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How Corporate Taxes Work · Stuff You Should Know

0:01
Speaker 1: Welcome to stuff you should know, a production of I
0:04
Speaker 1: Heart Radio. Hey, and welcome to the podcast. I'm Josh Clark,
0:13
Speaker 1: and there's Charles W. Chuckers Bryant over there, looking magnificent
0:18
Speaker 1: and marvelous as always, at least in my head your vision, Chuck. Yeah,
0:25
Speaker 1: we're going to see each other next week. I know,
0:27
Speaker 1: how excited are you? I am pretty on fire. I'm
0:31
Speaker 1: excited to it's it's been well over a year. I
0:35
Speaker 1: don't remember the last time we recorded together, but it
0:38
Speaker 1: was definitely I would say February probably of the last
0:45
Speaker 1: nuts we we isolated pre pandemic. We saw it coming, yeah,
0:50
Speaker 1: we did. We probably should have warned everybody, but well
0:54
Speaker 1: we didn't want to, cause, you know, a stir right,
0:57
Speaker 1: We don't like to make waves, so we knew some
1:00
Speaker 1: people would just not believe us. Um. So we're talking today,
1:06
Speaker 1: Chuck about corporate income tax, and I'm sure some people
1:10
Speaker 1: just said, well, goodbye and must stop. But I feel
1:14
Speaker 1: bad for those people, because it turns out that corporate
1:17
Speaker 1: income tax is less eye bleedingly boring than it seems
1:21
Speaker 1: on its surface. I think, yeah, I mean, I think
1:24
Speaker 1: so too. I think a lot of I mean economics,
1:26
Speaker 1: as you know, is tough for me. Uh, And there
1:30
Speaker 1: is a part everyone it's been many years since I've
1:32
Speaker 1: had to do this, but there's a part where Josh
1:34
Speaker 1: is gonna have to teach me because I read that
1:37
Speaker 1: section four times and I told Josh it sounded like
1:39
Speaker 1: physics to me. I'm I'm with you though, like, And
1:43
Speaker 1: there's a reason that I figured out all these years
1:45
Speaker 1: of us doing economics um episodes, I figured out why
1:50
Speaker 1: it's so hard to understand because a lot of it
1:54
Speaker 1: is just straight up who we like, economists are wrong
1:59
Speaker 1: about a lot of stuff, and um, they know it too,
2:03
Speaker 1: So I'm not exactly sure what they're doing to reinvent
2:07
Speaker 1: their field, but there's a I mean, it's taken a
2:09
Speaker 1: beating in the last few decades for sure. So I
2:12
Speaker 1: think one of the reasons why it's so hard to
2:13
Speaker 1: understand because it doesn't make a lot of sense in
2:17
Speaker 1: a lot of ways to Yeah, and there's economics is
2:20
Speaker 1: one of those things where you can have two very knowledgeable,
2:26
Speaker 1: well respected economists saying completely opposite things and saying that
2:31
Speaker 1: they are they are each correct, You're wrong, I'm right,
2:35
Speaker 1: And it's not like this philosophical sort of political stuff
2:41
Speaker 1: that can easily be disagreed on. It's just like no,
2:44
Speaker 1: they're they're like, no, I'm right about this economically speaking,
2:48
Speaker 1: and the other person's like, no, you're dead wrong. It's
2:50
Speaker 1: really this and then guys like us are like, I
2:52
Speaker 1: don't even know who to believe, right, And then agreeing
2:55
Speaker 1: to disagree solves nothing. It basically just punts it down
2:59
Speaker 1: the road. Yeah, don't you think that indicates that there's
3:01
Speaker 1: a fatal flaw in that science if there you know,
3:06
Speaker 1: if no one knows who's right. Well, that's like a
3:08
Speaker 1: really good point because that really comes to the surface
3:11
Speaker 1: with corporate income tax because there's a lot of people
3:13
Speaker 1: out there, typically liberal economists, who tend to think that
3:18
Speaker 1: corporate income taxes are a very very good thing and
3:20
Speaker 1: we need them, and that average American typically agrees with
3:25
Speaker 1: those liberal economists, even people who are not liberal in
3:28
Speaker 1: any way, shape or form, because the average everyday American
3:32
Speaker 1: tends to think that corporations should pay taxes as well. Um.
3:36
Speaker 1: And then there's conservative economists who say, no, this stuff
3:39
Speaker 1: is stifling business. It has all sorts of other pernicious
3:42
Speaker 1: effects that will get into um, we should do away
3:45
Speaker 1: with them alltogether, And the fact of the matter is,
3:48
Speaker 1: no one is sure who's right. Do we need corporate Texas,
3:51
Speaker 1: do they actually harm things? They don't even agree on
3:54
Speaker 1: who actually ends up paying corporate taxes. It is so
4:00
Speaker 1: um there's a lot to like kind of dig into here,
4:03
Speaker 1: which is one reason why I like it so much. Yeah,
4:05
Speaker 1: I mean, I guess we'll go ahead and get some
4:07
Speaker 1: stats on the board out of the gate. I think
4:11
Speaker 1: at ten of the countries in the world, only ten
4:17
Speaker 1: don't have some kind of corporate income tax, and here
4:20
Speaker 1: in the United States. And we'll get to how it's
4:22
Speaker 1: been over the years, but I think in twenty nineteen
4:26
Speaker 1: we've brought in about two thirty billion in corporate tax
4:30
Speaker 1: compared to one point seven to trillion from you know,
4:34
Speaker 1: people like you and I and uh now, it's about
4:38
Speaker 1: six percent of the total take, whereas in the nineteen
4:42
Speaker 1: sixties it was forty of like all taxes were paid
4:47
Speaker 1: by corporations. Yeah, and like, I mean, corporations were paying
4:52
Speaker 1: for a lot of the functioning of America at that time.
4:56
Speaker 1: What's weird is corporate profits were also higher during that
5:00
Speaker 1: time too. And I couldn't see anything any smoking gun
5:03
Speaker 1: where some economists was saying like this is the reason why,
5:07
Speaker 1: um that you know, a decline in corporate tax rates
5:10
Speaker 1: has actually led somehow to decline in profits. But I
5:15
Speaker 1: don't think there's anything in economics, especially when we're talking
5:17
Speaker 1: about huge, sweeping macroeconomics that make up one of the
5:21
Speaker 1: world's largest economies, if not the largest economy, America's. Um,
5:27
Speaker 1: it's never just one thing. There's never you don't just
5:29
Speaker 1: push one button and then it just has its one effect.
5:32
Speaker 1: You know, it's a whole bunch of buttons that are
5:34
Speaker 1: creating this one larger effect, and they're really hard to disentangle. Yeah,
5:38
Speaker 1: and Congress has been taking uh, corporate income tax since
5:42
Speaker 1: nineteen o nine when they said, quote, Congress shall have
5:45
Speaker 1: power to lay in collect taxes on incomes from whatever
5:48
Speaker 1: source derived without uh what is that apportionment? Okay, how
5:54
Speaker 1: I read the the oh, and the I switched in
5:56
Speaker 1: my mind apportionment among several states and without regard to
6:01
Speaker 1: any census or enumeration, right, which is a kind of
6:05
Speaker 1: a different thing like it used to be where if
6:08
Speaker 1: you taxed one group you had to text everybody equally,
6:11
Speaker 1: regardless of say, like if West Virginia the same population
6:15
Speaker 1: as California, but California had a lot more income. Well,
6:18
Speaker 1: West Virginia had to pay the same amount, not not percentage,
6:22
Speaker 1: amount of income tax that all the wealthy people in
6:25
Speaker 1: California had to pay, and so that kept income taxes
6:28
Speaker 1: away for a while. Which, by the way, we've done
6:31
Speaker 1: an episode on income taxes, and we also did that
6:33
Speaker 1: chapter in the book on it too. We apparently can't
6:35
Speaker 1: get enough of income taxes. Yeah, and we did a
6:39
Speaker 1: an episode on corporate personhood many years ago too, right, Yeah,
6:44
Speaker 1: which really kind of plays into this. It's the reason
6:46
Speaker 1: why a lot of people say corporations should pay their
6:48
Speaker 1: fair share. They're treated as people under the law, and
6:50
Speaker 1: people under the law have to pay taxes in the
6:53
Speaker 1: United States. That's kind of a big, a big reason
6:55
Speaker 1: why people want to see it. But yeah, it wasn't
6:57
Speaker 1: until nine nine, and I think, um, it was like
7:00
Speaker 1: you said, the sixties where that was like the heyday
7:03
Speaker 1: of corporate taxation, where the tax rates for for corporate
7:07
Speaker 1: income tax reached almost fifty three percent in the United States.
