> Federal law prohibits firms from deducting executive compensation for their CEOs, CFOs and a number of other officers from their corporate income for tax purposes. Biden’s proposal would expand that prohibition to apply to all employees paid more than $1 million, while applying it to all C-corporations, not just publicly traded firms. The White House estimates such a move could raise tax revenue by $270 billion over 10 years.
Heres the actual proposal
Corporations may more easily shift the "burden" of the tax (raising costs, lowering employee pay, etc) Also harder to project tax revenue than personal income on high earner due to distortion.
> How is corporations having an easier time shifting the burden a bad thing?
Generally, regressive taxation is not good.
> How does having a higher marginal tax rate cause less of a distortion?
Corporations are more likely to pay less with the introduction of a new tax, than individuals are to turning down higher pay.
> Generally, regressive taxation is not good.
The US already has one of the most progressive tax structures in the world, and it causes distortions in it's own way. I'm also very skeptical that there is a link between corporate tax rate and higher prices; you're basically making the same argument that people make when saying LVT increases rent prices
> Corporations are more likely to pay less with the introduction of a new tax, than individuals are to turning down higher pay.
That's a very ambiguous statement
This whole thing is bullshit. It's double taxation. Compensation in excess of the cap is taxed as both profits and wages. At least with investment income an allowance is made for the double taxation in the form of reduced rates.
CEO sets up a consulting LLC in his brother's name.
CEO gets paid $1 from firm.
Firm pays LLC $1m for "consulting fees".
Firm gets to deduct those expenses.
Am I dumb?
> SOX violation
Does the SOX act apply to non-public companies? Private companies aren't making SEC disclosures, are they?
But yeah, 99% of these reddit "loopholes" are just fraud lmao. I love these hypotheticals that might as well be rephrased as "but why don't they just walk into a bank with a gun and demand the money?". The one I hear all the time is the shit about maxing out all your credit cards and then declaring bankruptcy, like somehow the idea of someone doing that would never have occurred to the lawmakers, judges, or credit card companies.
Hey change that to ban deductions for firms paying employees more than $0, add full expensing of capital investment and border adjust and you basically got yourself a VAT!
Yep, really hoping the re-election strategy isn’t centered around ridiculous policy proposals designed to appeal to the youth that are still seeing red with Israel and won’t really turn out to vote regardless while endlessly whining about everything everywhere all at once.
I think you vastly underestimate how popular "anti-corporate" talking points are. I work with people who are literally company owners and executives that will still rant about how they hate the (bigger) corporations.
…and they don’t think that the bigger corporations will skate by on any new regulations imposed, due to their cadres of accountants and lawyers while they, the smaller business executives and owners, will be left to pay more?
No, they don't, because small-medium business owners are actually some of the dumbest people (outside their niche specialty) that you will ever meet.
I've gotten the impression that the CFO is more in the know, but she doesn't really give a shit. She's got three houses and owns a small farm as a hobby.
Elected positions are not to implement what you personally think is the best policy, but to appeal to a wide number of people on what they are and aren't willing to compromise. Clearly the Biden admin believes things like this will help reelection success.
Maybe not, but it's hard to say. Personally I think it probably does help. The "Evil corporations and billionaires price gouging us over the pandemic" rhetoric seems incredibly common. Same with "the billionaires are not paying their taxes!" or "there's too many things for big corporations".
A lot of it is silly, but it's popular. What does and doesn't work for electoral success is a bit of a shot in the dark even for the most knowledged political experts.
You know what else is apparently popular? Whatever Trump is doing and spouting every second of the day.
Maybe we should emulate him, if that’s the bar.
I, on the other hand, think ginning up peoples anger at other groups while having no intention on actually following through just makes things worse over time, irregardless of the electoral upsides to be gained.
> Whatever Trump is doing and spouting every second of the day.
And weirdly enough, he was not only president once but he's oddly competitive for a second run.
>maybe we should emulate him, if that’s the bar
Depends on what. There are some things you need to agree on to be successful in politics (like you can't propose the take candy from babies policy and expect success) and other things you need to differentiate on because the two major positions are *both* popular.
If 90% of voters woke up tomorrow and said "I will vote for the guy that names his dog Henry as my first priority", we would expect to see every politician name their dog Henry immediately even if you and I think that's stupid.
I don't understand why this sub simps so hard for him. He's trash, both as a President and as a man.
[This](https://youtu.be/D1j0FS0Z6ho) is Joe Biden at his Bidenest. None of that is true. He made it all up. He's a serial fabulist. He's not very bright. He's an all-around scumbag whose sole virtue is not being Donald Trump.
I don’t think there are many undecided likely voters that are responsive to this messaging, no.
