- 15 Jun 2018 02:47
#14924629
Assuming that my ideas are adopted. Then companies will have progressive taxes sort of like people. But, companies can offshore their profits with bookkeeping gimmicks.
So, to solve this offshoring of profits problem, suppose that the US used a modified VAT tax system to tax companies. Call it a MoVAT tax.
Modified in 2 ways ---
1] The comp. pays a higher rate after it has sales over some amount. This higher amount per item is still attached to the item as it moves to the distributor and retailer, and finally to the final buyer.
2] The comp. can deduct some of its costs from the VAT tax it pays. Specifically, the wages and salaries (and benefits? & FICA?) that it pays to all its American employees except the top 3 in terms of payments and benefits (stock options).
One problem is that the VAT tax paid by the customer includes the part deducted for wages. This will distort to final price some. It raises the final price some. I'm sure the nay-sayers will pounce on this, but is it really so bad. Let me think out loud.
. . . What happens? OK, the customer pays more for the 'thing'. This money goes some to the Gov. as a tax and some to the comp. as a bonus. A bonus for paying Americans to work for the comp., the more it pays [in higher wages or for more workers] the larger its bonus. The bonus is still pretty small though. Is this such a bad thing for the American people? I think the VAT rates can be adjusted for this and the market will adjust to this system.
It seems to me that this system amounts to a tax on total sales revenues less some of its costs. Specifically, the costs it must incur in America and not somewhere else.
Since, sales revenue less costs = the profit; is this system as good as can be done to tax profits above some thresh-hold at a higher rate with a VAT that can't be avoided if the comp. sells its products in America?
So, to solve this offshoring of profits problem, suppose that the US used a modified VAT tax system to tax companies. Call it a MoVAT tax.
Modified in 2 ways ---
1] The comp. pays a higher rate after it has sales over some amount. This higher amount per item is still attached to the item as it moves to the distributor and retailer, and finally to the final buyer.
2] The comp. can deduct some of its costs from the VAT tax it pays. Specifically, the wages and salaries (and benefits? & FICA?) that it pays to all its American employees except the top 3 in terms of payments and benefits (stock options).
One problem is that the VAT tax paid by the customer includes the part deducted for wages. This will distort to final price some. It raises the final price some. I'm sure the nay-sayers will pounce on this, but is it really so bad. Let me think out loud.
. . . What happens? OK, the customer pays more for the 'thing'. This money goes some to the Gov. as a tax and some to the comp. as a bonus. A bonus for paying Americans to work for the comp., the more it pays [in higher wages or for more workers] the larger its bonus. The bonus is still pretty small though. Is this such a bad thing for the American people? I think the VAT rates can be adjusted for this and the market will adjust to this system.
It seems to me that this system amounts to a tax on total sales revenues less some of its costs. Specifically, the costs it must incur in America and not somewhere else.
Since, sales revenue less costs = the profit; is this system as good as can be done to tax profits above some thresh-hold at a higher rate with a VAT that can't be avoided if the comp. sells its products in America?