Berkshire Hathaway Now Pays 5% of All Corporate Income Taxes in America

I think the idea is that corporations are the most efficient entities in the economy in terms of allocating capital. They have to be, or they go under. And when they have extra cash, investors tend to demand that it be deployed or paid back to them as dividends. So the natural incentive is for companies to run with the leanest possible capitalization and generate the biggest possible profits.

So when you take cash away from companies and allocate it to the government, you're reducing the overall capital efficiency of the economy a lot.

If you set corporate taxes to 0%, you can still keep the same size government budget if you then tax dividends and executive salaries, except you'll take the money away from less efficient entities (individuals). By the way, this also removes the incentive to deduct all sorts of personal expenses from your business tax, because there isn't any.

And if the government wants to reign in this or that monopoly or incentivize certain activities, it can do so via regulation rather than tax breaks / increases.

Same level of government budget & control, higher economic growth.

I don't think the studies account for a 0% tax rate and $0 government subsidy. If you're running a large deficit then adding in a tax rate is like having a fire that you're pouring lighter fluid on. Of course when you take away the lighter fluid the fire gets smaller. However, how are you getting that lighter fluid in the first place?

It also doesn't mean that 0% is the correct tax rate. This gives pretty strong evidence that during boom (bull) years you should increase the corporate tax rate to prevent the formation of bubbles and then during bane (bear) years you should decrease it to stimulate growth.

I think the easy way to think about this is that individuals tend not to spend all of their income especially at the higher income brackets. While companies are not as severe in that effect. So if you increase taxes on a business in order for the government to pay back debt to an individual who then saves the money instead of consumes it, you're going to decrease overall consumption.

He's something like 96, and has been working on replacing himself for at least 10 years, maybe longer. He announced his retirement a few months ago. It would be irresponsible to not plan for his succession; training your replacement is arguably the first responsibility of a leader, especially when your timeline is long-term.

Buffet still has 30% of the voting rights which makes him pretty hard to replace in the theoretical situation where someone would have wanted to. He's retiring at the end of the year and remaining chairman of the board.

> But corporate taxes are on profit, not revenue

They are taxes on revenue, but with a set of allowed deductions (e.g. labor costs, R&D, capital expenditure, etc. etc.)

Whether you call that a tax on profit or a tax on revenue with business related deductions is really just a matter of perspective.

Imagine if a household was only taxed on the money they managed to put away in savings and could count housing expenses, food expenses, education costs, healthcare, entertainment, vacations, vehicle purchases, etc. 100% against their income.

That the line is hard to perfectly define does not mean “none is fine”.

Pareto optimality would be ideal, but across an entire economy, that's almost impossible to measure.

In reality, there is no objective definition of "a fair share", there is only the intent expressed in the tax code (and people of course argue over what the intent "really is"). If people and/or corps. are paying taxes following that intent, then for all practical purposes, they are paying their "fair share".

It means they're not exercising loopholes and legal sleight of hand to pay less.

Fair means the same playing field, the same rules, the same consistent outcomes from all the corporations subject to these laws and regulations, and not just one of them who does the right thing. Exercizing loopholes is the opposite of fair. It puts those with the best cheating strategies ahead of those who play by the rules. Because you can catch the ref with his back turned doesn't make you a fair player.

It’s very easy. If I think I pay a lot then I’m paying more than my fair share. If I think you’re not paying enough then you’re not paying your fair share.

The bought-and-paid-for legislature and the military-industrial complex that both parties serve ceaselessly and unflinchingly.

Congress.

But why not just tax the owners of the corporation more to accomplish those same goals?

Why doesn’t the moral obligation rest with the owners of the company, rather than this legal construct that was created on paper?

Corporations aren’t rich people - they are machines that allocate capital and eventually return the money with profit to the owners. They can be owned by rich people, and we can tax them.

When we add taxes on corporations, we introduce compliance issues, accounting and forecasting requirements - all complications that take away money from the actual good things we can get from corporations - jobs in the community, better product development, etc.

The rationale for a low or zero corporate tax is that corporate profits eventually become personal income of the shareholders and employees, and can be taxed there. Nobody builds a for-profit corporation for zero salary or personal profit.

Hypothetically with zero corporate tax, if the corporation paid zero salary, zero dividends, and shareholders never sold anything, the corporation could amass ridiculous amounts of untaxed wealth. But this never seems to happen.

I mean personal income taxes, plus capital gains taxes, taxes on the individual -- I am in favor of; not on the corporate entity.

I feel like this is a myth people share without ever looking into. You service the debt with income that you make and pay tax on the income you service the debt with

For the hundredth time, it is not double taxation.

Money is taxed (generally) whenever it moves between parties. You paid tax on your income; you give (some of) it to someone else for goods or services - they pay taxes on it again. That's not double taxation, that's how tax works.

Money flows to the corporation. They pay some to employees, who pay tax on their income. They (might) pay some to shareholders, who (might) pay tax on dividends or capital gains. What is left (very simply speaking), the corporation pays tax on as its income.

West Germany used huge (60%) corporate tax rates in the near post-war period to force companies to invest into their R&D and CAPEX, which helped Germany rebuild their industrial base much faster than other countries.

If the goal of the USA is to force companies to re-shore, wouldn't this be a better way [0] to proceed than inflating the costs of many goods for the consumer? Large corporations appear to have record cash on hand in recent decades, where as consumers hold record debt.

[0] By better, I mean more much likely to achieve the stated goal.

Yup, only three parties pay corporate taxes; employees with lower salaries, consumers with higher prices, or shareholder via dividends, and all three of those parties are you and me.

Limited liability needs to priced to reflect the enforcement costs. Sole props are "free".

I think this can make sense theoretically and what about cases where companies just horde wealth like Apple or spend it on stock buybacks (like Apple)? I'd want to see some sort of impetus for them to either reinvest or pass it along to their employees.

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Now apply that same logic to people.

I also think the industries that Berkshire is generally in can't take advantage of some tax advantages that other companies are able to. Right?

>You'd never want other companies paying as much tax if they didn't have the profit to back it up. It would bankrupt them.

They do have the profit in that the money they make doing things exceeds the money they spend to do the thing, but though a series of tricks of varying legality and ethics they make it so on paper they do not have "profit" and therefore successfully avoid taxes.

Amazon reported losses for the first 10 years while growing to billions in yearly revenue.

>It would bankrupt them.

It really wouldn't have. While Amazon was growing to dominate retail and putting very many competitors out of business, they were paying 0 corporate taxes. Many companies play these tricks and many people want them to pay fair taxes. If you need to be tax free to break even, you should go bankrupt. Especially in the Fortune 500 region.