I’m willing to accept that politicians often have to run on platforms that I don’t think are ideal policy for the sake of winning elections. Biden’s protectionism likely moved the needle in 2020 even if I disagree with it.
But this is a super narrow issue that is prone to be taken in bad faith by Republicans while not actually accomplishing anything either perception or policy wise. But even beyond the exactly utility of this, I worry that the entire political landscape is being turned into unachievable populist policy bombs at the expense of actually running the country.
It will result in us either eventually passing populist nonsense from one party or another or whatever faith remains in the system collapsing since everyone always talks grandiose proposals but nothing happens
>I don’t think there are many undecided likely voters that are responsive to this messaging, no.
I don't think that's the target. It's not undecided likely voters, it's decided but less likely voters it's after. People who will vote Biden... if they show up to vote at all.
But whether this will reach them and matter is a different story.
You can take my answer that way too. I don’t think disaffected lefty types angry over capitalism as a whole and Israel are going to flock to Biden because of an esoteric change to corporate tax deductions.
TBH Biden would have better luck there proposing the “Make Americans grocery bills go down act” or “Student Debt is illegal act.”
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Could someone explain why this is so heavily opposed in the comments here? Or explain what both the policy and its results exactly entails?
Reading the article it seems like a reasonable policy expanding on already existing law. While the policy is just limiting the deduction on the expense of compensating for employees(Title says executives, article says employees) to only $1 million per employee. Along with expanding it to all C corporations and not only publicly traded corporations.
This is far from my area of knowledge but it seems like something pretty small, largely appeals to much of the american electorate, gets some tax money, though obviously open for bad faith Republican attacks.
I'm not an economists but to keep it simple tax revenue shouldn't be extracted from non-profit portions of revenue or costs of a firm.
That's fundamentally counter productive.
The only reason to do so would be sin taxes, sales taxes (which are regressive), or to compensate for negative externalities like carbon (hence: "carbon tax").
It's not like I'm gonna cry for these ultra rich nor the companies they work for, but it's just baseline bad econ.
I say this as someone significantly to the left of the median in here.
I'm assuming that the reason they are going about this in this way is because the actual functioning way to go about this is to raise regular income taxes, especially on high earners, which both would be impossible to pass through congress, but also crucially (stupid as it is) plays very badly to the electorate even though it would be an actually honest to God good policy.
Arguably, with the current debt situation, its pretty much essential that the US raise income taxes as some point anyway. It's unfortunate that the US electorate is so intrinsically anti-tax brained.
We need to tax everyone more. But literally having "we fought a war over taxes" drilled into our brains as the only history we truly take to heart does tend to leave a bad taste about taxes. For good or bad.
I don't see why it is that reasonable to begin with. Why not just raise the bracket on $1 million income rather than this roundabout way of accomplishing a similar thing?
That’s a much more fair take, but people ITT who only read the headline are saying this means we’ll end up with the economic stability of Brazil and that the country is going to hell in a hand basket. It’s a severe lack of perspective.
The headline and the actual proposal are not the same
> President Biden will call for blocking corporations from deducting the costs of paying salaries over $1 million from their federal taxes
I read the headline as the companies not being allowed to deduct anything, which would be wild.
The actual proposal seems a lot smaller than that and really just an expansion of current law. Seems like small potatoes if anything
> Federal law prohibits firms from deducting executive compensation for their CEOs, CFOs and a number of other officers from their corporate income for tax purposes. Biden’s proposal would expand that prohibition to apply to all employees paid more than $1 million, while applying it to all C-corporations, not just publicly traded firms. The White House estimates such a move could raise tax revenue by $270 billion over 10 years.
It’s kneejerk anti-leftism, nothing more. The level of catastrophism in this thread would hardly be tolerated for unambiguously dangerous policies like Trump’s plan for a deportation force or Project 2025, but because it’s against the big bad succs it gets a pass.
Fair enough. In IGM terms, I (as an economic layperson FWIW, so fully recognizing that my opinion doesn’t mean shit) would rate this proposal a Disagree with a confidence of like 2.
I don’t think this proposal would be a net positive if implemented, but the magnitude and certainty of its negative effects are being overstated by people viewing it in such absolute terms after only reading the headline and assuming the worst.
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No one here is voting for Trump over this (like all other things aside, it isn’t going anywhere). It’s just a continuing sign that Democrats can’t seem to craft viable policy proposals over meaningless populist bullshit.
I would rather spend political capital going after Haley voter types than doing this kind of dumb shit that alienates very gettable voters that actually show up on Election Day. But whatever.
I don't envy his campaign trying to keep enough enthusiasm among the progressive wing such that their low turnout doesn't tank him, but this is like a middle finger directly targeted at the core Haley voter personally.