7:13
Speaker 1: It is apparently, um, the UK had a similar peak,
7:17
Speaker 1: but there's came later in two and then Australia's peak
7:21
Speaker 1: came in nine six at fort So that and that
7:26
Speaker 1: actually kind of points out something that I came across, Chuck,
7:28
Speaker 1: because there's a lot of like, um, one country will
7:32
Speaker 1: change its tax code to kind of attract foreign money
7:36
Speaker 1: to kind of get dumped into it. And which makes
7:41
Speaker 1: a lot of sense because when you dump billions or
7:44
Speaker 1: hundreds of billions of dollars from all these businesses who
7:46
Speaker 1: find your tax codes attractive, that money is now in
7:49
Speaker 1: your economy, like your financial institutions can go out and
7:52
Speaker 1: invest it, and you can do all sorts of amazing
7:55
Speaker 1: stuff with it. That's why countries have different tax codes
7:58
Speaker 1: at different times to a tracked foreign investment basically, right,
8:02
Speaker 1: which we'll get into that. I mean that's foreign investment
8:05
Speaker 1: is one name for it. Um hiding money another way
8:10
Speaker 1: to say it. Jackie channing, Uh, I don't get that.
8:14
Speaker 1: What did you do? Remember the Panama papers they revealed this,
8:16
Speaker 1: this Panama's attack haveing. The only person who was basically
8:21
Speaker 1: publicly pilloried for it was poor Jackie chan. Somehow Jackie
8:26
Speaker 1: chan ended up the face of that thing. That's terrible. Um,
8:30
Speaker 1: So you mentioned conservative and liberals. It's a little counterintuitive,
8:34
Speaker 1: but under Ronald Reagan actually um the He actually went
8:38
Speaker 1: after corporate taxes to try and increase the corporate tax
8:42
Speaker 1: amount so he could decrease US paying taxes a little bit.
8:48
Speaker 1: And in eighties, I think that was with a Tax
8:51
Speaker 1: Reform Act, they cut the rate from forty to thirty four,
8:57
Speaker 1: closed a lot of loopholes, and I think the end
9:02
Speaker 1: the end result of that was the percentage went from
9:05
Speaker 1: five percent to ten percent starting in the eighties until
9:09
Speaker 1: Bill Clinton came along. Yeah, and then Bill Clinton topped
9:13
Speaker 1: it off at thirty five percent, and there it stayed.
9:15
Speaker 1: He's just added a percentage point and there it stayed
9:17
Speaker 1: for quite a while, actually until I think two thousand
9:22
Speaker 1: and seventeen when it got slashed to one UM. And
9:27
Speaker 1: for from about to two thousand seventeen, the US had
9:31
Speaker 1: one of the higher tax rates in the world. Because
9:33
Speaker 1: it seems like there's there's always an outlier, like the
9:37
Speaker 1: the United Arab Emirates I think has Camorros in Africa
9:42
Speaker 1: has fifty, and then usually it drops down into the thirties.
9:46
Speaker 1: And there's a handful of countries in the in the
9:48
Speaker 1: mid to low thirties UM, which is where the United
9:51
Speaker 1: States was for a while until two thousand seventeen. So
9:54
Speaker 1: it looks like, if I'm reading this right, the since
9:57
Speaker 1: of the nineteen eighties, the person image of federal revenue
10:01
Speaker 1: from corporate taxes has been under ten percent. Yes, yes,
10:07
Speaker 1: which is historically low. I think it got down to
10:10
Speaker 1: one percent of g d P, which is another way
10:13
Speaker 1: to measure it. Um uh, for the first time since
10:17
Speaker 1: the very early eighties when Reagan first came in. Because
10:20
Speaker 1: Reagan slash taxes across the board in and I think
10:24
Speaker 1: he overstepped it so far that Congress is like, we're
10:27
Speaker 1: reforming corporate taxes in six there, Like you want to paycheck,
10:32
Speaker 1: right exactly, fellow congress person. Right, Uh, maybe we should
10:37
Speaker 1: take a break after that set up, you think, I
10:40
Speaker 1: think so. Yeah, it's a little early, but now we
10:42
Speaker 1: can really get into the really fun stuff. Prepare for
10:46
Speaker 1: the eye bleeding, all right, We'll be right back, okay. So, um,
11:16
Speaker 1: when it comes to corporate income tax, it's a little
11:18
Speaker 1: different than individual income tax in the US. Right. With
11:22
Speaker 1: individual income text, there are a few things that are
11:24
Speaker 1: kind of removed from your taxable income, right, like you're um,
11:30
Speaker 1: health spending account contributions, just a little stuff like that.
11:33
Speaker 1: But for the most part, you're paying like on your
11:36
Speaker 1: gross income, which makes sense because you don't have like
11:39
Speaker 1: profit and loss necessarily, although I guess if you think
11:43
Speaker 1: about it, you could just tax people on just what
11:46
Speaker 1: they have left over. They're they're, um, what's it called
11:51
Speaker 1: your something income? You know, you're you're well, yeah, you're
11:56
Speaker 1: net but income expendable income, right, Yeah, they could totally
12:00
Speaker 1: just text everybody after like housing, after healthcare, after groceries,
12:05
Speaker 1: all that stuff, just like a business. They hadn't occurred
12:07
Speaker 1: to me, but that's totally how you could do it,
12:09
Speaker 1: And they don't do it that way. I'd be great,
12:11
Speaker 1: But they do it for for corporations. Uh they do
12:15
Speaker 1: because corporations get do get text on their net and uh,
12:20
Speaker 1: you know, this is actual corporations, where if you're a
12:23
Speaker 1: sole proprietorship or if you're a partnership like an scorp
12:28
Speaker 1: or yeah, like you know that's that's not the same thing.
12:31
Speaker 1: This is only for corporations. Uh. It says here that
12:35
Speaker 1: you know, if you're like my wife's business, for example,
12:39
Speaker 1: is not a corporation. It's a small business and she
12:43
Speaker 1: pays personal income tax, so that's like sort of the
12:47
Speaker 1: pass through situation. Yeah, her companies have passed through entity. Right,
12:51
Speaker 1: so like all of the profits and all that stuff
12:54
Speaker 1: just comes right to her your individual income tax. But
12:58
Speaker 1: with the corporation, it's a its own entity. Again, it's
13:01
Speaker 1: like in the United States. I'm sure not everybody out
13:03
Speaker 1: there understands this, but the Supreme Court, starting in the
13:06
Speaker 1: nineteenth century and a few times over the course of
13:08
Speaker 1: the last hundred or two hundred fifty years, has affirmed
13:13
Speaker 1: that corporations are artificial people. They have the same rights
13:17
Speaker 1: and everything is as everyday Americans. It's nuts, it's totally wrong,
13:23
Speaker 1: and it's created all sorts of horrible problems. But one
13:26
Speaker 1: of the things that that amounts to is that you
13:29
Speaker 1: can tax a corporation. They're treated, uh, in that sense
13:32
Speaker 1: under the law as a person, but a person with
13:34
Speaker 1: special privileges. Right, And he talked about moving money around.
