Tax changes

Quote: kenarman

I would agree that you are focused on the large companies. You do realize that companies with less than 500 employees are a larger portion of GDP than the large companies.

I don't think that I specifically knew that, but you also don't have to have 500+ employees to be publicly traded.

It occurs to me that AZDuffman has a final retreat available to him, even though it's truly ridiculous. Let's go ahead and argue with myself some more, just in case.

AZDuffman's last available argument is that, when a corporation pays a dividend to its shareholders, control of the money has NOT actually changed.

Ridiculous, right? Well, if I absolutely had to frame an argument around that obviously terrible position, my argument would be that the shareholders, collectively, are in control of the corporation. As such, the shareholders (collectively) control the corporation's money. Therefore, even when the dividend payments go from corporate coffers to individual shareholders, the individual shareholders are simply getting more direct control of money they already controlled.

And...holy shizz are there a number of problems with this.

1.) The corporation and its shareholders are legally distinct entities. That's why, in the event that someone files a civil claim against a corporation, they cannot*** include all of that corporation's individual shareholders in that claim.

***Technically, they can. The Plaintiff can technically attempt a lawsuit against whoever they wish. It's just that there is long-standing case law that would result in the individual shareholders all being dismissed from the case, without fail and Plaintiff's attorney would likely be sanctioned for even attempting this.

2.) Corporations, under the law, are legally considered people. Therefore, clearly a separate legal entity.

3.) A shareholder cannot just walk into a corporation and ask the corporation to hand them cash. Granted, they'd have no reason to do so as they could simply sell some of their stock, but the point is that shareholders (to the extent it can even be argued they control the money of corporations) clearly do not exercise such control over it to the extent of the degree of control (corporation money v. personal money) being legally indistinct.

So, those are a few of the counters to AZDuffman's theoretical last resort. Check and mate. Thanks for playing.

Quote: Mission146

Your argument was that employees have to pay tax on the income because they are not owners, thus, it is not double-taxation. My counterpoint was that employees could own shares of the company, thereby making them owners, thus invalidating your position. The only way your position survives is if you argue that employees with shares, because they are part owners of the company, should not be taxed.

Of course, I think that position would be way too asinine for you to take.

The easiest thing for you to do is concede that employees can be owners of shares and still have taxes paid on their wages, thus, even if your statement from a few posts ago were generally true, it is not strictly true.

The income is being taxed twice, but it's not double taxation. The fact that the corporation (generally) paid income taxes on it is irrelevant.

Double taxation is taxes being paid twice on the same source of income.

The company had net income, regardless of what the source of that net income was. Let's say that it's a corporation strictly engaged in sales; that's all they do. The company either gets a commission, or alternatively, the companies that contract them pay some fixed hourly rate based on sale rep hours.

That company makes income, pays income tax. That company later pays out a dividend to its shareholders.

COMPANY INCOME SOURCE: The payment that it receives from the companies that contract them to sell stuff.

DIVIDEND INCOME SOURCE: The company that paid out the dividend.

Ergo, the income source for the money is different; thus, it is not double taxation.

And, again, using the logic you are using---you could make the argument that any monetary outflow from the company, that gets taxed for any reason, is being subject to double taxation...such as paying its employees.

Employee wages are not double taxation because the corporation did not pay tax on that revenue. Can you not understand basic accounting?

Quote: AZDuffman

Employee wages are not double taxation because the corporation did not pay tax on that revenue. Can you not understand basic accounting?

Do you not understand basic debate? I'm not arguing that, in fact, employee wages are double taxation. I'm arguing that, if you consider paying tax on dividend income double taxation, then you could make (probably equally bad) arguments for anything being double taxation.

I also can't help but notice that your one objection has exactly nothing to do with the original point about whether or not tax on dividend income should constitute double taxation.  I can only assume that's because your position has been thoroughly humiliated; hence, there's nothing left but to challenge my ability to understand basic accounting...despite the fact that I am not actually trying to suggest that employees being taxed on earnings is double taxation.