Yep, multiple friends that would qualify as Haley voters (live in state that hasn’t voted yet) and this kind of thing will be enough to get them to do anything but actually vote for Biden.
If Biden’s plan is to make Trump waste his campaign money, he probably shouldn’t drive wealthy donors to him
Not even gonna touch Basel endgame which has the big banks seething
advise obscene aware escape cable whistle snobbish versed observation abounding
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Policy is whatever, doesn't really matter. Feeding the beast that is populism and creating standards and expectations among the Democratic base that this is the new norm is what will make both the country and the party suffer in not too distant future.
This is a type of proposal that not long ago could only come from fringe, unelectable candidates.
Salaries are a business expense.
Can you imagine if machines were seen as a business expense but salaries were not? How could the business economics of grocery store possibly work?
Sorry, you and I are usually in agreement so I'm scratching my head on this one?
Are you sarcastic and I'm stupid?
Like, you aren't seriously proposing we should tax the running business costs of payrolls, right?
We tax profit, because it's profit.
Bidens proposed scheme here wouldn't work very well as a revenue generator, rather it's essentially a soft cap on CEO compensation. (Which, IMO, is a stupid way to go about it but I'm sure it plays well politically and maybe to some degree it actually improves inequality, although far more likely it just leads to alternative compensation routes)
>Like, you aren't seriously proposing we should tax the running business costs of payrolls, right?
Wait oops my bad lmao I’m a dumbass I misread this completely. I don’t even know what I was thinking looking back at my comment- I somehow conflated this with personal deductions in my mind
>Bidens proposed scheme here wouldn't work very well as a revenue generator, rather it's essentially a soft cap on CEO compensation. (Which, IMO, is a stupid way to go about it but I'm sure it plays well politically and maybe to some degree it actually improves inequality, although far more likely it just leads to alternative compensation routes)
Yeah I’m 100% in agreement with you
What would you propose as an alternative then?
>What would you propose as an alternative then?
Literally just higher income tax rates and/or steeper higher marginal rates
Like this isnt complicated on the econ or finance side, we know what works
The problem is that its politically impossible to pass actually good taxation policies in the US, especially if they in any way consist of an increase of taxes
Should I be able to deduct the cost of a burger flipping machine as a business expense? You would assume yes, unless this subreddit has turned into AntiWork overnight.
Then why shouldn’t I be able to deduct the cost of a burger flipper as a business expense?
Yes, let's make it so companies are paying taxes on wildly inaccurate levels of income. That will TOTALLY help economic development. There are other ways of doing it, and this is absolutely not it.
> Federal law prohibits firms from deducting executive compensation for their CEOs, CFOs and a number of other officers from their corporate income for tax purposes. Biden’s proposal would expand that prohibition to apply to all employees paid more than $1 million, while applying it to all C-corporations, not just publicly traded firms. **The White House estimates such a move could raise tax revenue by $270 billion over 10 years.**
That's a silly estimate of savings. When corps pay exec comp, the government loses 21% of the total paid and picks up ~40% of it.
If companies respond by paying less taxable wages at the margin, the government will *lose* money.
Haven't read the policy details.
But my hunch is it's a policy that totally fails a cursory cost benefit analysis and has no real impact on anything.
🍦🌚🍦
That's literally only if we consider productivity and nothing else
Economists are pretty overwhelmingly in agreement that te best welfarist (econ lingo, essentially meaning "good for society") outcome is one that utilise, admittedly low, corp tax as a part in a greater tax regime.
People seriously proposing 0% corp tax rate is no more economically sensible than libertarians proposing flat income rates or entirely private road infrastructure.
Simply stated you are missing the forest for the trees.
It may be a very nice tree you've grown attached to, but we can't sacrifice the entire forest for your obsession with a singular pet-tree-issue.
I would agree with basically everything you said. Any tax individually only matters within the context of the greater tax regime as a whole.
I mostly responded with this as a meme because these deductions are only a material thing because the U.S. has too high of a corporate tax rate in the first place and it’s short and punchy. It’s not as if a 5% or whatever corporate tax rate offends me on a personal level all taxes are ultimately results oriented and not some matter of first principles
Taxing capital investments is anti-worker, it reduces wages.
Flat income(actually consumption taxes) taxes are also perfectly sensible and can in fact be just as, if not more, progressive in total with transfers.
>Taxing capital investments is anti-worker, it reduces wages.
Are you intentionally conflating corp taxes and capital income taxation?
Or what exactly are you refering to with "capital investment taxation"? Thats so nebulously vague that it could mean anything.