13:38
Speaker 1: The reason that happens is because here in the United States,
13:41
Speaker 1: they are taxed on money that they make in the
13:44
Speaker 1: United States. So if you're I don't know, like Apple
13:49
Speaker 1: or Microsoft, let's say, or any you know, not any
13:52
Speaker 1: or every big corporation, but many big corporations of them,
13:55
Speaker 1: you might want to say, hey, let's, uh, let's find,
13:58
Speaker 1: like you mentioned earlier, a country with a really friendly
14:01
Speaker 1: tax code. It's called tax in version, and let's just
14:05
Speaker 1: confuse everybody by uh using what's called transfer pricing, which
14:11
Speaker 1: is basically creating they're not fake transactions, but their transactions
14:16
Speaker 1: between subsidiaries all over the world just to move profits around. Basically, yeah,
14:23
Speaker 1: using more biblical terms, it's like robbing Peter to pay Paul. Basically,
14:27
Speaker 1: it's all like moving goods from one division to another
14:30
Speaker 1: within the same company. There's no reason that the company
14:33
Speaker 1: has to charge that division or the other division or
14:36
Speaker 1: providing a service. Like let's say you bring your marketing
14:39
Speaker 1: team into launch a new podcast. You could have the
14:42
Speaker 1: podcast division charge or the marketing division charge the podcast
14:45
Speaker 1: division front and it's all as far as the company's concerned.
14:49
Speaker 1: It's all internal money. It's all kept in the family.
14:52
Speaker 1: But all of that is just kind of right exactly.
14:56
Speaker 1: And then you're like this, I really needed that money, um,
15:00
Speaker 1: But the as far as like um, multinational corporations are concerned.
15:04
Speaker 1: When you do that and it crosses international borders, that's
15:07
Speaker 1: a really good way to move money from say the
15:10
Speaker 1: United States to say the Cayman Islands, where there's no
15:14
Speaker 1: income tax. It's one of those ten countries, And so
15:16
Speaker 1: all of a sudden, that money that you just moved
15:19
Speaker 1: from the U S to the Caymans doesn't count as
15:21
Speaker 1: profit that America can tax any longer. That's that's transfer pricing,
15:26
Speaker 1: which is a form of tax and version. There's other
15:28
Speaker 1: stuff you can do too. You can move your headquarters
15:31
Speaker 1: to another country with um a lower tax, which really,
15:35
Speaker 1: from what I can tell, basically amounts to changing the
15:38
Speaker 1: address on your letter head um and maybe some legal documents,
15:42
Speaker 1: like I think Burger King did that when they bought
15:45
Speaker 1: Tim Horton's. They basically used Tim Horton's headquarters as the
15:49
Speaker 1: new corporate headquarters for Burger King. So Burger Prince could
15:52
Speaker 1: go to school in the right district exactly right, except
15:56
Speaker 1: in this case rather than going to school districts is
15:58
Speaker 1: saving billion and billions of dollars in taxes, even though
16:02
Speaker 1: it's kind of a joke because Tim Horton's is just
16:05
Speaker 1: dwarfed by the size of Burger King. So the idea
16:09
Speaker 1: of this giant company, Burger King, transferring its headquarters to
16:13
Speaker 1: you know, relatively smaller Tim Horton's headquarters. It seems a
16:18
Speaker 1: little disingenuous, because that's the thing. Everybody knows that corporations
16:21
Speaker 1: try to get out of paying their taxes. They're just
16:24
Speaker 1: famous for it, especially in the United States. But when
16:28
Speaker 1: you come down to it, that is deeply un American
16:33
Speaker 1: and really immoral. And businesses are not supposed to be
16:37
Speaker 1: doing that. They're supposed to be paying their taxes and
16:40
Speaker 1: being upstanding corporate citizens, but they don't do that, and
16:43
Speaker 1: so every once a while they get called out on it.
16:45
Speaker 1: And one of the reasons why we still have corporate taxes,
16:48
Speaker 1: as we'll see, is because the average American, like you know, me, thinks, heck, yah,
16:52
Speaker 1: corporations should be paying their taxes just like us. Yeah,
16:56
Speaker 1: And these tax havens they cost governments a lot of
16:58
Speaker 1: money all over the world, between five hundred and six
17:01
Speaker 1: hundred billion dollars, which you know that that puts a
17:05
Speaker 1: dent on us here in the United States, but if
17:08
Speaker 1: you're a developing nation or a low income economy, it
17:12
Speaker 1: makes a real big dentu If you're losing, you know,
17:15
Speaker 1: a couple of hundred billion dollars, it's going to be
17:17
Speaker 1: a real hit to your g d P. And you
17:20
Speaker 1: know when Apple moves thirty billion dollars to Ireland over
17:25
Speaker 1: the course of four years and employees and nobody over there,
17:29
Speaker 1: and their TAXI rate of two percent, that does hit
17:31
Speaker 1: the United States, but not like it would in some
17:34
Speaker 1: other countries. Right, But again you can understand why why
17:38
Speaker 1: Ireland would be like, I think they actually made a
17:40
Speaker 1: sweetheart deal with Apple for that. Because Ireland's corporate tax
17:44
Speaker 1: is normally twelve point five percent, they knocked ten percent
17:47
Speaker 1: off for Apple. So um, but I looked at Ireland's
17:52
Speaker 1: GDP that thirty billion dollars was twelve percent of the
17:56
Speaker 1: value of Ireland's GDP in two thousand So I Land,
18:00
Speaker 1: that was an enormous influx of cash and worth whatever
18:03
Speaker 1: effort they were going to make to get it into
18:06
Speaker 1: their borders. Plus they got to make some money off
18:09
Speaker 1: of it in taxes in addition to having it invested
18:12
Speaker 1: into their economy. Um. An, Apple, like they got pilloried
18:18
Speaker 1: and kind of called out in two thousand thirteen for
18:20
Speaker 1: that that kind of transfer pricing or tax in version technique,
18:24
Speaker 1: right because they didn't have any any employees in Ireland
18:28
Speaker 1: at the time, and they got called out for it.
18:30
Speaker 1: But if you compare Apple to a lot of the
18:32
Speaker 1: other fortune five hundred companies, they are they might as
18:36
Speaker 1: well be we blows for goodness sake. As far as
18:39
Speaker 1: like paying taxes is concerned, they are ned flanders, um,
18:45
Speaker 1: just to the tea. As far as paying taxes goes
18:48
Speaker 1: compared to like companies like Amazon, it's just astounding. They
18:52
Speaker 1: should not be ever be picked on at all in
18:54
Speaker 1: that respect, just by comparison. Yeah, I mean, let's talk
18:58
Speaker 1: about Amazon. You know, they've been criticized a lot and
19:02
Speaker 1: called out a lot, especially over the past couple of years. Uh.