What I am suggesting is that suggesting that employees being taxed on income being double taxation is only, at worst, slightly more ridiculous than trying to argue that taxes on dividend income constitute double taxation.

Quote: Mission146

Do you not understand basic debate? I'm not arguing that, in fact, employee wages are double taxation. I'm arguing that, if you consider paying tax on dividend income double taxation, then you could make (probably equally bad) arguments for anything being double taxation.

But that is a crazy argument. Dividends come from taxed profits. Thus easy to see double taxation. No other argument you have made holds water because the money was not previously taxed.

Quote: AZDuffman

But that is a crazy argument. Dividends come from taxed profits. Thus easy to see double taxation. No other argument you have made holds water because the money was not previously taxed.

Well, you are the only one that cannot see it. Nothing about my position has been "humiliated" because you have not done anything to refute the point. It reminds me of years back on the other side where I used math to prove CA was not paying their fair share of income tax due to deduction of state taxes. In reply I got a bunch of "but if's."

To "humiliate" my position you need to:

1. Show that stockholders are not owners of the corporation OR
2. That the corporation did not file and pay proper income tax before the dividend.

#1 is impossible and #2 is not possible in a going corporation not engaged in fraud.



No, it is totally ridiculous. One is an expense, the other is distribution of profit already taxed.

My thought is that you just cannot handle that corporations are the people who own the corporation and not some inanimate object existing out of nowhere.

I know; it's a crazy argument and is only slightly more crazy than your argument.

Double taxation requires that the income source be the same. The corporation makes revenue (some of which can become net income) however it makes revenue, then the corporation pays the dividends to the individual shareholders.

Boom. Two different income sources. The corporation gets income however it does that and then the corporation becomes a source of income to investors by paying out the dividends. This isn't f***ing rocket science, dude.

That's all that is required to humiliate your position. Forget about basic accounting, or Accounting 101, I can humiliate your position simply by being able to count to two. That's how many income sources there are---no fewer than two. Because there are no fewer than two income sources, it is not double taxation.

Corporations are legally distinct from the people who own them and are, themselves, considered people. Corporations are not the people who own them because, as I have already established, they legally exist as totally separate from their shareholders. I already tried to make that argument for you and you already lost it in an earlier post.

I've had enough of this sort of thing every time I try to interact with you. I'll not block your posts, but I hereby humbly request that you never speak to me again. Thank you.

Quote: Mission146

I know; it's a crazy argument and is only slightly more crazy than your argument.

My argument is not crazy.

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Double taxation requires that the income source be the same. The corporation makes revenue (some of which can become net income) however it makes revenue, then the corporation pays the dividends to the individual shareholders.

The shareholders ARE the corporation. Thus the source is the same.

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Boom. Two different income sources. The corporation gets income however it does that and then the corporation becomes a source of income to investors by paying out the dividends. This isn't f***ing rocket science, dude.

It seems to be rocket science to you. You simply do not understand that as a stockholder you are an owner. But lets try this another way. Say you and I enter a doubles poker tournament. We win. They hand us the money less a W-2G. Now, when you file your income taxes do you pay AGAIN since the team won it but then gave you your share? I doubt it.

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That's all that is required to humiliate your position. Forget about basic accounting, or Accounting 101, I can humiliate your position simply by being able to count to two. That's how many income sources there are---no fewer than two. Because there are no fewer than two income sources, it is not double taxation.

You need to learn to count. There is only one. The corporation, which the shareholder is a piece of. Thus only one.

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Corporations are legally distinct from the people who own them and are, themselves, considered people. Corporations are not the people who own them because, as I have already established, they legally exist as totally separate from their shareholders. I already tried to make that argument for you and you already lost it in an earlier post.

Legally distinct or not when you own shares you are a part of it.

Quote:

I've had enough of this sort of thing every time I try to interact with you. I'll not block your posts, but I hereby humbly request that you never speak to me again. Thank you.

Take your ball with you, please.

I'll finish this conversation out of fairness. Enjoy it, because it is the last back and forth we'll ever have.

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My argument is not crazy.

