So, corporate taxes.
How much does it cost to make a car?
No, don't laugh. Seriously. If I am a corporation, I need to pay taxes on my income. That's revenues minus expenses. So I really need to know what my expenses are.
What are they?
I make a car, and tons of materials go into it. I have leather, of course, and aluminum. Barium, Asbestos, Copper, Cobalt. So how do I figure all that out?
Just add them up?
Nope, can't do that, because companies maintain inventories. I got 1000 tons of aluminum, but I bought 100 tons last month and 900 tons last year, when it was 10% cheaper. $%&@ if I know how much material cost is going into it. There's actually an entire branch of accounting that deals with JUST this, called inventory accounting. (Speaking of inventories, what happens when the cost of aluminum goes up and I am holding on to 1,000 tons? Do I raise my assets accordingly? Do I book a profit? Do I book a profit only when I sell it? What kind, so I know which tax rate to apply? HA! You thought accounting was easy)
Oh, Bob just wasted a steel frame, that's 1,000 tons of aluminum down the tube. How do I account for that? Is that a legit business expense or something that just goes wrong? Do I apply that to overall factory overhead, or do I apply that directly to the cost of the car? Do I apply it to the cost of ALL cars in my factory for the YEAR, for the MONTH, or just the batch, or what? I don't !@#$@#$ know.
Nails. Crap. We don't really keep track of nails, no factory does. Also, I am making Corvettes and Cadillacs on the same line. How do I divide the nail cost between the two? Do I say, I made twice as many corvettes so they get twice as much as the nail cost? Or, the Cadillacs weigh twice as much so they get twice the cost? Or do I use some sort of pre-established base? Labor hours? Maintenance time?
How do I apportion electricity expenses? They go to the WHOLE GODDAM FACTORY, and I am supposed to figure out how much went into making each individual car? What about the cost of the actual building ITSELF? How do I assign that to each car?
Labor, too. Not just direct labor, which is difficult enough to cost, ESPECIALLY when you get into the cost of benefits, but then you have to worry about the indirect labor: the accountants, the CEO, the janitors.
Marketing costs? Sure, we didn't actually ADVERTISE the Corvette this year, but we advertised a whole bunch of other GM products and built up brand strength, which may have translated into sales for the Corvette. How do I account for that?
The reason there are lots of tax loopholes is because accounting is very, very tricky. And only a moron would try to tax GE, with hundreds of millions of dollars to spare on an army of accountants. That's more than even super-rich Bill Gates can afford to keep on hand.
So why bother trying to tax corporations, when you can just tax the people earning the money directly, and they don't have the same organizational ability to try to screw the government out of money? Especially if the result is companies just trying to move more jobs overseas?