19:05
Speaker 1: In two thousand, seventeen and eighteen, they paid zero dollars
19:10
Speaker 1: in taxes. Uh, and they made big profits three billion
19:13
Speaker 1: dollars in profits. This isn't the gross. This is that
19:17
Speaker 1: that net profit that we were talking about that they're
19:19
Speaker 1: supposed to get taxed on. Uh. In seventeen, I think
19:24
Speaker 1: it was I'm sorry, in eighteen it was eleven point
19:28
Speaker 1: two billion dollars in profits from three billion. Yeah, they
19:32
Speaker 1: paid zero dollars in tax of both years. And not
19:34
Speaker 1: only that, check they got refunds those two years. Yeah,
19:36
Speaker 1: hundred and twenty nine million dollars and a hundred and
19:38
Speaker 1: thirty seven million dollars respectively over those two years, and
19:42
Speaker 1: then finally a couple of years ago in twenty nineteen,
19:45
Speaker 1: they were like, we'll pay some taxes. So they paid
19:48
Speaker 1: a hundred and sixty two million on the profit of
19:51
Speaker 1: thirteen point nine billion for a whopping percentage rate of one. Yeah,
19:58
Speaker 1: so in Amazon deserves to get it, you know, UM
20:01
Speaker 1: publicly berated for it. And I also have the impression
20:03
Speaker 1: that they paid those taxes in two thousand nineteen just
20:06
Speaker 1: because politically it was getting bad, like the press for
20:10
Speaker 1: it was getting kind of ridiculous. So they're like, all right,
20:12
Speaker 1: we'll pay a hundred and sixty two million. It's not
20:14
Speaker 1: even the combined refunds that we got the last two years,
20:18
Speaker 1: but at least we're paying something. Um. There are there
20:21
Speaker 1: plenty of other corporate tax sodgers. Chevron, Haliburt and IBM
20:24
Speaker 1: also paid zero dollars and taxes, and I think two
20:27
Speaker 1: thousand eighteen UM and there was a two thousand two
20:31
Speaker 1: eighteen study UM that found that of three hundred and
20:36
Speaker 1: seventy nine of the Fortune five hundred companies that turned
20:39
Speaker 1: a profit in two thousand and eighteen, ninety one of
20:43
Speaker 1: them paid zero dollars in taxes um. And I think
20:48
Speaker 1: altogether those three d seventy nine paid something like eighty
20:51
Speaker 1: six billion, when really, had they paid just the one
20:55
Speaker 1: percent that lower twenty one percent effective rate, it would
20:58
Speaker 1: have been a hundred and sixty one billion. So you
21:01
Speaker 1: can make a really good case that the corporations in
21:04
Speaker 1: America are really really good at getting out of paying
21:06
Speaker 1: taxes for the most part, even though not all of
21:09
Speaker 1: them do. And going back to Apple, Apple paid sixteen
21:12
Speaker 1: billion in taxes in two thousand nineteen compared to Amazon's
21:17
Speaker 1: hundred and sixty two million in in that same year, right,
21:22
Speaker 1: And you could also make the case that the UH
21:26
Speaker 1: tax reduction for corporations and leaving open of the loopholes
21:30
Speaker 1: did not in fact boost federal corporate tax revenue like
21:33
Speaker 1: they said it would, which never made sense to begin
21:36
Speaker 1: with anyway, exactly now it was all just a big scam, UH.
21:41
Speaker 1: You mentioned earlier though, like we still can't agree on
21:43
Speaker 1: who actually pays this. So you hear Amazon or whoever
21:48
Speaker 1: pays a hundred and twenty six what they pay a
21:51
Speaker 1: hundred six million dollars, I don't know, hundred and sixty
21:55
Speaker 1: two million, Like who actually you know, Jeff Bezos, right,
21:58
Speaker 1: a check to the federal governed want for that? How
22:00
Speaker 1: does that work? And economists don't even really agree on
22:04
Speaker 1: who ends up like taking this financial burden on. I
22:08
Speaker 1: think even in the seventeen I'm sorry, sixteen hundreds, there
22:12
Speaker 1: was an economist named William Petty, Sir William Petty, and
22:16
Speaker 1: he said, you know, kind of like what a lot
22:19
Speaker 1: of people probably think, which is it's just gonna be
22:22
Speaker 1: passed onto the consumer as higher prices. They're gonna just
22:25
Speaker 1: raise the price of their goods. Other people say, well,
22:28
Speaker 1: that can't be true, because if you're already charging prices
22:32
Speaker 1: where you've maximized your profits, you can't there's there's a cap.
22:36
Speaker 1: You can't just keep raising your prices over and over
22:39
Speaker 1: and over to cover yourself because eventually people are gonna
22:42
Speaker 1: be like, I'm not gonna buy that, right. Yeah, When
22:45
Speaker 1: you raise prices, it makes people think like, oh, can
22:47
Speaker 1: I actually afford that? And you start you start actually
22:49
Speaker 1: shooting yourself in the foot. And that's generally the understanding
22:53
Speaker 1: among economists today. You know, hundreds of years after Sir
22:56
Speaker 1: William Petty um that he was wrong and there that
23:00
Speaker 1: idea is actually born out. Among the different states in
23:03
Speaker 1: the US, some of them have zero taxes on corporate income,
23:08
Speaker 1: others have, you know, relatively high taxes on it. And
23:11
Speaker 1: yet if you go from one state to another state,
23:14
Speaker 1: when you buy a pack of Hubble Bubba bubble gum,
23:16
Speaker 1: it's probably gonna be exactly the same price before before
23:20
Speaker 1: you pay sales tax on it um, which goes to
23:24
Speaker 1: show like, you know, they're not going to charge a
23:26
Speaker 1: different price because they're having to pay corporate taxes. That
23:29
Speaker 1: just isn't the way it is. And Plus, also, corporations
23:33
Speaker 1: aren't the only ones who sell Hubba bubba, right. You know,
23:36
Speaker 1: if Emily wanted to, she could become a distributor of
23:38
Speaker 1: Hubba Bubba bubblegum. And I wouldn't blame her if she was,
23:41
Speaker 1: because it's about as good as bubble gum has ever
23:44
Speaker 1: been produced. I was a hubble Bubba kid. I was
23:46
Speaker 1: not bubblicious. I I didn't like bubblicious either, but ultimately
23:51
Speaker 1: I was bubble Yumm. And I think there are a
23:53
Speaker 1: couple of things that represent the pinnacle of human endeavor.
23:57
Speaker 1: One of them is um lemon lime bubble yum. Remember
24:02
Speaker 1: it was the green outside in the yellow center. Oh yeah, yeah, yeah, Um.
24:06
Speaker 1: I think I've mentioned it before. Rambo bubble gum. It
24:10
Speaker 1: was BlackBerry flavored big League chew with Rambo holding a
24:13
Speaker 1: missile launcher on the I've definitely never heard that. That's amazing.
24:17
Speaker 1: And then lastly et peanut butter flavored cereal. Uh well,
24:23
Speaker 1: I'm a Captain crunch guy, as you know, but uh
24:26
Speaker 1: on the gum. Hubble Bubba to me always produced, It
24:29
Speaker 1: always yielded the best bubbles. Yeah, and if you were
24:33
Speaker 1: a champion bubble blower and sometimes bubble within bubble blower
24:37
Speaker 1: like myself, then you reach for the hubble Bubba. You
24:40
Speaker 1: need to. You need to make a video of yourself
24:43
Speaker 1: doing that. Man. Bubble gum was good too, though, but
24:45
Speaker 1: just bubble you Almo was good too, But you're absolutely
24:47
Speaker 1: right there was hubble bubble was as good as it
24:50
Speaker 1: gets with the bubbles, for sure, don't. I don't chew
24:53
Speaker 1: gum anymore, but if I was going to, I would
24:55
Speaker 1: get a pack of bubblegum like that. I think hubble
25:00
Speaker 1: Bubba is basically unchanged bubble yams a little weird. Now,
25:04
Speaker 1: it's a little different the current state bubba. I've tried
25:08
Speaker 1: it once in a while. Yeah, I mean if you
25:10
Speaker 1: want to go get transported back to your youth, like
25:12
Speaker 1: get some get some real bubble gum, and I'm going
25:15
Speaker 1: to do that. Where were we? Okay, where we are?