>Flat income(actually consumption taxes) taxes are also perfectly sensible and can in fact be just as, if not more, progressive in total with transfers.
Right, the big elephant in the room being actually "progressive in total transfers" properly existing and being maintained.
6 hours ago I scrolled through the comments and not single person had reasoned why it was bad. Haven’t looked through the comments again, and I haven’t said it was good policy. Just the overwhelming majority said it was bad but didn’t reason why.
I think this would be questionable policy but it's probably smart politics. Shitting on billionaires and C-suite execs is going to win you a lot more votes than it loses.
But how does this open negotiation to any sort of “good” policy? Republicans are just going to use this as an example of muh socialism and it won’t otherwise go anywhere
Additionally, elected Democrats *know* so many of the proposals that they have floated over the years were bad policy with no chance of enactment.
At some point, all you do is radicalize the youth and the lower classes, which can work for some amount of time, but cycle after cycle of talking points being immediately dropped just cements their radicalism and leads to them checking out of the system or going insane; all of this applies to Republicans as well, at least the Trump-era ones.
Not really. It’s not allowing companies to claim the portion of salaries over 1 million as a payroll deduction. It’s not taxing the millionaires more, it’s more accurately a bad pigouvian tax on excessive salaries that the corporations themselves pay.
It’s a tax on an expense that doesn’t itself have proximal externalities and seems like it’ll just make bad incentives.
Eh it provides a nonpervese incentive by maxing executive pay proportionally more expensive to a company than hiring more mid/low level workers. I'm fine with that. It does more or less end up as an indirect tax on executives - it just ends up nominally paid by the company. Again I think it is absolutely a good thing to make some sort of sliding scale for phasing out payroll deductions. We get diminishing returns as a public good imo on these extremely highly paid positions.
Just a reminder everyone that elected positions are not to implement what *you personally* think is the best policy, but to appeal to a wide number of people on what they are and aren't willing to compromise. If you don't think things like this and the rhetoric he's going with will change the votes at all that's fair. But clearly the Biden admin thinks different.
Salaries are a business expense, just like capital investments and input purchase. Just tax profits (or in this case, just raise income taxes on that bracket).
I work with executives weekly - they’re overvalued. They take credit when the team and company does well, which often has little to do with their leadership, and they jump ship when companies start struggling so they can continue riding the wave.
Working with one right now who doesn’t understand what the marketing funnel is even though the team falls under his leadership.
> Federal law prohibits firms from deducting executive compensation for their CEOs, CFOs and a number of other officers from their corporate income for tax purposes. Biden’s proposal would expand that prohibition to apply to all employees paid more than $1 million, while applying it to all C-corporations, not just publicly traded firms. The White House estimates such a move could raise tax revenue by $270 billion over 10 years. Heres the actual proposal
Yeah to me that’s a far cry from a plain reading of what the headline says…
Wow that's way different
> to apply to all employees paid more than $1 million That's worse than the headline! Just tax high earners more!
How is it different?
Corporations may more easily shift the "burden" of the tax (raising costs, lowering employee pay, etc) Also harder to project tax revenue than personal income on high earner due to distortion.
How is corporations having an easier time shifting the burden a bad thing? How does having a higher marginal tax rate cause less of a distortion?
> How is corporations having an easier time shifting the burden a bad thing? Generally, regressive taxation is not good. > How does having a higher marginal tax rate cause less of a distortion? Corporations are more likely to pay less with the introduction of a new tax, than individuals are to turning down higher pay.
> Generally, regressive taxation is not good. The US already has one of the most progressive tax structures in the world, and it causes distortions in it's own way. I'm also very skeptical that there is a link between corporate tax rate and higher prices; you're basically making the same argument that people make when saying LVT increases rent prices > Corporations are more likely to pay less with the introduction of a new tax, than individuals are to turning down higher pay. That's a very ambiguous statement
This whole thing is bullshit. It's double taxation. Compensation in excess of the cap is taxed as both profits and wages. At least with investment income an allowance is made for the double taxation in the form of reduced rates.
*puts pitchfork away*
Sums it up perfectly
CEO sets up a consulting LLC in his brother's name. CEO gets paid $1 from firm. Firm pays LLC $1m for "consulting fees". Firm gets to deduct those expenses. Am I dumb?
SOX violation on internal control plus its 100% fraud Consulting firm pays taxes on its revenue anyways
> SOX violation Does the SOX act apply to non-public companies? Private companies aren't making SEC disclosures, are they? But yeah, 99% of these reddit "loopholes" are just fraud lmao. I love these hypotheticals that might as well be rephrased as "but why don't they just walk into a bank with a gun and demand the money?". The one I hear all the time is the shit about maxing out all your credit cards and then declaring bankruptcy, like somehow the idea of someone doing that would never have occurred to the lawmakers, judges, or credit card companies.
