Quote:
Originally Posted by Xazy
That is not a tax exemption that is using the loophole to do fraud and is illegal. That is the problem of fraud rather then the tax exemption. By the way if the profit goes to salary the salaries are taxed, and that does not change how much the corporation profit is.
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Yes you are correct about salaries being taxed on the other end, theoretically....to talk about how you'd think it works doesn't reflect the reality that is happening. Highly paid CEO's flat do not pay the listed tax rate, most don't pay more than 15%. Bonuses become part of a contracted pay package because they are taxed at a lesser rate.
except the banking industry and wallstreet not to mention oil companies and healthcare CEO's have built in loopholes that tax bonuses at a far lessor rate if at all. The biggest bonuses going out in wallstreet have full exemptions and offshore clauses that eliminate the tax burden. If anything a base salary should have it's standard rate and a bonus should be taxed at a higher rate to create a corporate incentive not to bonus as much. Investment brokers have finagled reduced short term gains, which is a segment of the investment market that should have huge tax penalties if anything. I am a day trader, I know a little bit about how whacked out the whole investment market is. It wouldn't hurt the market a bit to support long term investing by hammering short term gains by 70% and decreasing the tax penalty for gains as the term goes up. People should be encouraged to invest in companies for five or ten years. Quick profits made in days or weeks do nothing for the market except bring a Ponzi scheme element in where the less sophisticated long term retirement investors get caught holding an empty bag.
The levels that big government funded businesses have exempted themselves from taxes is profoundly unnecessary.
My point still stands that if you give a larger corporation a profit margin tax exemption you remove the incentives and reason for investing back into the company and the economy. Exemptions need to stay based on expenses incurred, not free money, it does not get back into the economy.