Investment Timing

[Singuy]

Wow, that is wrong on so many levels. Have you ever run a business?

Do I run a C-corp? No...but I do own a S-corp where corporate taxes does not affect my business.

I posted a link before showing that a lot of the top fortune 500 businesses pay very little corporate taxes despite what the corporate tax rate is (hopefully it's the "business tax" we are talking about) because they do a lot of reinvestments vs distribution.

[Spiffster]

Business taxes should be as large as possible to promote growth. Why would lowering business taxes promote growth? Lowering business taxes will just have the owner taking the profit as distribution vs reinvesting into the business TO AVOID paying for that "high " business tax to begin with.

High business expenses = growth and job creation
How can you promote businesses to have higher expenses? Increase business taxes!

???

Wouldnt we want to lower business taxes? Lower business tax and maintain high income taxes would promote more reinvesting into the business. I believe Trump plans to lower business taxes too... this is the only part of his tax plan that makes sense to me.

[sv2007]

Lower business taxes AND income taxes. Shift us into a national sales/use/property tax model. It'll solve a lot of our problems. For one, it'll alleviate the illegal immigration problem (Trump can save us money by not building that silly wall). It can also shift us into a more open nation (I'm hoping for a borderless world).

Imagine, open access everywhere (no more immigration controls), every government raises $ based on sales/use/property tax. If one gov/state/jurisdiction mismanages money and increase taxes, then just move to another. If a district has too many people, taxes can be raised to decrease the numbers (of course, better benefits to people in that district). If a district has too few people, taxes can be lowered to attract folks (ok, some people just don't want to live where there's snow, but anyway, you get the picture).

Where everybody is a citizens of earth.

[Singuy]

???

Wouldnt we want to lower business taxes? Lower business tax and maintain high income taxes would promote more reinvesting into the business. I believe Trump plans to lower business taxes too... this is the only part of his tax plan that makes sense to me.

Wait why would maintaining high income taxes promote reinvesting?

If I have a company and want to pay as LITTLE taxes as possible, the best way is to convert all my profits into CAPITAL GAINS since it's only taxed at 15-25%.

So as an "employee"(CEO) of the company, I would elect to take a $1 salary to bypass payroll taxes and personal federal income taxes(like Steve Jobs).

All the profit I have made from the business after all expenses will be REINVESTED back into the company(more R&D, or build another building, branch out and make apple cars or whatever). This will reduce the profit into almost nothing so I will NOT have to pay ANY corporate taxes.

So..how is Steve Jobs rich by taking only a $1 salary? He has millions of Apple Shares. What happens if Steve Jobs reinvest into his company? His shares are worth more and more..and every time he needs money..he can just sell some shares at a CAPITAL Gains tax rate..essentially bypassing corporate income taxes, payroll taxes, and personal federal income taxes!

So where in this entire tax game would decreasing corporate taxes help reinvesting?

[disneysteve]

So..how is Steve Jobs rich by taking only a $1 salary? He has millions of Apple Shares.

I realize you're just using him to illustrate a point but Steve Jobs has been dead for more than 5 years.

[StormRichards]

I realize you're just using him to illustrate a point but Steve Jobs has been dead for more than 5 years.

I informed him of that on the November 15th and he acknowledged my post with a

http://www.savingadvice.com/forums/everything-else/84600-debt-ceiling-taxes-stimulus.html#post443041

I think it is extremely poor taste to continue to use that analogy

[Singuy]