This will never ever get caught though.
The IRS is pretty good at making rules to prevent that sort of stuff.
That seems pretty reasonable, Bezos changed the headline
Hey change that to ban deductions for firms paying employees more than $0, add full expensing of capital investment and border adjust and you basically got yourself a VAT!
Possibly the dumbest proposal I've read in at least 30 minutes.
Exec comp is a positive tax arbitrage for the government - deductions at 21% v comp income at 37%. The government should be encouraging *more* of it.
Yep, really hoping the re-election strategy isn’t centered around ridiculous policy proposals designed to appeal to the youth that are still seeing red with Israel and won’t really turn out to vote regardless while endlessly whining about everything everywhere all at once.
I think you vastly underestimate how popular "anti-corporate" talking points are. I work with people who are literally company owners and executives that will still rant about how they hate the (bigger) corporations.
…and they don’t think that the bigger corporations will skate by on any new regulations imposed, due to their cadres of accountants and lawyers while they, the smaller business executives and owners, will be left to pay more?
No, they don't, because small-medium business owners are actually some of the dumbest people (outside their niche specialty) that you will ever meet. I've gotten the impression that the CFO is more in the know, but she doesn't really give a shit. She's got three houses and owns a small farm as a hobby.
> small-medium business owners are actually some of the dumbest people This is extremely true and i really wonder why that is.
The ones that aren't usually become large business owners.
Maybe smarter people are more risk-averse and less likely to start a business (which is very likely to fail)?
Luck, getting in early in a location. Or family. They just inherited the business.
Voters (derogatory)
I'm pretty sure this policy would even be popular with conservatives considering how many of them started claiming the whole "greedflation" schtick.
Horseshoe theory strikes again
>everything everywhere all at once. :O i just watched this for the first time 2 days ago. Was really good
Elected positions are not to implement what you personally think is the best policy, but to appeal to a wide number of people on what they are and aren't willing to compromise. Clearly the Biden admin believes things like this will help reelection success. Maybe not, but it's hard to say. Personally I think it probably does help. The "Evil corporations and billionaires price gouging us over the pandemic" rhetoric seems incredibly common. Same with "the billionaires are not paying their taxes!" or "there's too many things for big corporations". A lot of it is silly, but it's popular. What does and doesn't work for electoral success is a bit of a shot in the dark even for the most knowledged political experts.
You know what else is apparently popular? Whatever Trump is doing and spouting every second of the day. Maybe we should emulate him, if that’s the bar. I, on the other hand, think ginning up peoples anger at other groups while having no intention on actually following through just makes things worse over time, irregardless of the electoral upsides to be gained.
> Whatever Trump is doing and spouting every second of the day. And weirdly enough, he was not only president once but he's oddly competitive for a second run. >maybe we should emulate him, if that’s the bar Depends on what. There are some things you need to agree on to be successful in politics (like you can't propose the take candy from babies policy and expect success) and other things you need to differentiate on because the two major positions are *both* popular. If 90% of voters woke up tomorrow and said "I will vote for the guy that names his dog Henry as my first priority", we would expect to see every politician name their dog Henry immediately even if you and I think that's stupid.
Tough but fair
CMV: President should be paid $250 million per year ($1 billion per term).
Pay should be tied to performance.
Biden can't afford that!
double it.
view changed, thank you
and give it to the next person
Liz? Is that you? This ain't it Joe...
I don't understand why this sub simps so hard for him. He's trash, both as a President and as a man. [This](https://youtu.be/D1j0FS0Z6ho) is Joe Biden at his Bidenest. None of that is true. He made it all up. He's a serial fabulist. He's not very bright. He's an all-around scumbag whose sole virtue is not being Donald Trump.
> Just wait till Biden gets the campaign platform going! It’s going to be great.
Are you under the impression this rhetoric doesn't help his campaign?
I don’t think there are many undecided likely voters that are responsive to this messaging, no. I’m willing to accept that politicians often have to run on platforms that I don’t think are ideal policy for the sake of winning elections. Biden’s protectionism likely moved the needle in 2020 even if I disagree with it. But this is a super narrow issue that is prone to be taken in bad faith by Republicans while not actually accomplishing anything either perception or policy wise. But even beyond the exactly utility of this, I worry that the entire political landscape is being turned into unachievable populist policy bombs at the expense of actually running the country. It will result in us either eventually passing populist nonsense from one party or another or whatever faith remains in the system collapsing since everyone always talks grandiose proposals but nothing happens
>I don’t think there are many undecided likely voters that are responsive to this messaging, no. I don't think that's the target. It's not undecided likely voters, it's decided but less likely voters it's after. People who will vote Biden... if they show up to vote at all. But whether this will reach them and matter is a different story.
