>second time</strong>). So that particular stream of revenue is taxed <strong>two times</strong> once on the corporate return and again on the individual return. Since the stockholder arguably owns a fraction of the company, he is taxed twice on his company's earnings. Some public corporations instead of distributing retained earnings as dividends, use that money to instead buy back shares on the open market. This reduces the number of shares outstanding so on paper increases the earning "per share", while earning are the same. This is supposed to push up the stock price that values earnings per share as a valuation metric, and the stockholder pays no additional taxes on this maneuver, while hopefully receiving the benefit of more valuable stock. Of course this is less certain than dividends in hand, that are real money, and you pay capital gains tax on the gain if it works when you sell later, so just give me the dividends please. </p><p>------</p><p>There are fairly large deductions for estate taxes, but very large estates like family businesses get taxed when passed down to children, sometimes forcing the surviving family members to sell the business to pay the taxes. (This can generally be avoided by estate planning). Arguably this is not purely double taxation, but proof that you cannot avoid taxes even by dying. </p><p>-------</p><p>Capital gains are indeed only taxed on the gain or increase of capital at risk while loss of principal is deductible against other gains but only up to the amount of those other gains. (buy low and sell high works best). </p><p>-----</p><p>Outright taxation on simple wealth or possessions is more the practice of state and local governments, AKA excise taxes, for things like cars and houses and even some states charge a tax on business inventory. This would be double taxation if they only collected twice, but it seems to be a chronic condition, repeating annually. </p><p></p><p>I do not deny government the right to tax as needed to pay for all their useful services, I just wish they would spend our money more wisely than they have been. </p><p></p><p></p><p>I hate what lobbyists do, but is is protected speech. We all have the right to petition our elected representatives, and we get the bad with the good. I am not in favor of letting those suckers write the actual bills... No legislator should ever vote on a bill he hasn't read and understood. I suspect that would eliminate pretty much all of them. </p><p></p><p>The "effective" corporate rate (what they actually pay after deductions) and "nominal" corporate rate (what small guys typically pay) are two different animals, which is why the GMs and GEs of the world are not complaining about high tax rates. Only the small businesses end up paying those high nominal rates. </p><p></p><p>This is one kind of tax reform being considered (by some). Lower the nominal rate and close the loopholes, so the government gets the same tax revenue or more, while small business is on a more level footing with big business.. This sounds like class warfare between big business and small.. sorry, mea culpa. </p><p></p><p>JR</p></blockquote><p></p>
[QUOTE="John Roberts, post: 38954, member: 126"] Re: Gibson raided Yup now i feel guilty... but only a little. I don't have a pool. Corporations pay taxes on their profit at the corporate rate ([b]first time[/b]) before they distribute some of those earnings to stock holders as dividends. The stockholders are then taxed on that dividend income on their personal returns ([b]second time[/b]). So that particular stream of revenue is taxed [b]two times[/b] once on the corporate return and again on the individual return. Since the stockholder arguably owns a fraction of the company, he is taxed twice on his company's earnings. Some public corporations instead of distributing retained earnings as dividends, use that money to instead buy back shares on the open market. This reduces the number of shares outstanding so on paper increases the earning "per share", while earning are the same. This is supposed to push up the stock price that values earnings per share as a valuation metric, and the stockholder pays no additional taxes on this maneuver, while hopefully receiving the benefit of more valuable stock. Of course this is less certain than dividends in hand, that are real money, and you pay capital gains tax on the gain if it works when you sell later, so just give me the dividends please. ------ There are fairly large deductions for estate taxes, but very large estates like family businesses get taxed when passed down to children, sometimes forcing the surviving family members to sell the business to pay the taxes. (This can generally be avoided by estate planning). Arguably this is not purely double taxation, but proof that you cannot avoid taxes even by dying. ------- Capital gains are indeed only taxed on the gain or increase of capital at risk while loss of principal is deductible against other gains but only up to the amount of those other gains. (buy low and sell high works best). ----- Outright taxation on simple wealth or possessions is more the practice of state and local governments, AKA excise taxes, for things like cars and houses and even some states charge a tax on business inventory. This would be double taxation if they only collected twice, but it seems to be a chronic condition, repeating annually. I do not deny government the right to tax as needed to pay for all their useful services, I just wish they would spend our money more wisely than they have been. I hate what lobbyists do, but is is protected speech. We all have the right to petition our elected representatives, and we get the bad with the good. I am not in favor of letting those suckers write the actual bills... No legislator should ever vote on a bill he hasn't read and understood. I suspect that would eliminate pretty much all of them. The "effective" corporate rate (what they actually pay after deductions) and "nominal" corporate rate (what small guys typically pay) are two different animals, which is why the GMs and GEs of the world are not complaining about high tax rates. Only the small businesses end up paying those high nominal rates. This is one kind of tax reform being considered (by some). Lower the nominal rate and close the loopholes, so the government gets the same tax revenue or more, while small business is on a more level footing with big business.. This sounds like class warfare between big business and small.. sorry, mea culpa. JR [/QUOTE]
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