25:19
Speaker 1: So states? Uh yeah, states don't charge different prices. Like
25:23
Speaker 1: it's not like let me go to Florida and stuck
25:25
Speaker 1: up on that gum because it's you know, six cents cheaper. Um.
25:29
Speaker 1: So then, ohh I know where we were. Really we
25:32
Speaker 1: were talking about Emily becoming um Hubba Bubba distribution. She
25:36
Speaker 1: doesn't have to pay corporate text, so she could sell
25:38
Speaker 1: Hubba Bubba way cheaper than say, General Electric could sell
25:42
Speaker 1: Hubba Bubba. If they ever wanted to, she could undercut them.
25:45
Speaker 1: General Electric wouldn't be selling Hubba Bubba any longer because
25:49
Speaker 1: it would be hamstrung by those corporate taxes. Emily is
25:52
Speaker 1: not hamstrung by the right. So we're still left without
25:55
Speaker 1: an answer on who's paying um. Usually these days modern
26:00
Speaker 1: economists say, well, here's what's going on is the burden
26:04
Speaker 1: is going to fall on the owners. But what that
26:07
Speaker 1: really means is it's divided among shareholders of that corporation.
26:11
Speaker 1: And what it really is happening is employees are being
26:15
Speaker 1: paid less, and so they're all kind of taking in
26:17
Speaker 1: on the chin. Yeah, because as far as the economists
26:20
Speaker 1: are concerned, if if the government is coming in and
26:22
Speaker 1: taxing somebody, then there's three entities that could possibly be
26:27
Speaker 1: paying for it. Capital, the business owners, the people who
26:30
Speaker 1: like own the machinery, own the money that's invested into businesses, capital, employers, labor,
26:36
Speaker 1: you know, the workers employees, and then customers. And if
26:40
Speaker 1: we've already decided that it's not being passed on to customers,
26:43
Speaker 1: you've got capital and labor left. And so yeah, it
26:46
Speaker 1: makes sense that it would be capital who's paying the
26:49
Speaker 1: tax in the form of lower dividends than they would
26:52
Speaker 1: otherwise be getting if the pot that the dividends were
26:54
Speaker 1: coming out of was greater because the tax hadn't been taken.
26:58
Speaker 1: But economists still say that's not the end of it.
27:01
Speaker 1: We think it's probably ultimately divided somewhat, probably not evenly,
27:06
Speaker 1: but somewhat between capital and labor, and that labor helps
27:10
Speaker 1: bear the cost of these corporate taxes by getting paid
27:14
Speaker 1: lower wages. There's just less capital stock involved, and so
27:18
Speaker 1: when you have less money, um, you know, you can't
27:21
Speaker 1: get like a goose plucking machine. That that that means
27:25
Speaker 1: you're gonna pluck this goose. You know you you can
27:28
Speaker 1: do ten gooses an hour rather than two. That just
27:31
Speaker 1: little Samuel, the ten year old boy with the full
27:34
Speaker 1: chin beard, can pluck by himself with just his hands.
27:38
Speaker 1: Even though Samuel saying, you get this goose plucking machine,
27:42
Speaker 1: I'm going to oversee it and we're really going to
27:44
Speaker 1: make some money. You don't have the money to buy
27:46
Speaker 1: the goose plucking machine, so all you can do is
27:49
Speaker 1: just keep employing Samuel. Maybe his cousin Ezekiel every once
27:52
Speaker 1: in a while comes in on weekends, but you don't
27:55
Speaker 1: have that money. They're less productive, so you're making less
27:58
Speaker 1: money in the market, which means you have less money
28:01
Speaker 1: to pay Samuel and Ezekiel, even though they're doing harder
28:04
Speaker 1: labor than the otherwise would be. If you weren't such
28:07
Speaker 1: a tight wad and would buy the goose plucking machine,
28:11
Speaker 1: right and do you get his fire Samuel, to be honest,
28:14
Speaker 1: you probably would. Well, yeah, he has been talking back
28:18
Speaker 1: quite a bit lately. I mean someone could turn on
28:20
Speaker 1: that machine and push push goo. Ezekiel could at a
28:24
Speaker 1: lower rate than Samuel. Oh yeah, he has zero loyalty
28:28
Speaker 1: to anybody, including his cousin. Let's take a break here
28:31
Speaker 1: and then we'll talk about arguments against in than four
28:34
Speaker 1: after that. How's that? Okay? So arguments against taxing corporations
29:04
Speaker 1: some people, and this is sort of the thing you
29:06
Speaker 1: hear all the time is is the economy referred to
29:10
Speaker 1: as an engine and this motor that's got a home
29:13
Speaker 1: along and people that say you should not text corporations
29:16
Speaker 1: are people that are saying, listen, this is what is
29:19
Speaker 1: keeping that engine humming. Is they're employing people, they're generating money. Uh,
29:25
Speaker 1: they're selling things there. I mean, this is the economy basically,
29:30
Speaker 1: And if you just get rid of corporate taxes, then
29:33
Speaker 1: they're gonna they're gonna reinvest that stuff. They're gonna pay
29:35
Speaker 1: their employees more, Your prices are gonna drop, they're gonna
29:39
Speaker 1: it's gonna trickle down to you, and that engine is
29:41
Speaker 1: just gonna hum right. I mean, that's that's ultimately what
29:45
Speaker 1: all of the arguments against corporate taxation amount to. Because
29:50
Speaker 1: and you are already taxing those individuals and those shareholders
29:55
Speaker 1: on their personal income taxes. So like your double taxicum
29:58
Speaker 1: to cut it out right. So, yes, the corporation itself
30:02
Speaker 1: has to pay income taxes theoretically where they actually, like
30:05
Speaker 1: you said, Jeff Bezos, cuts a Skexias from the dark
30:08
Speaker 1: crystals check to the federal government for a hundred and
30:12
Speaker 1: sixty two million dollars or whatever um. And then on
30:16
Speaker 1: top of that, after they pay their taxes, this post
30:20
Speaker 1: tax amount, the the corporation sends out dividends quarterly annually. However,
30:26
Speaker 1: to the shareholders. The shareholders are in some way shape
30:29
Speaker 1: or form and oftentimes very literally owners of the company.
30:33
Speaker 1: But if you own shares in a company, you are
30:35
Speaker 1: part owner of that company, and so you're getting dividends,
30:39
Speaker 1: you're getting a part of the profits. Right. So when
30:42
Speaker 1: you get those dividends given to you, um, at the
30:46
Speaker 1: end of the year, you have to declare those on
30:48
Speaker 1: your income taxes and then you have to pay personal
30:50
Speaker 1: text and that. So it's like you said, it's double taxation.
30:53
Speaker 1: And so the government saying we'll take a little bit
30:56
Speaker 1: of this capital out of the economy for ourselves. Oh
30:58
Speaker 1: and by the way, we'll take out of your your
31:00
Speaker 1: little wealth pot too, um. And not all of a sudden,
31:04
Speaker 1: there's just that much less money to be reinvested into business.
