Question

Write two to three large paragraphs and include at least one reference other than the textbook. Discuss the one major problem with corporation taxation.

Answer 1

Corporate Taxation is an indespensable issue, it is used to tax the earnings made by corporates from their operations in America and abroad. The topic I choose here is that the The U.S. raises less corporate tax revenue than peer countries do​ and the process is complex, distorted and unfair to many. How? We shall discuss it underneath:

• ​For the theoritical rate of corporate taxation is 35%, but in practice companies pay much less than that because U.S. companies don’t pay taxes on debt-financed investments, which amounts to a subsidy.
• Income earned by foriegn transactions by US multinationsals is also filled with loop holes like United States collects very little tax on foreign income, since no tax is collected until foreign income is repatriated, and allow foreign tax credits to shield taxes that would normally be due on royalty income.
• There is no control over shofiting of profit to the tax haven countries and the treaties with many of them have failed to bear fruits,
• Another probable reason for the lower corporate tax base is that we encourage non-corporate business structures​ because of the simplicity in the operations and inhereted preferenc to debt backed investment than equity financed.