To Country!!!
13 to 50
I understand what you and he want to achieve. What you fail to understand is how it plays out in reality. Further, it is naive to think pulling one lever simply redirects activity in another desired way.
Businesses reinvest because it makes sense to do so and they develop new products , services and subsidiary businesses where and when they see an opportunity to do so. Are you suggesting Apple is not already doing everything it can to continue to innovate and expand its product lineups? How will higher taxes spur them to find more ideas beyond what they are already pursuing? If those ideas aren’t already identified, don’t higher tax rates mean they have less retained cash to pursue them in the future?
Costco already operates at pre tax margin of about 4%. What does doubling the tax rate do to help its economic growth? Nothing, it only probably stifles competition and limits Costco’s further economic expansion. In addition, they are likely to raise prices to return margins to a more acceptable level.
The entire idea of the motley fool boards was investors helping investors. It seems to me the METAR thread for many is a protest and push against private investment and the broader ideas of capitalism that allow for it.
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Ah, but we are helping other investors. Yours is becoming a dead end. We are $40 trillion in debt because of the nonsense you keep spouting.
In total, whom are you helping and what are the tradeoffs? Let’s use Apple as an example, explain to me how a 50% Corporate tax rate helps or hurts the various stakeholders, consumers, suppliers, and the economy as a whole? How does this translate into some grand net benefit?
We’re in debt because of an inability to control spending vs the available revenues. We are hardly unique in this regard. US corporations pay roughly $427 billion in annual tax revenues. Doubling that figure, it still leaves a $1.6 trillion gap in annual deficit spending. If the aim is to actually force reinvestment rather than as a revenue collection measure, it means the actual tax revenues should drop, not increase. If a corporation is forgoing profits for reinvestment, it would be the logical end result.
LIke I said, it’s nonsensical in its application. Which is why Comoros, a tiny collection of islands off the coast of Africa is the only country with that kind of imposed tax rate.
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The economy is a constant boom and bust. There is constant movement in all financial tools.
In demand side economics all boats rise with the tide. It benefits the entire nation.
In supply side econ we recapitalize and mostly only those who manage capital reap the rewards.
Demand side economics is not the either or you seem to think it is.
It is important to repeat, the Fortune 500 will make these outlays to reinvest regardless. The money is spread across the globe. The difference is in the incentive to reinvest here.
Fortune 500 companies represent roughly two-thirds (about 67%) of U.S. gross domestic product (GDP) when measured by their combined total revenues.
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Just a note from Yahoo this morning:
US annual interest expense is up to a record 18.5% of federal government revenue, according to fresh analysis from bond investment firm Doubleline (see chart below). This is now officially above the previous record of 18.4% set in 1991.
FoolOn45 you are getting the last word.
Again, using Apple, explain to me how the economics of this plays out. I don’t need an economics lesson on supply side vs demand side policy. I need to understand how you expect this to play out specifically with a business.
The top businesses in the S&P change over time. When you move to a tax policy that is so far out of whack with the rest of the globe, you disincentivize the development of those businesses in the US vs elsewhere. This is the problem with how you think about these large enterprises. The businesses leading today may not be the ones leading in the future. The capital needed to develop them will gravitate elsewhere where it is rewarded. The link below shows just over the last 40 years the change in the top ranked businesses.
Apple makes more than cellphones. Apple also can move some operations making cellphones to the US. Apple can further invest in R&D and labor productivity besides in manufacturing. The monies for this are already in their outlays. Making the US more attractive is the issue. It is counter intuitive, but higher taxes are very productive.
I responded because you are talking about something worth addressing, but much of this conversation has fallen on your deaf ears. The rest of the people here disagree with you for the most part. They may have gotten something more out of this dialog.
Let’s say Apple can produce phones and other devices in India for 1/2 what it can in the US. What is the incentive to bring that manufacturing here? The net profit is still higher. Also, Apple is already spending a fortune on R&D. Do you think Apple’s scarcity problem is capital or ideas worth pursuing?