Okay, then take your pick

Sergey Brin (Alphabet Inc.)[22]
Larry Ellison (Oracle Corporation)[23]
Darren Entwistle (TELUS)[24]
Richard Fairbank (Capital One Financial)[25]
Lee Iacocca (Chrysler Corporation)[26]
NTR (Founder of Telugu Desam Party)
Muhammad Ali Jinnah (Founder of Pakistan), as the first Governor General of Pakistan, fixed his salary to be 1 rupee without any other compensation[27]
Steve Jobs (Apple) did not take any alternative form of compensation (stock options, bonus, etc.) from 2003 until his death (in 2011)[28][29][30]
John F. Kennedy, Former President of the United States[31]
Herbert Hoover, Former President of the United States; both Kennedy and Hoover donated their presidential salaries to charity.[31]
John Mackey (Whole Foods Market), who also does not take any alternative form of compensation (stock options, bonus, etc.)[32]
N. R. Narayana Murthy (Co-Founder of Infosys)[33]
Elon Musk (Tesla Motors)[34]
Larry Page (Alphabet Inc.)[22]
Mark Pincus (Zynga)[35]
Richard Riordan (Mayor of Los Angeles)[36]
Henry Samueli (Broadcom Corporation)[37]
Eric Schmidt (Google)[22]
Arnold Schwarzenegger (former Governor of California)[citation needed]
Terry Semel (Yahoo!)[25]
Sehat Sutardja (Marvell Technology Group)[38]
Meg Whitman (Hewlett-Packard)[39]
Jerry Yang (Yahoo!)[40]
Mark Zuckerberg (Facebook)[41]
Jack Dorsey received no compensation for his time as interim CEO at Twitter[23]
David Filo $1 salary with no additional compensation as a founder of Yahoo![23]
Jeremy Stoppelman $1 salary with no option awards at CEO of Yelp[23]
Edward Lampert $1 salary with no additional compensation as CEO of Sears Holdings[23]
Richard Hayne $1 salary with additional compensation as CEO of Urban Outfitters[23]
Jan Koum (founder of Whatsapp) $1 salary joined Facebook's board with stock options worth nearly $2 billion.
F. Thomson Leighton

https://en.wikipedia.org/wiki/One-dollar_salary

[disneysteve]

I think it is extremely poor taste to continue to use that analogy

I don't find it to be in bad taste. I just find it to be an outdated reference. Just substitute the name of a current CEO.

[Spiffster]

Wait why would maintaining high income taxes promote reinvesting?

If I have a company and want to pay as LITTLE taxes as possible, the best way is to convert all my profits into CAPITAL GAINS since it's only taxed at 15-25%.

So as an "employee"(CEO) of the company, I would elect to take a $1 salary to bypass payroll taxes and personal federal income taxes(like Steve Jobs).

All the profit I have made from the business after all expenses will be REINVESTED back into the company(more R&D, or build another building, branch out and make apple cars or whatever). This will reduce the profit into almost nothing so I will NOT have to pay ANY corporate taxes.

So..how is Steve Jobs rich by taking only a $1 salary? He has millions of Apple Shares. What happens if Steve Jobs reinvest into his company? His shares are worth more and more..and every time he needs money..he can just sell some shares at a CAPITAL Gains tax rate..essentially bypassing corporate income taxes, payroll taxes, and personal federal income taxes!

So where in this entire tax game would decreasing corporate taxes help reinvesting?

Income taxes are high? Not relatively speaking. Especially with all the loopholes available to top earners.
Small, private businesses do a majority of the hiring. This is where the most revenue is reinvested and salaries are kept relatively reasonable. Priority is on business growth and efficiency, not shareholders. Sure growth and efficiency are good for shareholders, but not nearly to the same degree as a startup. You will see many more (domestic) jobs created by stimulating small business.

[Singuy]

Income taxes are high? Not relatively speaking. Especially with all the loopholes available to top earners.
Small, private businesses do a majority of the hiring. This is where the most revenue is reinvested and salaries are kept relatively reasonable. Priority is on business growth and efficiency, not shareholders. Sure growth and efficiency are good for shareholders, but not nearly to the same degree as a startup. You will see many more (domestic) jobs created by stimulating small business.

Just to clear up some something. Most small business that's an S-corp..which means they have less than 100 employees/shareholders are exempted from corporate taxes. Lowering corporate taxes doesn't do a thing for most small businesses.

That being said, it is still more tax efficient if you convert your profits into capital gains because bypassing personal federal taxes and payroll taxes is a better deal.