HomeArticlesTranscending the Partisan Tax Divide: Capital Gains Taxes vs. Income Taxes on Wages

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Transcending the Partisan Tax Divide: Capital Gains Taxes vs. Income Taxes on Wages — 2 Comments

  1. Prof. Anderson. You said, ” 60% of corporations are incentivized not to pay taxes, but give out any potential profits as wage bonuses to employees or stock options to CEOs.”

    I am having trouble believing that business owners only give out potential profits as wage bonuses to employees or as stock options to CEOs. Where is the support for such a statement? Some yes. But if I am reading this write you are inferring most businesses use potential profits in this way. And also . . . why the word ‘potential’. Solyndra really fits your description . . . but m o s t businesses?

    • David, That was cryptic. I do stand corrected, and wrote more about these other options in my book and elsewhere. Various corporations do all sorts of things with money before declaring profits: including trivial advertising, lavish parties, and exotic meetings. In one place I mentioned Gulf&Western taking out a 12 page ad to publish their annual report in Newsweek. There is also incentive for larger companies to use potential profits to acquire smaller companies and then expense the deal, or even buy companies with debt on their book to offset potential profits with debt the acquired company is carrying forward on their 990 tax returns.

      However, my experience with the average family-size company with 20 or fewer employees is that they give wage bonuses or increase benefit packages. I have worked for several companies that operate that way.

      Solyndra does not directly relate to what I was discussing because it received government funds with strings attached and was what I would call a quasi-governmental business and therefore not subject to the same economic incentives as completely private companies.

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