No, I think there is a core group here that are simply focused mainly on expressing a similar ideological grievance. I can only assume those that agree are not really investors that would be impacted by the consequences or don’t actually support 50% Corporate tax rates but simply generally agree in an increase. For the most part, the majority of the board ignores both of us and this discussion as worthless banter. It does nothing to inform investors, which is characteristic of most of your postings.
You need to stop framing this as ideological. It’s not. There is sound reason why higher taxes would incentivize businesses to reinvest, start new divisions, employ more people, realize greater sales.
The US economy grew faster in the period when taxes were higher. That’s a simple historical fact. China seems to be doing OK with a tax rate of 25% (although certain nascent industries/sectors can get lower rates for a period.)
If there’s someone hewing to ideology, I would have to say it’s you. You have yet to engage on trends and facts like growth rates being slower during this period of lower taxes, or CEO (and Top Tier) pay inflating gigantically even as the percent of productivity to workers remains flat.
One final tip: this is a message board. You should expect people to have opinions, and that some might not hew perfectly to what you believe. Perhaps if you supported your arguments with historical facts and examples it would help, instead of pulling theories or hypotheticals out of the air and predicting them just the way you think they would perform, then people would understand your arguments better. Just a thought.
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You are in agreement that a 50% Corporate Tax Rate would be a net positive?
Again, I’m not debating whether taxes need or should to be higher but whether 50% goes too far and has other unintended consequences. Taxes are only one part. I draw no conclusions about what role they play in China’s economy.
I don’t necessarily share the opinion that tax rates and growth share a 1 to 1 relationship. I do think you can go to the extreme and cause problems. 50% would be twice the average of most first world nations. Again, you’re muddling in pay inequality which is not part of this discussion.
I think it’s simple to take a real business and examine the real impact. Historical Macro Facts and Data have their place but not a requirement to have an intelligent discussion. Again, it’s a simple question. Do you support a 50% corporate tax rate? It’s really my only rebuke of his entire approach. I think it is incredibly punitive and will result in massive adverse consequences longer term. But if you want to rely on data and historical evidence, can you point to me a successful nation with that kind of rate?
But if you want data, here you go.
Raising corporate income tax (CIT) rates substantially above peer nations generally depresses long-term economic growth, reduces capital investment, and encourages profit shifting, though the exact magnitude depends heavily on global tax coordination and the definition of the tax base. [1, 2, 3]
Impact on Investment and Capital Accumulation
- Higher Cost of Capital: Increasing statutory rates raises the user cost of capital, making domestic projects less profitable compared to other countries. [1]
- Lower Business Investment: Empirical data from the OECD and economic literature consistently show that business investment rates correlate negatively with effective corporate tax levels. [1, 2]
- Reduced Productivity: Higher rates hit profitable and dynamic firms hardest—specifically those scaling up or adopting frontier technologies—which slows economy-wide productivity growth. [1, 2]
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Here’s some more…that’s not 20 years old.
"These negative effects of higher tax rates on investment and productivity should imply that higher corporate tax rates inhibit economic growth. Yet empirical research has struggled to establish a convincing link (see Gechert and Heimberger, 2022, for a metaanalysis). While one planation is the inherent difficulty of identifying causal growth effects, another possibility is that the conventional investment channel does not capture the full general-equilibrium impact of corporate taxation. Two mechanisms may weaken the link between tax-induced investment and aggregate productivity: (1) tax-driven investments may be of lower quality, and (2) taxes may affect the allocation of resources across firms, offsetting or even reversing micro-level effects. Recent empirical work provides evidence for the first mechanism, showing that tax-induced investments can be inefficient (Eichfelder et al., 2023; Holtmann et al., 2025).
Our paper focuses on the second mechanism. We show that higher corporate taxes push low-productivity firms out of the market, reallocating resources to more productive firms and thereby raising productivity at the lower end of the distribution."
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That is a fair analysis, but not the only part of higher growth rates.
