Semi-Random Politics/Tax Question (and explanation)
Has anyone thought of having the business tax rate more dependent on the number of employees? I'm not talking about giving incentives to companies for job creation, like I believe Obama is proposing. I mean that instead of having a flat tax rate for all businesses or a tax rate based on the net income of a business have the tax rate be based on the net income / the number of U.S. employees.
For example: If you had two companies with a net income of a billion dollars a year, one with ten employees, the other with a million, they would pay the same in taxes right now. What if the taxes were set up so that the first company would be hammered with somewhere around a 75% business tax, while the second paid no taxes at all? (They are after all only making $1000 per employee before taxes...)
It would encourage investors to invest in labor intensive industries. Tax rates do affect how much investors make and how companies decide to use there money and that is a major reason experts say that raising taxes will slow the economy. So we should change the rules so that companies that hire a lot of people don't have to pay as much in taxes as those that don't. After all, those employees will be paying income tax anyway. So really, those industries that are labor intensive are paying more in taxes already, between business tax and individual income tax, as those that are less labor intensive. This would be one way of leveling that tax burden gap.
It would also discourage outsourcing jobs to foreign countries. By outsourcing, a company would end up with fewer U.S. employees and could be put into a higher tax bracket. The savings from outsourcing could be less than the increase in taxes.
For the same reason, it would also make hiring illegal aliens less desirable. They might be working in the U.S., but unless they pay taxes and can prove they belong, they can't be counted for business tax purposes.
Now I know that there would be difficulties, like how do you count the number of employees, part-time vs. full-time or employees that only worked for part of the year, but I think that it would be worth the effort. And for what publicly traded companies already have to deal with for financial and tax reports, this wouldn't be that much extra work at all.
For example: If you had two companies with a net income of a billion dollars a year, one with ten employees, the other with a million, they would pay the same in taxes right now. What if the taxes were set up so that the first company would be hammered with somewhere around a 75% business tax, while the second paid no taxes at all? (They are after all only making $1000 per employee before taxes...)
It would encourage investors to invest in labor intensive industries. Tax rates do affect how much investors make and how companies decide to use there money and that is a major reason experts say that raising taxes will slow the economy. So we should change the rules so that companies that hire a lot of people don't have to pay as much in taxes as those that don't. After all, those employees will be paying income tax anyway. So really, those industries that are labor intensive are paying more in taxes already, between business tax and individual income tax, as those that are less labor intensive. This would be one way of leveling that tax burden gap.
It would also discourage outsourcing jobs to foreign countries. By outsourcing, a company would end up with fewer U.S. employees and could be put into a higher tax bracket. The savings from outsourcing could be less than the increase in taxes.
For the same reason, it would also make hiring illegal aliens less desirable. They might be working in the U.S., but unless they pay taxes and can prove they belong, they can't be counted for business tax purposes.
Now I know that there would be difficulties, like how do you count the number of employees, part-time vs. full-time or employees that only worked for part of the year, but I think that it would be worth the effort. And for what publicly traded companies already have to deal with for financial and tax reports, this wouldn't be that much extra work at all.