31:08
Speaker 1: That's a huge argument against corporate income taxes that's been
31:11
Speaker 1: around for a very long time. But there's also like
31:14
Speaker 1: a lot more nuanced ones too. Um. One of the
31:17
Speaker 1: big ones is that, like it's a tax on entrepreneurship
31:20
Speaker 1: where if you are a company and you need some
31:25
Speaker 1: money to keep it, say expand your business right, um,
31:30
Speaker 1: and you're you've got your profits and everything like that,
31:32
Speaker 1: but you really want to take it up to the
31:34
Speaker 1: next level and you need a lot more money than
31:36
Speaker 1: you have in the bank, you can issue shares more
31:40
Speaker 1: shares of your your company. UM. That's called equity financing,
31:44
Speaker 1: where you're releasing equity shares, which your current investors don't
31:48
Speaker 1: really like because all of a sudden there are way
31:50
Speaker 1: more shares on the market, um, and their shares are
31:54
Speaker 1: suddenly worth a little bit less. Even though they didn't
31:57
Speaker 1: do anything and your business is doing fine, they don't
31:58
Speaker 1: like you very much. Then there's another way to do
32:01
Speaker 1: It's called debt financing, and that is instead of issuing
32:04
Speaker 1: shares of ownership to your company, you're saying, hey, I
32:07
Speaker 1: need I need to borrow money from you. I'm going
32:08
Speaker 1: to issue you the certificate, I'll pay this back in
32:12
Speaker 1: X number of years with with interest. Right, they're called
32:14
Speaker 1: corporate bonds. You have to be a massive company to
32:19
Speaker 1: issue debt securities to raise money like that. You just
32:22
Speaker 1: have to have that kind of established business and trust
32:25
Speaker 1: with the public to issue debt securities. But the reason
32:28
Speaker 1: that businesses do that is because you you can deduct
32:33
Speaker 1: the interest that you pay those investors for lending you
32:36
Speaker 1: that money. You can't deduct dividends. So if you're a
32:40
Speaker 1: little startup, all you can do is um issue shares.
32:44
Speaker 1: Nobody trusts to enough to buy debt securities. I mean,
32:47
Speaker 1: you're an unproven business, but they will buy shares in
32:50
Speaker 1: your company because they think you probably are going to
32:52
Speaker 1: be able to make it. They're just not sure. So
32:55
Speaker 1: you can issue shares and then put out dividends, but
32:59
Speaker 1: you can't deduct the dividends. Your competitors, the bigger guys,
33:02
Speaker 1: can do that, or they can issue death securities and
33:05
Speaker 1: then they can deduct the interest. So there's actually a
33:08
Speaker 1: tax is corporate tax. Um is actually at tax on
33:12
Speaker 1: entrepreneurship in that sense, which again it's really nuance and
33:16
Speaker 1: it's really wonky. But once you start to like enter
33:18
Speaker 1: the world of like high finance and new innovative technology.
33:23
Speaker 1: This is a big deal to you, you know what
33:25
Speaker 1: I mean. Yeah, And you know there are people that
33:28
Speaker 1: say that the disparity between the taxation between those interest
33:32
Speaker 1: in dividend payments is why we're getting all these stock
33:35
Speaker 1: buy backs happening, which you know, if you're if you
33:38
Speaker 1: paid attention at all to the news in the United States,
33:41
Speaker 1: when tax laws change for corporations, you heard a lot
33:46
Speaker 1: about stock buy backs, which is the idea that a
33:49
Speaker 1: company is going to use their profits to buy its
33:51
Speaker 1: own stock off the market instead of doing the thing
33:54
Speaker 1: that they said it would do, which is, hey, they're
33:57
Speaker 1: going to reinvest these these profits that they're they're making
34:00
Speaker 1: back into the company. They're gonna get new equipment, they're
34:02
Speaker 1: gonna hire more people, everyone's gonna get a raise or
34:05
Speaker 1: R and D is gonna pick up. And what really
34:07
Speaker 1: happens a lot of times is they just buy stock
34:10
Speaker 1: by box. They just say, hey, we got this extra money, now,
34:13
Speaker 1: why don't we buy back a bunch of our own
34:15
Speaker 1: stock and consolidate even more control and more power and
34:19
Speaker 1: more money. Uh. And it's you know, insert doctor evil laughing, right,
34:26
Speaker 1: at this point. Basically yeah, because allegedly you're theoretically, the
34:29
Speaker 1: stock buy backs only come when this company is so
34:32
Speaker 1: flush with cash it can't spend all of it, so
34:35
Speaker 1: it just does these buybacks. But they happen even when
34:38
Speaker 1: a company doesn't have a bunch of cash, because it
34:40
Speaker 1: raises the share price a lot more. Too. It also
34:43
Speaker 1: lowers their their non deductible dividend payments as well. So
34:47
Speaker 1: the the the idea that you that deductibles are not
34:52
Speaker 1: or dividends are not deductible. Um, but interest is it's
34:56
Speaker 1: it's a it's it's also laying the foundation for those
34:59
Speaker 1: stist buy backs, like you were saying, right, and then
35:03
Speaker 1: you add in just the complex plate of spaghetti that
35:06
Speaker 1: is the U. S. Tax code, and it's just it's
35:11
Speaker 1: really complex. And some people say, if companies weren't having
35:14
Speaker 1: to kind of sift through this tax code and it
35:17
Speaker 1: was a lot simpler, or maybe if they didn't have
35:20
Speaker 1: to pay them at all, then maybe they would uh
35:24
Speaker 1: reinvest some and not have stock buybacks. Yeah. Not to
35:28
Speaker 1: mention the critics of of corporate taxation say, like, we
35:33
Speaker 1: don't even know who's paying this at this point. It's
35:36
Speaker 1: possible that wages could go up if we didn't have this.
35:38
Speaker 1: So when you take all of these reasons together, there's
35:42
Speaker 1: some pretty good arguments um against corporate taxation, and um
35:47
Speaker 1: you can take them all together, put them into a
35:50
Speaker 1: pile and say, hey, every day, Joe American, what do
35:54
Speaker 1: you think of this? And watch them urinate on all
35:57
Speaker 1: of your reasons that you just neatly piled together. O
36:00
Speaker 1: there reasons for uh corporate taxation? The people say, no,
36:04
Speaker 1: we definitely should. One of the big reasons is just
36:07
Speaker 1: kind of what we've been talking about is just public
36:10
Speaker 1: perception of your average American is, yeah, why do I
36:13
Speaker 1: gotta pay taxes? And Amazon doesn't? Uh, So that's one
36:16
Speaker 1: big reason. Another is is people that say, hey, look,
36:20
Speaker 1: the government is basically providing the infrastructure for which these
36:24
Speaker 1: companies are getting rich. The bridges and the waterways and
36:29
Speaker 1: everything that we're maintaining and subsidizing as tax paying citizens,
36:33
Speaker 1: the roads. Even these corporations are are utilizing that stuff.
36:38
Speaker 1: So they need to pay their fair share just to
36:41
Speaker 1: support that that infrastructure. And the government is really the
36:44
Speaker 1: engine because they take care of all this stuff. In theory,
36:48
Speaker 1: it's dude, it is just such a smoke screen too,
36:50
Speaker 1: that the government is portrayed as just this, this spend
36:54
Speaker 1: thrift pickpocket that just steps on innovation and and takes
36:59
Speaker 1: the rev out of the engine of the economy by
37:02
Speaker 1: taxing business like there's an entirely different way of looking
37:05
Speaker 1: at it, and that by maintaining those bridges in these
37:08
Speaker 1: waterways and and um, the infrastructure that businesses used to
37:12
Speaker 1: hum along. The government itself is a wealth creating engine two.
