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optimisticpessimist's avatar

Should the government focus on ensuring businesses pay their 'fair share' of federal taxes?

Asked by optimisticpessimist (3909points) April 13th, 2011

I have seen a lot of discussion on personal income tax and raising (or lowering) it for the highest personal income levels. Wouldn’t it be more cost effective (generate more income versus the amount of work) to first ensure large companies who make large profits are paying their fair share of federal taxes?

Reading this article is what prompted this question. In particular this quote, “This comes amid disclosures of low tax payments by some of the nation’s biggest companies, including General Electric Co., which made $14.2 billion in worldwide profits last year, but paid no U.S. corporate taxes in 2010.”

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13 Answers

GracieT's avatar

I agree with you about having companies pay their fair share, but wouldn’t that make them more likely to outsource? We already have many companies doing that, and I think that that would just make it worse. The American public (I’m guessing you are in the US) doesn’t like being inconvenienced much, and big corporations know that. We always take the easy way out, and we’ll buy anything that makes our lives easier, often at the expense of our country! ;0(

wundayatta's avatar

Certainly the IRS should spend some effort to enforce the law—and they do. But you have to look at enforcement on a cost/benefit basis. How much will each additional dollar spent on enforcement bring in in revenue, compared to how much will a tax hike bring in in additional revenue.

Enforcement is also important to keep people more likely to be honest, in general. However, we don’t want to throw too much of our tax administrative costs into enforcement. We have to be smart and put the right amount into it. What that right amount is—I don’t know. But the IRS should be figuring it out if they don’t already.

mazingerz88's avatar

It’s never a simple task to come up with a “fair” figure of how much taxes to require from companies, especially because they have their own ideas of how much they should be taxed. This debate will linger forever. @GracieT US companies will outsource whether they are being taxed highly or not. That is simply capitalism by default. Profits remember? These past few years I have learned that US capitalism forces holds more power than the US goverment in some instances. It’s also the present condition of the economy that dictates momentary rules of the game. Obama and a big business group tried working together at first but when they arrive at a point of total disagreement, Obama gave in. Recall the extension of tax cuts for the rich? I believe it’s all about the present state of the economy, various parties will either sincerely try to fix it or use it to their “selfish” advantage.

GracieT's avatar

Good points, @mazinger88. That’s why I’m not sure there is any economic system people can devise that will be fair. I voted for Obama in the last election, and I’m not really happy with the way things have turned out. It’s sad to say, but the only thing that is keeping me from a more pessimistic attitude is the fact that things would probably be worse with McCain and that woman from Alaska in charge.

Qingu's avatar

I speak as a relatively diehard liberal: no.

Well, yes and no. Businesses shouldn’t be able to cheat on their taxes. There are too many loopholes.

On the other hand, a lot of liberals have this sacred cow of raising the corporate tax rate, because they think that’s “fair.” I would much rather raise an equivalent amount of revenue by raising taxes on wealthy individuals. And I think it’s important not to equate corporations (as a whole) with the wealthy individuals who generally control them.

mazingerz88's avatar

@GracieT Agree with you 100 % on choosing Obama over McCain. I’m a democrat but there was a time I rooted for McCain to win that Republican nomination vs Bush but he did not know how to play dirty like Karl Rove did. With regards to your unhappiness regarding the economy and everything else happening I would apply the same principle you used in voting for Obama, that it will be worse if the Republicans have the White House and Senate. As for an economic system that could be devised as to be fair, I don’t know really. Might be worth asking that question for jellies.

Qingu's avatar

@GracieT, politics has always been and probably will be “the lesser of two evils.” You will never agree with any politician who can win an election 100%, or even 80%. And even on the points you wholeheartedly agree about, the politician you vote for will fail to accomplish things, or will be forced to compromise.

That’s just how democratic politics work. The alternative is going back to a monarchy and hoping you get a king who agrees with your positions on stuff.

Jaxk's avatar

The more complex you make the tax code, the more loopholes you create. We tend to make our tax laws very complex and when we think some one is not paying enough we raise the rates. That only complicates the problem and provides more incentive to find the holes.

As we try to manage our economy and create subsidies for this and that, we also create loopholes. If you use this, we give a tax break. If you invest in that we’ll provide subsidies. All these rules and giveaways, add incredible power to those with lobbyists. It is no coincidence that Jeffery Immelt has the ear of the president and GE paid no tax. Ge has tailored thier business to take advantage of everything the government is pushing. Everything subsidized or incentivized.

We need to get rid of the subsidies and incentives. Let everyone compete on a level field. Bring down the corporate tax rate but make everyone pay it. Simplify the tax code and their will be less need for lawyers and lobbyists. They add very little to our economy.

mazingerz88's avatar

@Jaxk Quite enlightening thanks!

Qingu's avatar

@Jaxk, there is no such thing as a level playing field. Powerful corporations shift the playing field to their advantage, like matter warps space.

optimisticpessimist's avatar

Thank you all for your responses. @Jaxk I tend to agree with all that you said; however, I probably would not have stated it so well.

Crashsequence2012's avatar


It should focus on LOWERING them across the board.

This question borders on the idiotic in this time of recession.

wundayatta's avatar

There’s more to an economy than GDP. Taxes are spent on productive things, something I think virtually all conservatives don’t recognize. In fact, spending on the poor actually has the greatest multiplier effect, so it is the most efficient form of spending in terms of goosing the economy.

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