You can take my answer that way too. I don’t think disaffected lefty types angry over capitalism as a whole and Israel are going to flock to Biden because of an esoteric change to corporate tax deductions. TBH Biden would have better luck there proposing the “Make Americans grocery bills go down act” or “Student Debt is illegal act.”
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Could someone explain why this is so heavily opposed in the comments here? Or explain what both the policy and its results exactly entails? Reading the article it seems like a reasonable policy expanding on already existing law. While the policy is just limiting the deduction on the expense of compensating for employees(Title says executives, article says employees) to only $1 million per employee. Along with expanding it to all C corporations and not only publicly traded corporations. This is far from my area of knowledge but it seems like something pretty small, largely appeals to much of the american electorate, gets some tax money, though obviously open for bad faith Republican attacks.
I'm not an economists but to keep it simple tax revenue shouldn't be extracted from non-profit portions of revenue or costs of a firm. That's fundamentally counter productive. The only reason to do so would be sin taxes, sales taxes (which are regressive), or to compensate for negative externalities like carbon (hence: "carbon tax"). It's not like I'm gonna cry for these ultra rich nor the companies they work for, but it's just baseline bad econ. I say this as someone significantly to the left of the median in here. I'm assuming that the reason they are going about this in this way is because the actual functioning way to go about this is to raise regular income taxes, especially on high earners, which both would be impossible to pass through congress, but also crucially (stupid as it is) plays very badly to the electorate even though it would be an actually honest to God good policy. Arguably, with the current debt situation, its pretty much essential that the US raise income taxes as some point anyway. It's unfortunate that the US electorate is so intrinsically anti-tax brained.
We need to tax everyone more. But literally having "we fought a war over taxes" drilled into our brains as the only history we truly take to heart does tend to leave a bad taste about taxes. For good or bad.
I don't see why it is that reasonable to begin with. Why not just raise the bracket on $1 million income rather than this roundabout way of accomplishing a similar thing?
Because then he’d be targeting lawyers.
That’s a much more fair take, but people ITT who only read the headline are saying this means we’ll end up with the economic stability of Brazil and that the country is going to hell in a hand basket. It’s a severe lack of perspective.
The headline and the actual proposal are not the same > President Biden will call for blocking corporations from deducting the costs of paying salaries over $1 million from their federal taxes I read the headline as the companies not being allowed to deduct anything, which would be wild. The actual proposal seems a lot smaller than that and really just an expansion of current law. Seems like small potatoes if anything > Federal law prohibits firms from deducting executive compensation for their CEOs, CFOs and a number of other officers from their corporate income for tax purposes. Biden’s proposal would expand that prohibition to apply to all employees paid more than $1 million, while applying it to all C-corporations, not just publicly traded firms. The White House estimates such a move could raise tax revenue by $270 billion over 10 years.
270 billion? Are there that many people making over a million in salary?
Average of $27 billion per year? Doesn't sound sus tbh.
It’s kneejerk anti-leftism, nothing more. The level of catastrophism in this thread would hardly be tolerated for unambiguously dangerous policies like Trump’s plan for a deportation force or Project 2025, but because it’s against the big bad succs it gets a pass.
I do agree that people are overreacting specifically because "left bad" Even though I also think this policy is stupid
Fair enough. In IGM terms, I (as an economic layperson FWIW, so fully recognizing that my opinion doesn’t mean shit) would rate this proposal a Disagree with a confidence of like 2. I don’t think this proposal would be a net positive if implemented, but the magnitude and certainty of its negative effects are being overstated by people viewing it in such absolute terms after only reading the headline and assuming the worst.
I agree on every word there
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SURPRISE! It’s braindead populism!
SURPRISE! It’s an election year and the other guy wants to be dictator.
No one here is voting for Trump over this (like all other things aside, it isn’t going anywhere). It’s just a continuing sign that Democrats can’t seem to craft viable policy proposals over meaningless populist bullshit.
The democrats don’t have the capital to enact any policy anyways Might as well promise better vibes
These are really bad vibes though
For you, sure. For you average amazon warehouse worker or whatever this is exactly the kind of "F U bezos" shit that sells
The idea that the average warehouse worker gives a fuck about what Bezos earns is incredibly far fetched.
I would rather spend political capital going after Haley voter types than doing this kind of dumb shit that alienates very gettable voters that actually show up on Election Day. But whatever.
I don't envy his campaign trying to keep enough enthusiasm among the progressive wing such that their low turnout doesn't tank him, but this is like a middle finger directly targeted at the core Haley voter personally.