37:17
Speaker 1: And the government is mandated to use that money as
37:20
Speaker 1: soon as it gets it right. A business is not
37:23
Speaker 1: necessarily mandated there, There is no mandate. The board of
37:27
Speaker 1: directors and the shareholders might want the business to spend
37:29
Speaker 1: its money rather than sitting on it, but it doesn't
37:32
Speaker 1: have to. And plenty of businesses might just be sitting
37:34
Speaker 1: on a big pot of money. Well. Another argument in
37:37
Speaker 1: favor of corporate taxation is that the government says, you
37:40
Speaker 1: can't do that, at least not with this percentage. Is
37:42
Speaker 1: twenty one percent of that money that you made this year,
37:45
Speaker 1: because we're gonna take it and we're gonna put it
37:47
Speaker 1: back in those roads and everything. And yes, agreed, the
37:50
Speaker 1: government is not like a uh an efficient machine by
37:54
Speaker 1: any stretch of the imagination, and plenty of that money
37:57
Speaker 1: also ends up going into other things that I consider
38:00
Speaker 1: very important, like social programs that keep people from starving
38:03
Speaker 1: to death, that kind of stuff that don't necessarily have
38:06
Speaker 1: anything to do with business unless you zoom out enough
38:09
Speaker 1: and then realize that if you want a worker to
38:12
Speaker 1: show up to work um alive, they need to eat food.
38:16
Speaker 1: And so if you're not paying them enough, the government's
38:19
Speaker 1: actually taking that money from you and making sure that
38:21
Speaker 1: that worker is fed so they can show up at
38:23
Speaker 1: work the next day. If you zoom out far enough,
38:26
Speaker 1: it all has to do with business, and it all
38:28
Speaker 1: connects like that. It's just some people argue that that
38:33
Speaker 1: it's it should just be just on its face about business,
38:37
Speaker 1: that anything that isn't obviously overtly on its face about
38:41
Speaker 1: business should just go away and and be and not
38:44
Speaker 1: have anything to do with business and let business deal
38:46
Speaker 1: with business. Yeah, how's that working? Yeah, real well, real well,
38:53
Speaker 1: thanks for asking. Another reason you might want to argue
38:56
Speaker 1: for corporate taxation is is merely took to put these
39:00
Speaker 1: companies in check and these corporations in check, and to
39:03
Speaker 1: make them tap the brakes every once in a while,
39:06
Speaker 1: because with that kind of money yields great power, especially
39:10
Speaker 1: in the wake of the Citizens United Decision, when now
39:13
Speaker 1: corporations and companies can spend whatever they want to get
39:18
Speaker 1: involved in politics and to woo politicians through lobbying efforts.
39:23
Speaker 1: And you know, some might say that if you at least,
39:28
Speaker 1: you know, smash their head with attacks a little bit,
39:31
Speaker 1: maybe that shouldn't be so violent. If you levy attacks
39:35
Speaker 1: on their corporation, if you tickle their ear with a
39:37
Speaker 1: feather a metaphor for taxation, then that at least keeps
39:41
Speaker 1: their power and influence a little bit more in check.
39:44
Speaker 1: I'm not sure how much that's that's working, but that's
39:47
Speaker 1: the thought. I think it's working a lot. Actually, yeah,
39:51
Speaker 1: And I think and it's weird to think of and
39:53
Speaker 1: I didn't think of it before, but researching this, it
39:56
Speaker 1: seems to be. Um, you know, it's two sides of
39:59
Speaker 1: this same coin. Some people say, well, a good way
40:02
Speaker 1: to keep government power and check is to reduce its
40:04
Speaker 1: ability to tax things because it depends on that money.
40:07
Speaker 1: It's like a vampire that just sucks money right out
40:09
Speaker 1: of everybody. Um, So it's two sides of the same coin.
40:13
Speaker 1: I think that that is the give and take that
40:15
Speaker 1: we see when it comes to the tax code is
40:17
Speaker 1: you know, whatever group thinks that the government is a
40:19
Speaker 1: blood sucker um if they're in charge, then taxes go down.
40:24
Speaker 1: If somebody thinks that that businesses need to be kept
40:27
Speaker 1: in check, taxes tend to go up. And that's that
40:29
Speaker 1: kind of seesaw effect that we see. But I think
40:31
Speaker 1: ultimately it does have at least some impact. It's not perfect,
40:34
Speaker 1: but I think it's enough that it's it's worth doing
40:37
Speaker 1: just for that that point as well. Right, You also
40:41
Speaker 1: might say that it provides a backstop basically two personal
40:45
Speaker 1: income tax for the wealthy. Here in the United States,
40:49
Speaker 1: nine tenths of corporate stock are owned by the top
40:53
Speaker 1: tenth of the income distribution, So it's you know, the
40:58
Speaker 1: wealthy are uh, they're the ones that are running these
41:03
Speaker 1: corporations obviously, and if we didn't text the corporations, they're
41:09
Speaker 1: also getting away with tax loopholes and tax shelters, and
41:12
Speaker 1: these individuals might not be paying any tax at all
41:15
Speaker 1: as people and as corporations. Yeah, they might actually form
41:19
Speaker 1: shell corporations themselves and say, oh no, all of this
41:22
Speaker 1: is corporate income. It's not taxable. If there's no corporate tax,
41:25
Speaker 1: and I read that that's one reason why most countries
41:28
Speaker 1: have a corporate income taxes too, because it's ultimately a
41:31
Speaker 1: tax on the wealthy, because the wealthy are the largest
41:34
Speaker 1: shareholders in the corporations around the world. And I hadn't
41:37
Speaker 1: really thought about it before. But once you see corporate
41:40
Speaker 1: taxes a tax on the wealthy, like, the picture becomes
41:44
Speaker 1: much clearer of what, you know, what the battle lines
41:47
Speaker 1: are in that that argument and debate over the existence
41:51
Speaker 1: of corporate taxes. Right, so it's here to stay. It's
41:57
Speaker 1: not gonna go away. They're not going to completely do
41:59
Speaker 1: away with it. The tax code is a big jumble
42:02
Speaker 1: play a spaghetti. Like I said, it's a big mess.
42:04
Speaker 1: And there are some people that say, well, you know,
42:06
Speaker 1: if we want to kind of fix this corporate problem
42:09
Speaker 1: that we have, maybe and I think these were a
42:12
Speaker 1: couple of Rutgers professors, and there are there are some
42:14
Speaker 1: different ideas will govern, But they had an idea I
42:17
Speaker 1: thought was interesting, which is, let's not rewrite the tax
42:20
Speaker 1: code again. It just gets more confusing and offers more
42:23
Speaker 1: opportunities for loopholes. Let's just lock that in, but then
42:27
Speaker 1: offer a wealth tax on top of everything for these corporations.
42:31
Speaker 1: They said, how about five percent of the actual growth
42:34
Speaker 1: of the company for that year. So maybe the federal government,
42:39
Speaker 1: here's what you should do. Subtract the end of the
42:41
Speaker 1: year's share price from that share price that uh where
42:44
Speaker 1: it was at the beginning of the year, multiplied by
42:47
Speaker 1: the number of outstanding shares on each date, and then
42:50
Speaker 1: tax him on that amount over and above the regular
42:53
Speaker 1: corporate tax rate. Yeah, and then that captures everything that
42:57
Speaker 1: captures the actual growth in the company's well that year,
43:01
Speaker 1: not just necessarily their profits from revenue. And it also says, hey,
43:05
Speaker 1: keep it up, keep going. You can find all these
43:07
Speaker 1: loopholes and all these tax hodges that you figured out.