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No, but I’d say 30-35% would not be unreasonable to 1) pay for the rights and privileges they enjoy (roads, courts, other infrastructure, ability to freely monetize basic research funded with government funds, educated workforce, etc) and 2) to give enough incentive to have them try to avoid taxes by reinvesting and growing their current and/or other new businesses.
I arrive at that figure simply because it’s about what a median human being earner pays, once you include actual income tax, payroll tax, and the other half of payroll tax already being paid but hidden.Unfortunately we have found ourselves in a race to the bottom as other countries have found a way to lure US dollars by offering lower rates and encouraging both legal and sketchy tax avoidance.
To that end I would also have a “comparability” clause, saying that if you are found to be shifting assets (or sales, or costs, or any of the other variables) you immediately pay the difference, you pay the same in a one time fine, and then you pay that same fine again in every succeeding year for at least 5 years. I hate profit shifting, asset stripping, cost reallocations, whatever you want to call it. If Ireland or the Caymans or wherever wants to be cute, let them be cute. If you want to play with them, you will get burned. And should be.
I would also increase dramatically the compliance budget as that is a “profitable” enterprise 
Accountants can be quite conservative unless they are told not to be. Likewise lawyers. I would put peril in their advice, should they be found to be promoting or endorsing activities which are contrary to sound practice, particularly including the payment of taxes.
I note without irony that your “data” includes no data. No source. No study quoted. No author or methodology or anything else that might be read, investigated, or questioned. It presents only a conclusion which you, yourself would surely endorse, but offers no rationale as to how that conclusion was derived. That is not, and I don’t mean to put too fine a point on it, “data”.
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35% is the reasonable middle ground. The national debt is going to explode to make this all happen as law. But then the reasonable middle ground is not tenable for the economic need.
We have some 7%? of global industrial output. The shrinking of our output is the problem. We need close to 30% of global output. In someways this is echoing the post war years. But first we are going to see a financial collapse.
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Some of those taxes are intended go to those payers in the form of future benefits. The bottom 50% certainly pay nowhere near that average all in. That aside, I don’t have an opinion yet on where the long term rate should land. Although, it is substantially higher than the average for other developed nations. Even at your suggested rate, it would only add another $300 billion annually and leaves roughly $1.7 trillion in deficit spending.
The conclusions provide links to the research and data. I hardly find it necessary to demonstrate beyond the practical application of it. 50% is as absurd as 75% or 100%. They all make investing and building businesses wildly cost prohibitive.
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That assumes it is paid into the U.S. Treasury versus expensed by the corporations.
Apple is known to have reinvested $55 billion per year in China. In today’s dollars, the Marshall Plan was $54 billion over four years.
The reinvestment in factories, R&D, and productivity gains suggested by workers and management have plenty of knock-on effects further out. We do not need to collect the $300 billion itself.
If we had raised these taxes earlier I would not think 50% is necessary, but where we are going it will be. Earlier is a hypothetical. The Chinese at that time would have crushed us in this race. But time has proven cruel to the Chinese economy.
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The average hourly wage of a Chinese worker in an Apple factory is $2.70 per hour. China has a much larger and more efficient supply chain for electronic devices. In addition, it is geographically closer to the raw materials and other components used in making products like the iPhone. Tariffs now make importing those components and materials much more expensive. By some estimates, the cost to manufacturer might end up as much as 90% higher and an end product that costs over $3,000.
The Marshall plan was a broad based grant to help rebuild a decimated Europe. Apple’s investment in China was surgical and specific. Any reinvestment in the US is likely to be the same. Beyond that, it creates inefficiencies in the use of capital that could be deployed in other areas. In addition, it completely ignores any retaliation by other nations seeking to prevent the outflow of capital, economic activity and job losses.
We could have cut spending much sooner. But, more than doubling our corp tax rate seems to ignore the trade offs but typical of someone making decisions to which they are never held accountable.
Most of what is left is SS, Medicare, and Medicaid.
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Correct! There simply isn’t enough “waste and fraud” in the federal budget to matter much. DOGE proved this to those that did not already know this. If you want to fix the “spending problem” of the Federal government you have to tough the third rail.
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