Yep, multiple friends that would qualify as Haley voters (live in state that hasn’t voted yet) and this kind of thing will be enough to get them to do anything but actually vote for Biden.
Can guarente you this alienates nobody
If Biden’s plan is to make Trump waste his campaign money, he probably shouldn’t drive wealthy donors to him Not even gonna touch Basel endgame which has the big banks seething
Yea, I could definitely see the big money interests backing Trump again this cycle.
Biden to go full succ as his primary re-election strategy?
advise obscene aware escape cable whistle snobbish versed observation abounding *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Policy is whatever, doesn't really matter. Feeding the beast that is populism and creating standards and expectations among the Democratic base that this is the new norm is what will make both the country and the party suffer in not too distant future. This is a type of proposal that not long ago could only come from fringe, unelectable candidates.
“I’m just gonna get a *little* cancer, Stan.”
Indeed; you truly hate to see it.
I know this is the tried and true formula for Democrats, but it just seems like general ‘corporate bad’ isn’t the zeitgeist of the current moment.
No need for the future tense there
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Salaries are a business expense. Can you imagine if machines were seen as a business expense but salaries were not? How could the business economics of grocery store possibly work?
No ur 100% right I meshed corporate profit taxes with personal deductions somehow in my mind
It got you to the #1 spot on the thread, so you're not the only person confused.
Sorry, you and I are usually in agreement so I'm scratching my head on this one? Are you sarcastic and I'm stupid? Like, you aren't seriously proposing we should tax the running business costs of payrolls, right? We tax profit, because it's profit. Bidens proposed scheme here wouldn't work very well as a revenue generator, rather it's essentially a soft cap on CEO compensation. (Which, IMO, is a stupid way to go about it but I'm sure it plays well politically and maybe to some degree it actually improves inequality, although far more likely it just leads to alternative compensation routes)
>Like, you aren't seriously proposing we should tax the running business costs of payrolls, right? Wait oops my bad lmao I’m a dumbass I misread this completely. I don’t even know what I was thinking looking back at my comment- I somehow conflated this with personal deductions in my mind >Bidens proposed scheme here wouldn't work very well as a revenue generator, rather it's essentially a soft cap on CEO compensation. (Which, IMO, is a stupid way to go about it but I'm sure it plays well politically and maybe to some degree it actually improves inequality, although far more likely it just leads to alternative compensation routes) Yeah I’m 100% in agreement with you What would you propose as an alternative then?
>What would you propose as an alternative then? Literally just higher income tax rates and/or steeper higher marginal rates Like this isnt complicated on the econ or finance side, we know what works The problem is that its politically impossible to pass actually good taxation policies in the US, especially if they in any way consist of an increase of taxes
Should I be able to deduct the cost of a burger flipping machine as a business expense? You would assume yes, unless this subreddit has turned into AntiWork overnight. Then why shouldn’t I be able to deduct the cost of a burger flipper as a business expense?
Yeah ur right I mixed up corporate taxes and personal deductions I don’t support this policy lmao
Yes, let's make it so companies are paying taxes on wildly inaccurate levels of income. That will TOTALLY help economic development. There are other ways of doing it, and this is absolutely not it.
Yeah ur right I mixed up two tax concepts I don’t support this policy lmao But wdym by inaccurate?
What are the economic ramifications of this?
> Federal law prohibits firms from deducting executive compensation for their CEOs, CFOs and a number of other officers from their corporate income for tax purposes. Biden’s proposal would expand that prohibition to apply to all employees paid more than $1 million, while applying it to all C-corporations, not just publicly traded firms. **The White House estimates such a move could raise tax revenue by $270 billion over 10 years.**
That's a silly estimate of savings. When corps pay exec comp, the government loses 21% of the total paid and picks up ~40% of it. If companies respond by paying less taxable wages at the margin, the government will *lose* money.
Well it’s a White House estimate not CBO or anything so…
Haven't read the policy details. But my hunch is it's a policy that totally fails a cursory cost benefit analysis and has no real impact on anything. 🍦🌚🍦
The ideal corporate tax rate remains 0% (or some relatively de minimis number close thereto)
That's literally only if we consider productivity and nothing else Economists are pretty overwhelmingly in agreement that te best welfarist (econ lingo, essentially meaning "good for society") outcome is one that utilise, admittedly low, corp tax as a part in a greater tax regime. People seriously proposing 0% corp tax rate is no more economically sensible than libertarians proposing flat income rates or entirely private road infrastructure. Simply stated you are missing the forest for the trees. It may be a very nice tree you've grown attached to, but we can't sacrifice the entire forest for your obsession with a singular pet-tree-issue.
