Dear pigdog,
"Nonsense, s-test."
LOL. Because you say it? * chuckle *
"It's unfortunate you can't understand a simple example of cascading of embedded taxes which do not even include paroll taxes or commpliance costs."
I understand your example just fine. Better than you do. It comprises profits and taxes only. So, wonder of wonders, it has all "embedded" profits and taxes!! LOL.
Your example is the classic example of "GIGO," garbage in, garbage out.
Make a spreadsheet with real world, realistic profit margins, value added, and effective tax rates, and you'll see "embedded" tax costs of a couple of percent. If I have time to waste later, I'll do it for you.
However, we actually KNOW the embedded cost of corporate income taxes in the US. It varies from year to year. In recent years, it's been as high as nearly 2%, and as low as 1.3%. It's the percentage of GDP that's paid in corporate income taxes.
"Whatever value might be added is encompassed by the example and the fact you can't/won't see that changes nothing. In asddition, the fact that you are not a Sub C corp changes nothing. You business still accrues tax liaibilities even though they may be paid via your 1040. The effect of those taxes still remains in the business and pretending it does not is (at the very least) shortsighted."
I think you mean Chapter C corporation.
In any event, why don't you ask groanup's opinion of that? He seems to think that if you're not paying corporate income taxes, well, you're not paying corporate income taxes.
Why don't you explain for everyone here your theory of why all other workers should get back all their personal income and payroll taxes, but small business owners using Subchapter S corporations, LLCs, partnerships, and proprietorships, should not get back their personal income and payroll taxes?
"The effect of those taxes still remains in the business and pretending it does not is (at the very least) shortsighted."
You assert, assert, assert, in the face of all evidence and reason arrayed against you. LOL.
"As for the C-corp figures you present, I can only offer a big yawn and say 'so what'. If those are correct figures (and I doubt they are),..."
Look 'em up yourself.
"...there are many tax-abatement stunts that can be used (frequently short term ones) but over a longer term the taxes would most likely go back up."
Nope. These businesses just don't pay a lot of taxes. That's all.
" According the The Institute for Taxation and Economic Policy for 2004:
'ITEP's new report examines the U.S. profits and federal income taxes of 250 of the nation's largest and most profitable corporations over the 1996-98 period. Although big corporations ostensibly are supposed to pay 35 percent of their profits in taxes, the 250 companies in ITEP's survey paid only 20.1 percent in 1998. '"
I don't disagree with that.
You are confused, pigdog. You have confused "to pay 35 percent of their PROFITS in taxes," with "percentage of their REVENUES in taxes."
Wal-Mart paid nearly 30% of its profits in federal corporate income taxes. Nearly THIRTY PERCENT.
But, its profits were only 5.6% of its revenues.
For every $100 of sales Wal-Mart makes, they make a pre-tax profit of about $5.60. THAT'S their profit. That's all. And of that $5.60, they pay about $1.60 or so in federal corporate income taxes.
So, if you get rid of the corporate income tax, the price of $100 of Wal-Mart stuff could conceivably fall to $98.40.
Read what I've written very carefully, pigdog. You are confusing REVENUES with PROFITS.
It doesn't matter if the tax rate on profits is ONE HUNDRED PERCENT (the absurd case). If profits are only a very small part of revenues, then taxes will only be a very small part of revenues.
sitetest
"For every $100 of sales Wal-Mart makes, they make a pre-tax profit of about $5.60. THAT'S their profit. That's all. And of that $5.60, they pay about $1.60 or so in federal corporate income taxes."
That assumes no cost savings from Wal-Mart's suppliers which get passed up the supply chain. To the extent that Wal-Mart is selling imports, that is a reasonable assumption. However, to the extent that they buy US produced goods, it isn't reasonable at all. It may also very well be that because of the price shifts which will make US produced goods more competitively priced, more of Wal-Mart's stuff will be US produced.
The tax rate expressed as a percentage of GDP has little or nothing to do with embedded tax costs which is what the discussion is about. Tax costs (excluding payroll/withholding and compliance costs) are determined from profits, not revenues, but I suppose you did not know that. Revenues themselves show nothing about the cascading of embedded taxes. To determine the cascading embedded taxes it is necessary to look at income tax rates so that the build-up due to taxes can be determined at each level.
The simplified example I have given shows this mechanism quite well and is purposely simplified for easy understaanding. The post #88 shows the example and it clearly is discussing cascading embedded taxes and they are shown as "tax costs as % of sell price" and NOT as a % of revenue. Embedded tax is calculated from the margin of the business and their tax rate. Revenue is unrelated to cascading embedded tax and trying to express that amount of tax as a percent of revenue is completely meaningless since it shows nothing about how the mechanism works.
The meaningful figures are the income subject to tax and the taxes actually paid. The latter divided by the former is the rate of taxation for the particular business - just like they taught you in high school, that gives the tax rate for the business. It is this rate that figures importantly in cascaded tax costs.
As for groanup's opinion of whether or not payroll taxes of any sort should be included is of no importance to the discussion at hand - and perhaps he's correct. That once again is irrelevant since the example was defined as not including payroll/wihholding or compliance costs.
As for your statement:
"He seems to think that if you're not paying corporate income taxes, well, you're not paying corporate income taxes. "
Well, DUH - who's to argue about that. That's like saying if you're scratching your head, you're scratching your head.
The example in #88 is for a business (period) and not just Subchapter C corporations as you keep trying to pretend. They all have the same mechanism effecting the build up in prices. The fact you don't understand his is your problem, not mine. As for "... evidence and reason arrayed against me ..." I see very little of either but I do see a bunch of meaningles nonsense presenting numbers that are completely unrelated to the discussion but presented to try to fool others into thinking they are meaningful even though off-topic.
In post #310, the figures from the IRS SOI publication for 2001 show the detailed information that the C-corp tax rate (which you seem to think is the entire business world) is 34.4% rather that the 25% figure used in the original cascading example. Using that actual overall figure the cascading embedded taxes become:
LEVEL 1 2 3 4 5 6 INPUT $1.00 $1.44 $2.08 $3.01 $4.34 $6.27 33.00% PROFIT MARGIN $0.33 $0.48 $0.69 $0.99 $1.43 $2.07 34.40% TAX RATE $0.11 $0.16 $0.24 $0.34 $0.49 $0.71 SELL PRICE $1.44 $2.08 $3.01 $4.34 $6.27 $9.05 Accumulated tax costs $0.11 $0.28 $0.51 $0.86 $1.35 $2.06 Tax costs as % of 7.86% 13.31% 17.09% 19.70% 21.51% 22.77% sell price
So you can see that using the actual tax rate for your C corps results in a much faster build up of emedded tax costs. This is probably more true to the real world effect than the original illustrative example since it now uses the figures from what you seem to think is the whole business universe (and it isn't) - the major industries. Your statement about these C corporations:
"These businesses just don't pay a lot of taxes. "
... is shown to be the nonsense it is - they pay a good amount of taxes and at a 34% (plus) rate. To even try to fool readers into thinking that these amounts do not become embedded into prices is - truly - nonsense. Even your compatriot Nightie is now urging the use of a much higher figure for embedded taxes. Perhaps you should straighten him out???