43:10
Speaker 1: This is again like a like like, uh, corporate taxes
43:13
Speaker 1: a backstop to wealth and income tax for the wealthy.
43:17
Speaker 1: This is like a backstop for corporate corporations getting out
43:20
Speaker 1: of paying corporate income tax. It's it's just kind of
43:24
Speaker 1: clomped on in addition to it. I don't know if
43:26
Speaker 1: it's going to go anywhere, but it's a it seems
43:28
Speaker 1: like a pretty good idea. Uh. Some people say, another
43:31
Speaker 1: way we can fix it is to basically treat these
43:33
Speaker 1: corporations like they are partnerships and you know, just let
43:39
Speaker 1: the money flow through and then tax the shareholders individually. Yeah.
43:44
Speaker 1: The problem with that that I saw is that you
43:47
Speaker 1: then would be taxed on your individual income on all
43:51
Speaker 1: the profit that the corporation made that year, even though
43:55
Speaker 1: you didn't see that amount in dividends necessarily. Let's say
43:59
Speaker 1: you saw twenty or dividend that year for your one share,
44:02
Speaker 1: but really your your share of that profit was two
44:05
Speaker 1: hundred dollars, but you might be text on the two
44:07
Speaker 1: hundred dollars rather than the twenty dividend, and that, I mean,
44:11
Speaker 1: that would just chase people away from investing in companies.
44:14
Speaker 1: So that's probably a generally bad idea, agreed. But yeah,
44:18
Speaker 1: it's it's like you said, it's not it's not going
44:20
Speaker 1: anywhere at all. It's it's here to stay, just at
44:23
Speaker 1: the very least, because the everyday American is like, yeah,
44:26
Speaker 1: corporations should pay taxes. Yeah. Um, the none or the
44:31
Speaker 1: everyday Americans that are saying let's just get rid of
44:34
Speaker 1: it are not every Dame Marian's right there, like Mr
44:37
Speaker 1: Burns and disguise sort of wearing a bowling shirt or something.
44:42
Speaker 1: You got anything else, I've got nothing else. I'm taking
44:44
Speaker 1: off my ice skates. Finally, you did great. Man. You
44:48
Speaker 1: didn't seem like you were hanging by your fingernails at
44:50
Speaker 1: any point in time either. I don't think fooled you again. Uh. Well,
44:55
Speaker 1: since Chuck said he fooled us again, I think then
44:59
Speaker 1: everybody is time for a listener mate. Yeah, boy, this
45:04
Speaker 1: is a good one. Uh, I need to said this
45:06
Speaker 1: one up. Remember we did. I don't want to bring
45:09
Speaker 1: this up. I know it's a matter of a past
45:11
Speaker 1: trauma for both of us. But remember when we did
45:14
Speaker 1: our Feral Children Live show at south By south Befests.
45:21
Speaker 1: Just so you folks know, you might not have heard
45:23
Speaker 1: the story. We did our Feral Children Live show at
45:25
Speaker 1: a bar in south By Southwest where there was a
45:29
Speaker 1: big sort of DJ event before and after I think,
45:34
Speaker 1: and then we were squeering in the enter. We were
45:36
Speaker 1: squeezed in between and this was a bar with they
45:40
Speaker 1: were probably I don't know, let's just ballpark it and
45:42
Speaker 1: say four dred people in there and about fifteen of them.
45:46
Speaker 1: We're stuff. You should know listeners that wanted to hear
45:48
Speaker 1: what we were having to say. Let's not exaggerate, Chuck
45:50
Speaker 1: it is probably like eighteen or nineteen. I just remember
45:54
Speaker 1: you and I locking eyes at a certain point very
45:57
Speaker 1: early on and and literally mind reading each other of
46:02
Speaker 1: we're agreeing right now to skip this material, right, And
46:07
Speaker 1: we did, Yeah, we did, And it was it was
46:09
Speaker 1: like we just kind of knew what parts we were
46:11
Speaker 1: going to skip and all that too. It was pretty
46:13
Speaker 1: amazing that. The saddest thing about all this is that
46:15
Speaker 1: a lot of stuff, you should know, listeners were left
46:17
Speaker 1: out in the hot sun on the sidewalk and couldn't
46:19
Speaker 1: get in, which we had nothing to do within our
46:22
Speaker 1: still apologizing for it. So that's the setup. Uh, this morning,
46:27
Speaker 1: I was listening, Hey guys, I was listening to our
46:29
Speaker 1: Feral Children real and you started the episode by lamenting
46:33
Speaker 1: how terrible your first attempt was when you did it
46:35
Speaker 1: live in Austin In Like, we didn't even release that
46:38
Speaker 1: it was unreleasable. Uh no, it wasn't even close. Like
46:43
Speaker 1: we re recorded it, if I'm correct, right, Um, yeah,
46:46
Speaker 1: we recorded it as like a regular studio exactly after
46:50
Speaker 1: we got over the trauma. I just want to let
46:53
Speaker 1: you know that at least one great thing came from
46:55
Speaker 1: that show. See, I was in the audience that day
46:57
Speaker 1: with an old friend that I hadn't talked to and ages.
47:00
Speaker 1: We were both fans of the show and we're excited
47:03
Speaker 1: for the chance to see you live. We ended up
47:05
Speaker 1: having a great time decided to hang out again a
47:07
Speaker 1: few weeks later. Long story short, we're now married with
47:10
Speaker 1: an eighteen month old. That's awesome. How awesome is that
47:15
Speaker 1: you guys would continue to play a huge partner lives
47:17
Speaker 1: and have kept his company during countless road trips and commutes,
47:21
Speaker 1: including to cross country moves. Our daughter now starts dancing
47:25
Speaker 1: when she hears the theme song and we jokingly refer
47:28
Speaker 1: to you guys as Uncle Josh and Uncle Chuck. I
47:30
Speaker 1: think that's only right. Yes, thanks for all you do,
47:33
Speaker 1: and please come back to Austin. Uh. And that is
47:36
Speaker 1: Jenny And I told Jenny. I was like, this is amazing.
47:39
Speaker 1: I'm gonna read this. And I'm a little mad at
47:41
Speaker 1: you for not sending a picture of this baby that
47:44
Speaker 1: we're partially responsible for. I want to see this kid.
47:48
Speaker 1: I bet Jennielsen the picture. I'll bet you will too. Um. Well,
47:52
Speaker 1: thanks to Jenny, thanks to the kid, thanks to the husband,
47:56
Speaker 1: and thanks to all of the terrible bar patrons at
47:58
Speaker 1: that episode that we record at that time but never released.
48:02
Speaker 1: But thanks especially to all this Stuff you Should Know
48:04
Speaker 1: listeners who were turning around and telling the people at
48:07
Speaker 1: the bar to sh Do you remember that it didn't work? No,
48:11
Speaker 1: it didn't work, But I was like, hats off to
48:13
Speaker 1: all of you guys trying to shush the people at
48:16
Speaker 1: the bar who've never heard of stuff you should Oh boy,
48:20
Speaker 1: that was terrible. Yeah, but that's great news, Jenny, And
48:23
Speaker 1: thanks again. And if you want to get in touch
48:25
Speaker 1: with this, like Jenny and take one of our terrible
48:27
Speaker 1: memories and dust it off and make it shine and
48:30
Speaker 1: show it in a different light. We love that kind
48:32
Speaker 1: of stuff. You can send us an email to stuff
48:35
Speaker 1: Podcast at iHeart radio dot com. Stuff you Should Know
48:42
Speaker 1: is a production of I Heart Radio. For more podcasts
48:44
Speaker 1: my heart Radio, visit the i heart Radio app, Apple Podcasts,
48:48
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