I should probably say that your supporting argument is crazy; your position that it shouldn't be taxed is fine. Your position that it constitutes double taxation is completely flawed.

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The shareholders ARE the corporation. Thus the source is the same.

The shareholders are not the corporation because the corporation is an individual and is a separate legal entity. That's why individual shareholders aren't accountable for torts that the corporation might commit...other than it could negatively impact the stock price.

Anyway, I already made a, "The corporation is the shareholders," argument for you and you already lost it, because it's an incredibly dumb argument. Actually, my argument was slightly less stupid...my argument was that the shareholders control the corporation's money, albeit indirectly, so as a result are simply moving the money from the corporation (which is theirs) to themselves.

The main thing going against that argument, other than being silly, is that the corporation is legally distinct from its individual investors.

Quote:

It seems to be rocket science to you. You simply do not understand that as a stockholder you are an owner. But lets try this another way. Say you and I enter a doubles poker tournament. We win. They hand us the money less a W-2G. Now, when you file your income taxes do you pay AGAIN since the team won it but then gave you your share? I doubt it.

I don't understand that stockholders are owners of the corporation? Your argumentation is a joke and your attempts to portray me as an idiot only serve to reveal your poor debating skills. I was talking about shareholders equity before; if the shareholders were not owners, then what would they have equity in?

For your poker tournament example-there is a fundamental difference between a corporation and a partnership. Actually, there are many differences, but attempting to explain them to you would be a waste of my time and you'll probably spend the next fifty posts arguing that corporations and partnerships are actually the same thing.

(Quotes below clipped to make a point.)

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You need to learn to count.

Okay.

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The corporation

One.

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the shareholder

Two.

Did you know that there are also numbers that come after two? You'd be shocked.

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Legally distinct or not when you own shares you are a part of it.

Right; being a part of something is not literally being that thing. Also, they aren't even part of it, necessarily, they own part of it.

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Take your ball with you, please.

Happily.

Quote: Mission146

Your position that it constitutes double taxation is completely flawed.

So I guess places like investorpedia and pretty much any reputable financial advisor are also flawed? Please, do some research on the subject.

Quote: AZDuffman

So I guess places like investorpedia and pretty much any reputable financial advisor are also flawed? Please, do some research on the subject.

From Investopedia:

Quote:

How Double Taxation Works
Double taxation often occurs because corporations are considered separate legal entities from their shareholders. As such, corporations pay taxes on their annual earnings, just like individuals. When corporations pay out dividends to shareholders, those dividend payments incur income-tax liabilities for the shareholders who receive them, even though the earnings that provided the cash to pay the dividends were already taxed at the corporate level.

Crucially, Investopedia agrees with me that this can happen because of corporations being separate legal entities from their shareholders, regardless of whether or not you think they are.

Anyway, it works exactly as I said. (Insert source of revenue) is the source of the corporation’s income, then when the corporation pays out the dividend, the corporation is a source of income for the individual. Investopedia says exactly that. The only difference is they call it double taxation because the primary source of income (whatever the business does to make money) is the same. However, those are two different types of income; one is corporate income and the other is personal income; ergo, two different sources of income. Two totally different categories of income, in fact.

As much prestige as I hold Investopedia in, a slightly more important entity called:

https://supreme.justia.com/cases/federal/us/252/189/

The Supreme Court of the United States held, in the link above, that even additional shares paid as a stock dividend are taxable personal income. Why? Because they are a capital gain, and constitute personal income pursuant to the 16th Amendment. Naturally, the case I linked above also references the case in which it was decided that cash dividends are personal income.

I guess what I’m saying is that if you disagree with me that it’s double taxation (thus, unconstitutional) in the legal sense, then you can prove me wrong by suing the Government, appealing it all the way to the Supreme Court (because you’ll lose in every court along the way) and then have the Supreme Court declare taxation of stock dividends to be illegal under the Sixteenth Amendment.

Of course, if you succeeded in the above, my position would change because reality would change and to cling to an outdated and incorrect position would be foolish.