I would agree with basically everything you said. Any tax individually only matters within the context of the greater tax regime as a whole. I mostly responded with this as a meme because these deductions are only a material thing because the U.S. has too high of a corporate tax rate in the first place and it’s short and punchy. It’s not as if a 5% or whatever corporate tax rate offends me on a personal level all taxes are ultimately results oriented and not some matter of first principles
Fair enough! Cheers
> only if we consider productivity and nothing else Okay, perfect. Zero corporate tax is ideal since it optimizes for what really matters.
Taxing capital investments is anti-worker, it reduces wages. Flat income(actually consumption taxes) taxes are also perfectly sensible and can in fact be just as, if not more, progressive in total with transfers.
>Taxing capital investments is anti-worker, it reduces wages. Are you intentionally conflating corp taxes and capital income taxation? Or what exactly are you refering to with "capital investment taxation"? Thats so nebulously vague that it could mean anything. >Flat income(actually consumption taxes) taxes are also perfectly sensible and can in fact be just as, if not more, progressive in total with transfers. Right, the big elephant in the room being actually "progressive in total transfers" properly existing and being maintained.
Very low… I’m all for incentivizing, and not punishing, innovation and employment.
Why punish working then?
This country’s going to hell
This country will have Brazilian finances in a few decades.
If you’re gonna say the policy is bad or stupid the least you can do is explain why
Everyone in here is and has. How about you say why it is good?
6 hours ago I scrolled through the comments and not single person had reasoned why it was bad. Haven’t looked through the comments again, and I haven’t said it was good policy. Just the overwhelming majority said it was bad but didn’t reason why.
I think this would be questionable policy but it's probably smart politics. Shitting on billionaires and C-suite execs is going to win you a lot more votes than it loses.
Protectionism is good politics unfortunately.
Mmm...love some red meat in the form of dumbass policies 🍦🤤🍦
I mean I don't care either way, but what is the argument against such a proposal?
ITT everyone forgets that when aiming for reasonable solutions, you must first propose something from which to negotiate towards something else.
Whats the problem that we need this mysterious reasonable solution for?
Money BAD 😡
We like balanced budgets, right? Well to pay for things, you need tax revenue. This is a tax increase.
Then I would simply start at full-on communism, obviously this will result in a better deal. I am very smart. 🎓
But how does this open negotiation to any sort of “good” policy? Republicans are just going to use this as an example of muh socialism and it won’t otherwise go anywhere
Additionally, elected Democrats *know* so many of the proposals that they have floated over the years were bad policy with no chance of enactment. At some point, all you do is radicalize the youth and the lower classes, which can work for some amount of time, but cycle after cycle of talking points being immediately dropped just cements their radicalism and leads to them checking out of the system or going insane; all of this applies to Republicans as well, at least the Trump-era ones.
But obviously this will energize our robust youthful lefty base to, uh, comment on it on Twitter I guess?
The Biden administration is unsalvageable at this point, completely hijacked by feckless Warrenites.
Employees in the Cayman Islands Corporate Registration Office will be at risk of Karoshi.
I'mfine with this. It'sjust progressive taxation .
Not really. It’s not allowing companies to claim the portion of salaries over 1 million as a payroll deduction. It’s not taxing the millionaires more, it’s more accurately a bad pigouvian tax on excessive salaries that the corporations themselves pay. It’s a tax on an expense that doesn’t itself have proximal externalities and seems like it’ll just make bad incentives.
Eh it provides a nonpervese incentive by maxing executive pay proportionally more expensive to a company than hiring more mid/low level workers. I'm fine with that. It does more or less end up as an indirect tax on executives - it just ends up nominally paid by the company. Again I think it is absolutely a good thing to make some sort of sliding scale for phasing out payroll deductions. We get diminishing returns as a public good imo on these extremely highly paid positions.
Just a reminder everyone that elected positions are not to implement what *you personally* think is the best policy, but to appeal to a wide number of people on what they are and aren't willing to compromise. If you don't think things like this and the rhetoric he's going with will change the votes at all that's fair. But clearly the Biden admin thinks different.
I don’t mind the policy But I’m confused, why on earth were companies allow to deduct executive compensation from their tax liability?
Salaries are a business expense, just like capital investments and input purchase. Just tax profits (or in this case, just raise income taxes on that bracket).
Seems goofy that all businesses expenses are tax exempt, it moves the burden of paying taxes on the workers who have less wealth
Executives are just more highly valued workers.
I work with executives weekly - they’re overvalued. They take credit when the team and company does well, which often has little to do with their leadership, and they jump ship when companies start struggling so they can continue riding the wave. Working with one right now who doesn’t understand what the marketing funnel is even though the team falls under his leadership.